Other ways to reduce the cost of your lifetime mortgage However, if you are unable to make repayments towards your lifetime mortgage, there are other options that could help to manage the size of your loan. Consider a drawdown plan
to secure a lower rate. By paying a lower interest rate, you can reduce your total cost of borrowing. However, a reduction in interest rates in the future isn’t guaranteed. It’s also important to remember that an early repayment charge (ERC) may be payable if you choose to remortgage your equity release plan. However, all our plans come with fixed ERCs, meaning they expire after a certain amount of time. Your Key equity release adviser can explain this in more detail to you.
With a drawdown lifetime mortgage, you only take out the money you need when you need it. This can help reduce your total cost of borrowing, as interest is only charged on the money you release, rather than the full amount available. You can read more about this on page 16. Remortgage to another equity release plan in the future If interest rates reduce in the future, you may have the option to remortgage your current plan
Flexible features for personalised plans Here’s an overview of the flexible features available with our lifetime mortgages, specifically designed to help put you back in control of your later life finances. Lump sum or drawdown
Downsizing protection If, for any reason, you need to move home after five years of taking out a lifetime mortgage, you can pay the loan back early without incurring an early repayment charge if the new property doesn’t meet your plan’s criteria. This is available from day one with an interest reward lifetime mortgage. Early repayment charges All our plans have fixed early repayment charges, so you’ll always know what the charge will be should you wish to repay your loan early.
Choose to release a lump sum of tax-free cash or take out an initial amount and draw down money in stages. With a drawdown, you only ever pay interest on the portion of your facility
that you have withdrawn. Optional repayments
With a lifetime mortgage, there are typically no monthly repayments to make, as the loan, plus roll-up interest, is repaid when the plan comes to an end. However, there are benefits to making repayments if you can afford to do so. Partial capital repayments Make voluntary, ad-hoc repayments up to 10–12% of the initial amount you’ve borrowed each year (without incurring an early repayment charge) and reduce the size of the loan on which interest is charged.
23 Get advice today 0800 294 3171
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