Drawdown lifetime mortgages are the popular choice for those wanting flexibility. Drawdown allows the withdrawal of an initial lump sum, followed by future access to a cash reserve facility for extra funds whenever required. Therefore, drawdown helps limit the compounding effect of interest, thus reducing ‘roll-up’.
Lump Sum equity release schemes are designed to provide a one-off capital amount to spend as you wish. They are usually required for homeowners requiring a maximum equity release lump sum. Each lifetime mortgage has its own specific loan-to-value ratio for calculation maximum release purposes.
Voluntary Repayment equity release schemes are designed to provide flexibility for the homeowner to manage the future balance of their lifetime mortgage plan. Lenders offering voluntary partial repayments set a maximum 15%pa repayment allowance of the original amount borrowed back to the provider.
Interest Only Lifetime Mortgage
An Interest Only Lifetime Mortgage is designed to assist the homeowner manage their equity release scheme by making repayments of part, or all of the interest charged by the lender. This interest payment could be made either monthly, annually or an ad-hoc basis to suit the future inheritance of your beneficiaries.
Retirement Mortgages are making a resurgence with some lenders & providing mortgages for pensioners. Filling the corridor of uncertainty between conventional mortgages and equity release plans, a retirement mortgage can provide lending into retirement on interest only or capital and repayment basis.
Enhanced equity release mortgages are designed around the personal medical history of the applicant. Should poor health persist, underwriters will assess the effect this could have on life expectancy. If proven, lenders can adjust the maximum loan amount based on the state of health, or lower the interest rate.