Roll up Lifetime mortgages are specialist mortgages for people aged 55 or more who want to release some of the equity in their property without having to make monthly repayments. These schemes are designed to enable you to retain full ownership of your property whilst benefitting from cash that is provided to you from a loan that is secured against it. You do not have to make any monthly repayments like a normal mortgage and the loan is repaid when you leave the house to go into care or on death.
The interest element of loan is added each month and rolls-up in a cumulative way until the loan is repaid by the executors of your will or other people who are responsible for looking after your affairs should your home need to be sold.
The maximum amount that can be borrowed under roll up mortgages is a percentage of your home’s value. Other factors such as you age, or the youngest age in joint cases, are also taken into consideration when the provider calculates how much money can be released.
The advantage of a roll-up lifetime mortgage is that you do not have to make any monthly repayments. However, if you can afford to make monthly repayments, you might be able to pay-off the interest element of mortgage and prevent the loan from increasing buy using an interest-only mortgage.
Flexible Lifetime Mortgage Drawdown
One of the most popular forms of Lifetime Mortgage is one that facilitates drawdown. In this respect, it is very similar to pension drawdown because it allows you to set up a maximum facility at the outset which is agreed by you and the provider.
You can then take as much cash as you need at the outset and leave a balance (often called a ‘Reserve’) to take at another date in the future.
Using a drawdown facility means that you can reduce the amount of money on which interest is charged because you will only be liable to interest on the amount of money that you drawdown. You will also benefit from saving on professional fees such as solicitors and valuations whenever you want to release equity in your home.