Lump Sum Mortgage

The Lump Sum Equity Release Plan

There are several options available to homeowners who are interested in releasing equity from their homes. Perhaps the simplest of these is the lump sum lifetime mortgage which is available to homeowners who are over age 55 and want a one-time equity release. A lump sum lifetime mortgage is quite simple and provides a one-time release without any additional obligations attached.

If you are a homeowner, over age 55, who is interested in capitalizing on the equity in your home, and you’d like to do so through a straightforward and simple process, a lump sum lifetime mortgage product might be perfect for you. You simply choose how much equity you’d like to release from your home. Many homeowners who choose this kind of product know ahead of time what they need the cash for and know that they will need very little, or no additional cash in the future, following the release of the lump sum payment.

Once you have decided how much equity you would like to release, you simply take out a secured loan on your property and then receive the lump sum payment, which is tax-free. You will incur an interest rate on the money borrowed. Typically, there are no repayments required on the loan, though some products offer repayments as an option, if that interests you in keeping your balance low. The interest on the loan is then compounded which means that the balance continues to increase over time. That outstanding balance is paid off when the house is sold, which generally takes place when the final homeowner either passes away or moves into permanent long-term care. Because the balance has grown over the lifetime of the loan, you should be prepared to have the repayment make an impact on any inheritance previously planned on for your beneficiaries or loved ones.

A lump sum lifetime mortgage is ideal for the homeowner who wants simplicity in their lifetime mortgage plan. In addition, because the equity release marketplace has continued to integrate plans with increased features, choosing a plan that is simple can mean that you are able to get a more favorable interest rate.

There are factors that determine how much you are able to borrow from your lender. The two most impactful factors are the age of the youngest homeowner and the value of the property. So, the older you are, the more tax-free cash you are able to release from your home. There may be an option for you to borrow more money in the future through additional borrowing if your lender provides this is as a feature. The lender will use a specific calculation to determine if this feature is available to you and if so, for how much.

Because there are a number of providers who offer a simple lump sum lifetime mortgage, it is important to compare them all in one place to determine the best rate and best features available to you.