Post-Completion - Lifetime Mortgages & Home Reversion Plans

Question 1

Lifetime Mortgages - Advantages:

Answer 1

Interest roll-up = no monthly payments

All of cash or income can be used by the borrower as they wish

No negative equity guarantee available from most providers.

No need to move house to raise additional fianance

Borrower retains ownership of the property

Borrower’s estate benefits if the property increases in value quicker than mortgage

An annuity-linked home income plan fixes both the annuity and interest rate - interest is paid from the annuity and does not roll up.

Question 2

Lifetime Mortgages - Disadvantages:

Answer 2

Interest may roll up quickly

The debt could increase significantly for younger borrowers

Little control of interest with rollup scheme - children’s legacy reduced

Means-tested benefits could be affected by capital from the scheme

Moving house may be rendered impossible due to the rolled up debt

Question 3

Home Reversion Plans - Advantages:

Answer 3

Planholder has no repayments
More cash available than a Lifetime Mortgage
Guaranteed tenancy for life
Part reversion available

You essentially sell the house but are allowed to live in it still.

Question 4

Home Reversion Plans - Disadvantages:

Answer 4

Cash or income provided only represents a % of property value

Benefits such as Income Support or Pension Credit could be affected

Owner loses all rights to increase in the property value

Plan holder could die shortly after starting the scheme

Schemes are inflexible - moving home could be difficult

Any home improvements will not benefit the plan holder