Planning for your future now

For many people, reaching retirement age is a time to relax, enjoy the fruits of your working life and do what you want – travel, spend time with the family or enjoy a few luxury purchases.  But sometimes things don’t go as planned, especially with the problems with pensions in recent years.  This has meant a more difficult prospect for retirement for many but if you are a homeowner, then there are options available to you.  Two examples are equity release and lifetime mortgages – but what are they and how do they work?

Lifetime mortgages

A lifetime mortgage is a little different to a normal mortgage.  Normally, you would take a mortgage to buy a house over a set period of time, often 25 years or more.  You would make a set payment every month or a variable one depending on the terms and at the end of the period, the property would be yours.

A lifetime mortgage almost works in reverse.  Rather than having to sell your home to get the cash held in it, you can take one of these mortgages and have the cash immediately.  The balance on the mortgage would only become due once you died or were moved to long term care and would be cleared by the sale of the home.

Equity release mortgages

Equity release mortgages work in a similar way – you borrow the money against your property and the balance is paid back when you either die or go into long-term care.  You have a guaranteed right to live in the property for as long as you need to so no-one can force you from your home.  When you use a company for this kind of mortgage, always ensure that they have a negative equity guarantee – they don’t lend more than your home is worth so there is never a debt to be cleared after the property is sold.

Why might you consider it?

So who might a mortgage of this kind be suitable for and why might they want to consider it?  Examples are varied and can include clearing debts from other sources or even paying off an interest-only mortgage to relieve stress and financial pressure.  It may be in order to buy a new home or to free money to help family.

Or you simply might want to release cash from your home and unlock the money your property has stored in it to improve your quality of life.  If you want to travel, buy dream purchases or spend money on family, then these products may work for you.

Finding the right product

Understandably, anyone taking a mortgage in later life is a little cautious about the stories that circulate about people being moved out of their homes just to sell them and clear debt.  To ensure you are using a reputable company, always work with an over 55’s specialist who has experience in this type of product and will guarantee to get you the best advice and plenty of information to make a decision.