Lifetime Mortgages and Later Life Planning

we make money simple

Preparing for later care

An ageing population in the UK has caused the need for later life care to increase dramatically over the last few decade. The cost of care can be significant, with the average weekly cost of residential care currently £704 in the UK.

Whether you want to make provisions for the future you or have a family member in need of immediate care, our Financial Planners will help you put a strategy in place to fund the costs of care. We will help you assess your current financial position, understand what you are entitled to in terms of support from the government and ultimately how to utilise your assets to fund care costs in the most efficient way.  

Equity Release

An ageing population and increasing home values over the last 30 years have led to an increase in family’s releasing equity from their homes. There can be a host of reasons for the need or desire to release equity from your home, be it funding later life care needs, repaying existing debt, gifting to family or just seeking to improve your quality of life in retirement.

There are a few ways to release equity from the family home and each one has their benefits and draw backs. Our advisers can help establish the right the solution for you

Downsizing

Many find that in later life their family home is too large for their needs and moving to a smaller property can be a fantastic way to improve their quality of life whilst also releasing the funds they need. Whilst there is the cost of moving to consider, downsizing is likely to be the most cost-effective way to release equity in the long run. If you don’t want to leave your property, or need more flexibility, then downsizing may not be for you.

Use of other assets/investments

If you have other assets, it may make more financial sense and save you money to utilise these to meet your funding requirements. Our advisers will help you make sense of them all and establish a financial plan that makes the most of what you already have.
Aged financiers

Lifetime Mortgage

If you are over age 55, another option for releasing equity from your property is a Lifetime Mortgage. A lifetime mortgage allows you to draw tax-free funds from your property. Lifetime mortgages have improved significantly over the last decade, they can give you flexibility on how much you release and whether you repay the interest or not. Lifetime Mortgages tend to have higher rates of interest than standard mortgages and if left to roll up, the interest compounds. This will reduce the value of property left to your family. The lifetime mortgage will be repaid upon death of the move into full time residential care, earlier repayment is possible however it may incur early redemption charges if it is within the first 5 to 10 years of the term. Lots of Lifetime Mortgages now come with downsizing protection, allowing you to move the mortgage to a new property if you downsize without repaying.

Retirement Interest Only-Mortgages

If you are over 55, you can now also utilise a Retirement Interest Only (RIO) Mortgage. The Retirement Interest Only Mortgage is similar to a Lifetime Mortgage in that it allows you to flexibly release equity from your property. As it say’s in the name, you only repay the interest on the loan on an ongoing basis with the capital payable when you sell the property, pass away or move into long term care. Retirement Interest Mortgages can sometimes benefit from lower rates than Lifetime Mortgages, however lenders will require an affordability assessment to ensure that you can afford the monthly interest payments. As such, you will generally need sufficient retirement income.
Releasing Equity can be an excellent way to meet your financial goals, however it is a major financial decision that should not be taken lightly. Making the wrong decision can have a serious long-term impact on your family’s finances. As such, it is vital to seek advice to establish whether it is the right decision for you and to help you ensure that the solution utilised best suits your need’s.
Arrange a Discovery meeting with one of our Equity Release advisers today