19th October 2015
I have just arranged a Lifetime Mortgage through Aviva for a client who was about to lose their home due to the fact that their interest-only term had expired. Imagine receiving a letter like this from your mortgage company!
Dear Mr. and Mrs…
Your mortgage account has not been conducted as required by the Order made by the Court. Therefore, it is important that you contact us as soon as possible. If we do not hear from you within the next 7 days, we may apply for an order allowing possession of your property. If we take this step it will be done without further recourse to you….
You should contact your Local Authority to establish if you are eligible for re-housing….
A Lifetime Mortgage is a mortgage just like any other in that it is just a loan secured against your property, but the key difference is how they are designed. Unlike conventional mortgages, the majority of Lifetime Mortgages do not require an affordability assessment (the main problem in securing a conventional mortgage) and a poor credit history need not be a barrier either.
This is because a Lifetime Mortgage is designed as a roll-up mortgage, which does not require any mandatory payments to be made, and therefore the affordability of any payments is irrelevant and missed payments cannot cause repossession. Instead, the interest adds on to the amount borrowed.
It gets better! If you are looking to pay some or all of the interest, some of the plans permit voluntary payments up to a pre-determined percentage of the amount you have borrowed each year. This gives you maximum flexibility on repayments to suit your income and expenditure requirements.
As you would expect, it’s not all good news! The lenders do restrict the amount they are able to lend based on your age. Also, if the annual interest isn’t paid off each year, any interest being added to the outstanding mortgage balance will accumulate compound interest, although you are protected with a ‘No Negative Equity Guarantee,’ so your mortgage will never exceed your property value.
If you have any questions about the subject matter of this blog, or would like more information on any equity release related point, please do not hesitate to contact me in any of ways highlighted on this website.
Equity release is the answer to so many financial questions. If you would like to know more about it, and see if it could be the right move for you, please book an appointment or request a call-back
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