Looking After Each Other

It is an unfortunate fact that eventually we are all likely to reach a point where we will need help either physically or in looking after our other affairs. If you have not already made enquiries about Lasting Powers of Attorney, we certainly advise that you do look into it and inform yourself

about them. A reliable source of information is gov.uk’s “Make, register or end a lasting power of attorney”

Lifetime Mortgage Interest Rates

Most Lifetime Mortgage interest rates are fixed for the term of the mortgage. The rates currently range from about 3.68% upwards with the rate dependant on the percentage of borrowing and other scheme options. The maximum levels of borrowing shown in the previous example commonly come with higher rates of 5.55%. The lower rates are for lower percentage borrowing. While these rates are

much higher than the residential mortgage rates currently available, they are for potentially much longer terms and they are in line with the average mortgage interest rates over the past 10 years or so. There are also some variable rate options starting at 3.5% but these are increased in line with inflation (Consumer Price Index) each year.

Some More Details of the Lifetime Mortgage

Because of the potentially very long term of the mortgage, the maximum amounts that can be borrowed are generally less than you would be able to borrow with the usual residential mortgage. Here are examples of the maximum amount of borrowing possible based on age. (Note: in the case of a couple the age that the lender’s operate on is that of the younger of the two.)

Age      Loan To Value        Maximum borrowing on property worth £300,000

55          25.5%                           £76,500

60          31.0%                           £93,000

65          36.0%                           £108,000

70          41.1%                           £123,300

75          47.0%                           £141,000

80          51.5%                           £154,500

Note: These are examples only but do represent a reasonable estimate of the maximum borrowing possible at the ages shown. In the event that there are serious medical conditions a higher level of borrowing may be possible.

Looking Inside a Lifetime Mortgage

A Lifetime Mortgage is a mortgage like any other mortgage. You borrow money against the security of the property. You remain the owner of the property and benefit from any increases in the property value. You also remain responsible for keeping the property in a good condition. Usually the interest rate is fixed for the term of the mortgage which can be as long as you live or until you go into care.

You can pay off the mortgage at any time, although in the initial years there may well be early

repayment penalties – just as there are with most fixed rates with the usual residential mortgages. With a Lifetime Mortgage you can either choose to repay the interest being charged, or make no payments of interest – letting the interest build up and be repaid by the eventual sale of the property.