How do lifetime mortgages and later-life mortgages in Earls Court work?
Equity release is a way to release equity from your Earls Court or West Brompton property whilst still living there. Available to property owners over the age of 55, whose properties are worth £70,000 or more, the money is then yours to use as you wish. It is tax-free and unlike residential mortgages, you do not need to make repayments. Even if you have not paid off your mortgage yet, you could still be eligible for equity release, but you must use the money to first pay off any outstanding mortgage.
There are broadly two categories for equity release: Lifetime mortgages and home reversion schemes. A lifetime mortgage is the most popular choice and allows you to release a lump sum of tax-free cash from the value of your home. You will continue to be the owner of your house and live there until you pass away or move out into long-term residential care. If you take out a lifetime mortgage as a couple, it is when the last remaining homeowner dies or moves out. At this point the loan, plus interest, is paid back from the proceeds of the sale of the property.
Any lifetime mortgage will reduce the value of your estate. However, there are features available with some products that allow you to pay off some or all of the interest to stop it rolling up, or to ringfence some inheritance for your family.
With lifetime mortgages, interest rates are fixed for life. You can also move or downsize subject to the new property meeting certain criteria.