Types of plans

Lifetime Mortgage

A lifetime mortgage allows you to release a lump sum of cash from the value of your property. There are no regular monthly repayments to make as the amount that you have released, plus any interest, is repaid from the money made when the property is sold. Generally this is when you die, move into long-term care or permanently leave the property.

Drawdown Lifetime Mortgage

This is similar to the standard lifetime mortgage. However, with the drawdown lifetime mortgage, you can access your money with more flexibility. Rather than just receiving a lump sum, you have the option to release your cash over time, as and when you need it. Because you only pay interest on the cash that you have taken, these plans can often prove to be more cost-effective.

Interest-only lifetime mortgage

This is like a standard lifetime mortgage. However, you can choose to make repayments in full or on an ad-hoc basis to reduce the effect on the value of your estate. Some plans allow you to make repayments that are equal to or less than the amount of interest that is charged. The balance is paid off from the proceeds of your estate once you have died or have moved in to long-term care.

Home reversion plan

A home reversion plan allows you to exchange the ownership or some or all of your property for a lump sum of cash. Along with the right to stay in the property, free of charge, for as long as you live. This is also known as a ‘lifetime lease’. Because you can continue to live in your home, rent-free, for life, you would generally receive an amount for your property that is lower than its market.

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