In the recent years, lifetime mortgages have gained a lot of attention and popularity amongst the 50 – 55+ generation as a way for them to attain financial freedom and get out of debt. Now the question is, what is it exactly that has made lifetime mortgages so popular? The answer lies in the plan’s many advantages, which we will discuss next.
You Get to Pay Off Your Previous Debts
Previous mortgage loans or any other loans on the house will be paid off in full first, freeing up the homeowner’s monthly income. Of course, being an equity loan, one can choose to pay off the loan amount from the lifetime mortgage with interest, but nobody really has to, unless they plan on including the house in their will.
Nobody Takes Your Home Away
Unlike other house mortgage schemes where the bank can take away the borrower’s home, no such clause exists in a lifetime mortgage. The house still belongs to the original owner legally and practically, for as long as they live.
It’s Almost Like Selling a House without Losing Possession
Consider the fact that the owner of the house gets a lump sum amount of money, in accordance with the current and future value of the property, but still gets to own the property nonetheless. Anyone can find out the exact release amount, the probable interest rates, and even an estimated value of the house in near-future by visiting www.responsibleequityrelease.co.uk and putting in a few basic details there. This is practically and legally what happens when someone opts for a lifetime mortgage. The house will get passed on to the lending company after the original owner passes away or moves to a care home, provided the mortgage amount plus interest is not paid back in time, but by then, it wouldn’t really matter to the owner anymore.
It Makes Inheritance Less Complex and Immediate
It is advisable to sit down with the family and have a sincere chat before opting for a lifetime mortgage. If the house owner’s heirs stand to gain more by getting access to the money right now than inheriting the house later, this particular form of equity release is a great option for everyone.
Lifetime Mortgages are a Perfect Choice for People with Well-Established Children
If the house owner has children who are well-established and do not need the money from the house, or they don’t have any plans to live in the house in their later lives either, a lifetime mortgage is the perfect way for him/her to lead a better life with financial independence, without having to rely on anyone else for money.
Unlike selling the house or even inheriting property, lifetime mortgage lump sums are tax-free! This makes a huge difference, especially when the lump sum amount in question is particularly big.
As should be evident by now, lifetime mortgages are popular because they allow the retired generation to pay off debts, live more comfortably, travel around the world, and finally have a carefree lifestyle, without losing their home in the process.