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These are special mortgages, developed for homeowners who require additional income, a cash lump sum, or to capital raise as a part of Inheritance Tax planning. This involves us working closely with clients' accountants, financial advisers and solicitors, to ensure the most appropriate advice is given in each individual case.
There are basically two types of Lifetime or Equity Release plans:
The first enables the taking of a cash lump sum(s), an income for life, or both if required and at the same time, the ability to remain in the property until the eventual demise of the surviving owner (if married). Until this event, interest charged against the mortgage, is ‘rolled up’ (accrued) and repaid on death from the sale proceeds of the property. The total of accrued interest is determined by how long the loan has been in force. If for example, death occured shortly after taking out the plan, accrued interest would be proportionately less than after five years into the plan. Upon the eventual demise of the second party to the mortgage, the accrued interest, redemption costs and capital repayable, will never exceed the property value at that date.This is ann example of a Lifetime mortgage.
The second type requires the borrower to agree from the outset, to exchange a percentage of their main residence's future value, upon their death, for a lump sum(s) or income from the lender. An example of this would be where a married couple elect to legally exchange 50% of the equity (value) in their home for a lump sum. In this instance, 50% of their home’s eventual sale proceeds, upon the death of the surviving second borrower, will revert to the plan provider, regardless of what has happened to property prices in the ensuing years. This is an axample of a Home Reversion Plan.
TO UNDERSTAND THE FEATURES AND RISKS, PLEASE ASK FOR A PERSONALISED ILLUSTRATION. HOME REVERSION PLANS ARE NOT REGULATED BY THE FSA. YOU SHOULD CHECK THAT YOUR CHOSEN PLAN WILL MEET YOUR NEEDS IF YOU WANT TO MOVE, SELL YOUR HOME OR IF YOU WANT YOUR FAMILY TO INHERIT IT.
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“Thank you very much for arranging my remortgage. It went very smoothly.”
Mrs P H, Edinburgh
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