Irregular weather patterns have been a feature of British life for centuries. Given our isolated position as a tiny island set in the North Atlantic, it *tends* to be hot during the summer and cold during the winter, though neither presumption is consistently accurate.
Nevertheless, initial signs suggest that the winter of 2023-24 will adhere to the long term, predictable norm. The evidence provided by early morning December mists and frosts are in keeping with seasonal expectations and already it seems reasonable to assume that we can expect a prolonged, cheerless period of cold weather. And as winter bites deeper over the next few months, the central heating will be on full (all day), while preparing to go out will take an extra ten minutes as we wrap ourselves in scarves, hats, gloves and don warm, sturdy footwear.
Britain’s yo-yo weather, which manages to combine unpredictable summers with often bitter winters has long acted as a persuasive incentive for many people to bid au revoir and escape to sunnier climes, either on a permanent or semi-permanent basis. Those of us left behind look on a little ruefully, while continuing to harbour a quiet admiration for the departing family’s willingness to take the plunge, a sense that becomes more acute each time one of their incoming emails remind us that the weather in the Mediterranean or the Gulf of Mexico is significantly better than Blighty.
Owning a place abroad was once a dream which required a chunky Lottery or Premium Bond win if it were to become a reality. Nowadays, however, an increasing number of people no longer need to leave matters to chance; instead, they take out a lifetime mortgage, the country’s most popular method of releasing equity from your home.
If you’ve read about equity release – and it’s been difficult to avoid the product’s increasing popularity among the over-55s – the probability is you’ve been told lots about tax-free cash, refurbishing your home, or even buying a place overseas with the proceeds, but there isn’t much information regarding lifetime mortgages. So what, exactly, is a lifetime mortgage?
‘Lifetime mortgage’ is simply the name given to a loan which allows you to unlock a percentage of your property wealth, tax-free, while retaining full ownership of your home.
There are hundreds of different variants of lifetime mortgages, each suitable for different groups, from assistance with purchasing a new main residence to gifting down to loved ones to help them get onto the property ladder – the list of uses is endless.
Lifetime mortgages are available to the over-55s, and are unique because once the funds are received by the homeowner, there is no contractual obligation to make monthly repayments. However, for those concerned over how much inheritance they leave, rest assured that with the flexibility of today’s modern plans, you can now make optional voluntary payments to help control the future balance.
As you would expect, this particular characteristic adds appreciably to the mortgage’s appeal. However, should you be considering equity release, it’s important that your lifetime mortgage is taken out with an Equity Release Council (ERC) approved lender. Why? Because mortgages provided by these lenders contain a hugely important feature: a no-negative-equity guarantee.
What does this mean? In a nutshell, it means you will never owe more than the value of your home and cannot, therefore, lumber your heirs with a lifetime mortgage debt.
“Once people are told of this important safeguard, it helps puts their mind at rest,” says Mark Gregory, chief executive of Equity Release Supermarket, the UK’s largest independent equity release firm.
“We only deal with lenders who are members of the Equity Release Council because it means we can assure people that their heirs will never personally be left with a lifetime mortgage debt,” adds Mr Gregory.
The peace of mind that comes built-in to an ERC-approved lifetime mortgage has encouraged thousands of folks to buy their sun-soaked holiday bolthole.
Mr Gregory tells of how one couple, who identified their “dream apartment” while on holiday in Portugal, were initially a little unsure about equity release. Upon returning home, they voiced their concerns when meeting with an equity release adviser who explained how the process worked. The adviser described the full range of plans on offer and produced a personalised illustration which took account of the couple’s current financial situation, explaining how it might change once the equity sum they required had been released from their home.
Suitably assured, the pair found they were able to buy their Algarve apartment at a sizable discount after noting the Equity Release Council’s protections with equity release - which is occasionally overlooked. Once the lifetime mortgage formalities were completed and the tax-free funds transferred to their bank account, they were effectively cash buyers, a position they put to good use when negotiating the purchase of their Portuguese bolthole.
“The wide range of lifetime mortgage plans currently on the market invariably means there is a suitable solution for most homeowners,” concludes Mr Gregory. Good news for those of us preparing to wrap up warm as winter closes in and thoughts turn to sunnier climes.