Would Lifetime Mortgages Help People Buy A Home?
Given the challenges many people face in arranging a mortgage and buying a home, it is natural people are looking for assistance.One solution for many potential homeowners is a lifetime mortgage. Therefore, a growing number of prospective buyers are asking would lifetime mortgages help people buy a home.
What is a lifetime mortgage?
With a conventional mortgage, interest is charged on a sum that decreases over time. However, with a lifetime mortgage, interest is charged on an increasing quantity. The interest on the mortgage is added to the outstanding amount each year. You will find most lifetime mortgages carry a fixed rate of interest.
With a lifetime mortgage, you will not repay more than the property value.
How do I arrange a lifetime mortgage?
You should enquire if a lifetime mortgage is available to you because not all lenders offer this style of mortgage. For some lenders, there is a strict lending criterion in place. For a lifetime mortgage, there isa minimum age, which is usually around 55 or 60 years old, depending on the lender.
With this style of mortgage, the amount you can borrow increases as you get older. Usually, people aged 65 are allowed to borrow a maximum of between 25% and 30%. However, older people can often borrow up to50% of the value of their property.
Many lenders require properties to hold a minimum value, and there are minimum loan amounts in place.
What are the different types of lifetime mortgage?
There is more than one option to consider with lifetime mortgages, so make sure you know what your options are. The leading forms of lifetime mortgage are:
- A lump sum
- Flexible lifetime mortgage
- Enhanced lifetime mortgages
With a lump sum, you receive all the money at once, while the interest payable is “rolled up” over the full term. The borrower doesn’t pay anything for the rest of their life, but the interest is compounded annually until the mortgage holder dies or moves into a residential care home. The interest rate is usually fixed from the start with a lump sum mortgage.
With a flexible lifetime mortgage, you can draw a smaller amount of money at the start, and they draw additional amounts as and when required. Interest is only payable on the money which has been withdrawn, which means this style of lifetime mortgage is more affordable.
Enhanced lifetime mortgages are available for mortgage holders with a lower than average life expectancy. These funds can be used to arrange care for later life.
With many homeowners looking to draw on the value of their home, this style of mortgage can bring a range of benefits. Some people wish to support their loved ones before they pass away, and this style of re-mortgage can help them do so. There is also the fact that many people want to see out their golden years in great style and comfort, and this option helps them with the process.
With an ageing population in Great Britain, the mortgage market is evolving to meet the needs of buyers and homeowners. Xpress Mortgages has a team of mortgage experts who are happy to help, so please get in touch.