There are two types of lifetime mortgage, where you borrow money against the value of your home. These are:
Roll-up mortgages
Interest-only mortgages
One of the conditions of getting a lifetime mortgage is that you have to pay off any existing mortgage on your home. Interest rates on lifetime mortgages are usually considerably higher than standard mortgage rates.
Roll-up mortgages
With a roll-up mortgage, you make no repayments and you continue to own and live in your home. Interest is charged on the money you borrow and added to the original loan amount. Each month, you are charged interest on what you have borrowed plus the interest added from previous months. This is called ‘compound interest’. The longer a roll-up mortgage lasts, the more money you will owe.Surat Stock
The table below shows how much a roll-up mortgage would grow after 15, 20 and 25 years.
Amount owed after:
Amount borrowed
15 years
20 years
25 years
€50,000
€122,785
€165,645
€223,467
€100,000
€245,570
€331,291
€446,934Bangalore Investment
€150,000
€368,354
€496,936
€670,401
These figures assume compound interest fixed at 6%
You usually repay the loan from the proceeds when your home is eventually sold – following your death or when you move out. However, there is a risk that when the time comes to sell your house, there may be no money left over after paying back the mortgage. Make sure you get a ‘no negative equity’ guarantee.
Interest-only mortgages
With an interest-only lifetime mortgage, you pay interest on the loan each month at a fixed or variable rate, so the amount you owe will not increase over the term of the mortgage. However you will have to make repayments:
Monthly interest on a €100,000 loan
7.85% variable
8.1% fixed
8.4% fixedNagpur Stock
€654.17
The repayments might seem manageable. However, if you are on a variable interest rate and your rate increases, you may find it more difficult.
Roll-up mortgage: You can usually borrow between 15% and 45% of your home’s value. The older you are, the higher the percentage you can borrow. There will probably be an upper and lower limit on the amount you can borrow and there may be a minimum property value. Depending on the lender, they may allow you to take your loan:Udabur Stock
as a lump sum
in instalments or
a mixture of both.
If you don’t need the total amount all at once, it may be cheaper in the long run to take the money in instalments as you need it. If you are approved for a large amount and take it all at once, you will be charged interest on the whole loan. If you take the money in smaller amounts, you will only be charged interest on the amount you have taken. However, you may be charged a fee for each instalment you take, so you need to take this into account.
Interest-only mortgage: You can usually borrow from €30,000 up to a maximum of 30% of the value of your home. If you are making the repayments yourself, you will have to meet a minimum annual income requirement to qualify for the mortgage. The money will be paid to you as a lump-sum.
when you sell your home or
you move out of your home permanently, for example if you move into long-term care or
you die
Some lifetime mortgages must be repaid within 30 years of you borrowing the money.
You are free to do what you want with the moneySimla Stock. But bear in mind that the interest you are charged is based on the amount you borrow. If you take more than you need and leave it in a low-interest account you could end up paying more in interest on the money you borrowed than you earn in a deposit account. Your debt will also be larger than it needs to be. Also do not take out a lifetime mortgage in order to fund investments.
Yes. You can pay off a lifetime mortgage at any time by:
selling your home and using the money to pay off your loan or
using any other money you have to pay off the loan
You may have to pay an early repayment fee if you have a fixed interest rate.
Make sure your lifetime mortgage gives you a ‘no negative equity’ guarantee. This means that you (or your estate) will never have to pay more than the proceeds of your home when it is sold, even if the amount of your mortgage is more.
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