Pros and Cons of Lifetime Mortgages

The best option these days to unlock the value of your home involves taking out a lifetime mortgage plan. You can borrow money against the value of your home in the form of mortgage. This is normally in the form of one lump sum, a regular income or both. It is highly recommended that you seek Independent Legal Advice before entering into any equity release arrangement.

Advantages

There are few schemes for less than 60 aged peoples, but most of them offering products to people aged 60 onwards.
Your home ownership will be still there and all price hike benefits will be applicable.
You know how much money you will receive from the scheme at the outset.
Possibility of leaving some equity to your heirs, depending on the size and length of your loan.
Regulated by the Financial Services Authority.

Disadvantages

If you are not disciplined in expenses then your overall debt will grow over time, although this can be limited by only releasing money you need when you need it.
The entire equity in your property may be exhausted, leaving nothing for your family.
As you do not repay anything until the end of the loan, interest is added to the amount owed. You will therefore start to pay interest on this as well. As a result the total amount you owe will grow more quickly than it would with a loan where you are paying off interest during the life of the loan
If you choose to repay the loan early, early repayment charges may apply.
Your tax position and eligibility for means tested benefits may be affected, as might your options for moving or selling your home in the future.

ArticleSource: ArticlesAlley.com

Additional articles about Equity Release Schemes

About the author

Please Rate This Article

Number of ratings: 0
Rating: 0

Articles Area

Guidelines

Pros and Cons of Lifetime Mortgages