Lifetime Mortgages - FAQs

What is Equity Release?

Equity Release is a popular way of releasing some of the value of your home without the need to move.

Whether you require a little extra cash to supplement your pension income, make home improvements, take dream holidays, or gift money to children, Equity Release lets you convert some of the value of your home into cash.

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What is the SHIP Code?

The Equity Release industry has created an independent organisation known as SHIP (Safe Home Income Plans) dedicated to protecting equity release customers. The formation of SHIP has helped develop a new generation of products that are much simpler to understand and offer more protection. The SHIP code of conduct is as follows:

The members of SHIP agree to provide fair, simple and complete presentation of their plans. The benefits, obligations, variables and limitations must be set out clearly in their literature, including all costs which the applicant has to pay in setting up the scheme, the position on moving, the tax situation and the effect of changes in house values.

The client's legal work will always be performed by the solicitor of his or her choice. In all cases, prior to the completion of the plan the solicitor will be provided with full details of the benefits the client will receive. The solicitor will be required to sign a certificate to the effect that the scheme has been explained to the client.

In addition, all SHIP plans carry a No Negative Equity Guarantee i.e. you'll never owe more than the value of your home.

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How is my Lifetime Mortgage paid off?

The loan will be repaid when your home is sold, usually following your death or your move into long-term care (or in the case of joint borrowers, when the surviving partner dies or moves into long-term care). When repayment is due, the full amount must be repaid and this will be made up of the original loan amount plus the accrued interest and charges that have been added. Any remaining equity in your home, after the loan has been repaid, will belong to you or your estate.

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What happens to my home when I die or move into long-term care with a Lifetime Mortgage?

When you die (or in the case of joint borrowers, on the death of the survivor), your personal representatives must get in touch with the lender. They'll be responsible for selling your property and will typically have 12 months to repay the loan. If you (or the surviving borrower in the case of a joint loan) move into long-term care you also have typically 12 months to repay the loan. The lender will continue to charge interest until the loan is repaid.

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What happens if my circumstances change?

You must advise the lender as this may affect the contract you have with them and may mean that you have to sell your property within six months to repay the loan e.g. if you move in with a relative.

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What happens if I move home with a Lifetime Mortgage?

You can usually transfer your mortgage under the same Terms and Conditions as long as your circumstances and your new property meet the lender requirements and lending criteria at the time.

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