Later Life Lending
The bespoke, life-enhancing care available from Hamilton George can be funded via whatever means clients and their families prefer. An increasing number of people are using their property wealth towards this purpose, using specialist borrowing solutions available to homeowners aged 55 and over. Andy Shaw, Head of Later Life Lending at SPF Private Clients, offers some guidance below.
What options might be available?
By far the most common form of later life lending is a lifetime mortgage. Lifetime mortgages provide a sum of money secured against the borrower’s home via first legal charge in the same manner as a conventional mortgage, meaning that the borrower retains full legal ownership of their home. Interest rates are usually fixed for life and the loan is repaid when the borrower (or last borrower for joint applications) dies or leaves the home to move into permanent residential care. Lifetime mortgage loan sizes and interest rates are based on the borrower’s age and the value of the subject property i.e. they are not assessed against income / affordability.
It is essential that all alternatives are considered alongside lifetime mortgages when establishing the most suitable solution, these may include:
- Home Reversion Plans. These schemes allow the homeowner to sell a percentage or all of their property at below market value and live there rent free until they move into care or die. At this point the home is sold and the reversion company gets its share (or all) of the proceeds.
- Retirement Interest Only Mortgages. These products allow homeowners to borrow a lump sum secured against their home, pay monthly interest on the loan and repay the debt when the home is sold. These mortgages are assessed against retirement income and in the case of joint applications, on a ‘sole survivor’ basis.
- Mainstream Residential Mortgages. An increasing number of lenders are willing to offer conventional mortgage terms to older borrowers and advisers should always investigate these options on a borrower’s behalf as well as specialist later life lending products.
Lifetime mortgage protections and flexible features
Future flexibility is often key when establishing the most suitable lifetime mortgage lender and product, as well as ensuring the appropriate protections are in place. Important considerations may include:
- A ‘No Negative Equity Guarantee’ to ensure that you cannot leave debt greater than the value of your property to your beneficiaries.
- The option to pay some or all of the mortgage interest or to choose to make no payments at all and add the interest to the loan.
- Portability – the ability to transfer the mortgage to a new property if you move home in future.
- No penalties for repaying the mortgage at its natural end (i.e. upon death or on moving into permanent residential care), whenever that may be.
- Exemptions from Early Repayment Charges if repaying the mortgage on first death (joint borrowers).
- Enhanced terms for borrowers suffering from certain medical conditions.
- The choice of taking funds as a lump sum or on a drawdown basis.
What next?
If you would like to find out more, please contact SPF Private Clients on 0207 330 8555 or via email at laterlifelending@spf.co.uk, quoting the reference ‘Hamilton George’.
SPF Private Clients offers bespoke mortgage advice with access to the full range of products available to intermediaries and is authorized and regulated by the Financial Conduct Authority. An advice fee is only ever payable on successful completion, the precise amount will be tailored to your circumstances and agreed upfront
Please note that lifetime mortgages may have an impact on your eligibility to claim certain state benefits and grants now or in the future; there may also be tax implications and it is therefore essential that you seek advice from appropriately qualified experts in these areas.
Your home may be at risk if you do not keep to the terms and conditions of any mortgage secured against it.
