A Retirement Mortgage Over 55, is an option for those in this age bracket to get a Mortgage either to buy a new Property or to release Equity from an existing Property.
So if you are 55 or over how does this work and is it the right Mortgage for you?
Retirement Interest Only Mortgage.
Today I am going to focus on the over 60’s Retirement Interest Only Mortgage offering from Scottish Building Society. The Scottish Building Society have been around since 1848 and unlike many of their fellow Scottish Building societies survived the credit crunch.
How Much Can You Borrow with the Over 55’s Mortgage?
You are allowed to borrow up to 50% of your Property value. The actual figure you can borrow will be determined by your current income. The lender will take into account State Pension and any Private pensions you may have to work out maximum amount you can borrow.
The lender will also take into account any committed outgoings that will continue, such as loans or credit cards.
Is there Any End Date to My Mortgage?
No,this is classed as a Lifetime Mortgage. The Mortgage will normally end when one of of two things happen. You die and the property is sold to repay the outstanding Mortgage or if you have to go into Long Term Care.
Can I Pay Capital to The Mortgage?
The Lender will allow you to pay up to 10% of the outstanding balance in any 12 month period. So if you wish to reduce the Mortgage balance outstanding, you can, as long as it is no more than 10% of the balance( in the 12 month period)
Please note,there is no requirement to pay anything other than the interest only payments each month.
What Happens If I Want to Move or Sell Up?
The lender will allow you to transfer or port your Mortgage to a new Property, if you want to move. However you still need to match the lenders criteria for an new Property. If any new Property is valued lower than existing property, you may incur a partial early repayment charge. Check with us and we can clarify what if any charges are due or if you are likely to meet the lenders criteria.
If you decide to sell up and not transfer the existing Retirement Mortgage to a new Property, you may incur early repayment charges if you are, for example still within a fixed rate deal that has not expired. If you sell after any fixed or promotional rate has ended, then in most cases there will be no early repayment charge.
What Can I Use The Retirement Interest Only Mortgage For?
You can use it to buy a new property or to release Equity tied up in your home. The money can be used for whatever you wish, such as Repay an existing Mortgage,Holiday of a Lifetime, a new Car, Home Improvements or simply to give you some cash to spend as you wish.
Why is this Different from a Equity Release Mortgage?
In most cases traditional Equity Release Mortgages will allow you to roll up the Interest payments each month. So you do not have to make any monthly payments at all. While this may sound attractive, you need to consider that the interest rolling up each month will result in the Mortgage amount increasing each month
This could result in less Equity in your Property and may mean there is less to leave to your Family. With the Retirement Interest Only Mortgage, as long as you maintain the monthly interest only payment each month, the Mortgage outstanding will not increase.
It is important therefore to get advice on which type of Lifetime Mortgage is right for you. At Mortgage Advisor Glasgow, we can offer you Professional advice on a range of Lifetime Mortgages and will take into account your full circumstances and requirements before advising you on the right option, including other ways to raise cash.
Will Taking Out A Retirement Interest Only Mortgage Affect My Benefits?
Releasing a lump sum from your property may impact on your entitlement to certain benefits, if you currently receive benefits. It is always best to check with either The Dept of Works and Pensions or your local Citizen Advice Bureau, who can talk through your entitlements etc in more detail.
You should also check your tax position prior to releasing cash sums from your Property. Either speak to your Accountant or HMRC direct.
I Want to Know More About my Options?
If you are interested in discussing your options in relation to any type pf Lifetime Mortgage, including a Retirement Interest Only Mortgage, then please call us on the number above or complete the short “Call Me Back” form to the right of this page.
One of our qualified Lifetime Mortgage Advisers, will be happy to help you and answer any questions you may have or to arrange a consultation to discuss your needs.