What is Later Life Lending?
Later life lending refers to a range of financial products tailored for individuals in their later years, typically aged 55 and over. These options, such as equity release and retirement interest-only mortgages, are often designed to offer retirees options to boost their finances during retirement.
At Bower Home Finance, we specialise in helping people aged 55+ explore a range of later life lending solutions. With over 18 years of experience in the sector, our team of dedicated specialists is based throughout the UK and ready to provide expert, personalised advice to help you find the option that best fits your needs.
Later Life Lending
Later life lending products can help you to make the most of your retirement and come in a range of mortgage products to suit your plans for the future such as
Retirement Interest Only Mortgages (RIO)
Retirement interest only mortgages were designed to accommodate older borrowers over the age of 55 who could struggle to get a mainstream mortgage due to age limits.
This type of mortgage allows homeowners to borrow against their property by only paying back the monthly interest and not the capital of the loan itself. This means that the amount owed doesn’t increase over time and because you are paying off the interest, often meaning the payments are lower than a standard mortgage.
The terms of these loans usually mean that there is no fixed end date and as long as the monthly payments are made then you can remain in the home, but some include a fixed term that requires the loan to be repaid when you reach a certain age, so always check the terms of any proposed plans carefully.
The remaining capital on the mortgage will have to be repaid from the proceeds of the sale of the property once you move into long term care or pass away. This means that any inheritance you plan to leave will be affected so it is important to consider your decision carefully.
Types of Equity Release plans
Equity release allows homeowners over the age of 55 to access tax-free cash tied up in their homes without needing to move out or sell their home. There are two main types of equity release: lifetime mortgages and home reversion plans.
Lifetime Mortgage
Learn More Learn More about lifetime mortgages- A lifetime mortgage allows you to release some of the value in your home without moving while remaining the property owner.
- The money can be taken as a tax-free lump sum or through a drawdown facility and used for things such as clearing debts, home improvements, or gifting to family.
- Gifting equity release funds to family may have tax implications, so it is important to speak with a qualified equity release adviser.
- The loan, plus any interest, is repaid when your home is sold after you pass away or move into long-term care.
- You can choose whether to pay the interest monthly or allow it to roll up and be repaid from the property sale.
- A lifetime mortgage can reduce the value of your estate and may affect any inheritance you wish to leave, so this should be discussed with your adviser.
Home Reversion Plan
Learn More Learn More about Home Reversion Plans- This type of plan is less common and involves selling a share of your property in exchange for a tax-free lump sum or regular income.
- You can continue to live in your home rent-free while remaining responsible for maintaining the property.
- No interest is charged, and the arrangement is secured against your property.
- When you move into full-time care or pass away, the property is sold and the proceeds are shared according to the remaining ownership split.
- Any increase in the property’s value is reflected in the final sale, benefiting those who inherit the money
Eligibility and Application
Each later life lending option will come with its own eligibility criteria and application process. It’s important to seek out professional support and guidance when exploring your later life lending options.
During your application, you’ll need to provide detailed information about your property’s value, your income, and your expenses. If you have an existing mortgage or other debts, these will also need to be disclosed. The adviser will help you navigate the application process, ensuring you understand the terms and conditions of the loan and how it fits into your overall financial plan.
Could Later Life Lending Be Right for You?
Borrowing in later life can provide a wide range of benefits but at the same time it can also impact any potential inheritance you plan to leave as well as affecting things such as state benefits.
If, however, you are looking for a way to access cash that allows you to fully enjoy your retirement, without the stress or burden of worrying about money then later life lending mortgages or equity release could be the ideal financial solution.
Eligibility criteria can vary between equity release and later life mortgage providers but in general they require that applicants are:
Over 55 years old
Aged over 55, or in some cases aged 60+ for Home Reversion Plans
Main residency
The mortgage is for a property which is your main residence.
Live in the UK
The home you are living in or buying is in the UK.
Retirement Mortgage
Able to pass affordability checks for Retirement Interest Only Mortgages
Home ownership
For equity release the home you own must be worth over £70,000.
RIO Mortgage
For RIO mortgages the minimum loan amount is £10,000 which means your property must be valued at £100,000 or more.
Benefits and Considerations
Later life lending options can offer several compelling benefits, they enable you to release equity from your home, providing you with the funds to achieve your retirement goals, whether that’s traveling, renovating your home, or simply enjoying a more comfortable lifestyle. Additionally, these mortgages can help reduce your monthly payments compared to traditional mortgages, as you may only need to cover the interest or nothing at all.
However, it’s crucial to consider the potential drawbacks. For instance, taking out a lifetime mortgage can affect your eligibility for means-tested benefits. If you choose not to make monthly interest payments, the debt can accumulate over time, reducing the amount of inheritance you can leave behind. Early repayment charges are another factor to be aware of, as they can apply if you decide to pay off the loan early.
Lastly, it’s important to remember that your home may be repossessed if you fail to keep up with any contracted payments. Therefore, weighing these benefits and considerations carefully and seeking professional advice is essential to determine if a life mortgage is suitable for your individual circumstances.
Discover your later life lending options
At Bower Home Finance, we’re here to make the process easier. Start by using our free online equity release calculator to find out how much equity you could release from your home.
For personalised advice, speak with one of our expert advisers. We’ll explain your options clearly, including how later life lending could affect your finances, benefits, and inheritance plans, so you can make a confident, informed decision.
Not sure which option is right for you? Contact our friendly team today, we’re here to help you find the right solution for your needs.
Our Customer Reviews
IMPORTANT TO KNOW
At Bower Home Finance, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.
Bower Home Finance provides independent, impartial whole of market equity release advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,695 be payable.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding. If you are considering equity release, we strongly recommend that you read our Equity Release page carefully and talk to one of our specialists before deciding if you wish to proceed.
To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or use our live chat on our website.
Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.