Payment-term lifetime mortgage A payment-term lifetime mortgage is a type of equity release that could allow you to release more tax-free cash at a lower rate of interest than you would otherwise be able to through a lifetime mortgage. In return, you commit to a period of mandatory payments which lasts until your, or the oldest applicant’s, 66th birthday.
Is a payment-term lifetime mortgage right for me? A payment-term lifetime mortgage is available to customers aged 55-62 at the outset, with a property value of £125,000 or more. It could be the right solution for you if you need access to a tax-free lump sum and you’re able and willing to make mandatory payments, as you’ll need to pass an affordability check to take out a plan. There's no drawdown option with a payment- term lifetime mortgage. Read more about drawdowns on page 16. How much extra cash could I release? The amount of extra tax-free cash you could release depends on how much you need to borrow and your affordability. But by committing to a period of mandatory payments, you could unlock up to 8% more of your home's value, tax-free. In an average UK property, that's worth more than £23,000, which could be the difference in you meeting your later life finance needs, such as repaying your existing mortgage, or not.
After that point, you don't need to make any mandatory payments. And while we always recommend repaying what you can to help manage your total cost of borrowing, even if you choose to make no repayments at all, you'll retain full ownership of your home and can continue to stay in it for as long as you wish. A payment-term lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly. Your home may be repossessed if you do not keep up with mandatory payments.
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