Your guide to lifetime mortgages

Transcription

1 Your guide to lifetime mortgages

2 What is a lifetime mortgage? 1 What difference could a lifetime mortgage make to you? 4 What is a lifetime mortgage? A way of releasing money from your home without having to move. Frequently asked questions 5 Discovering a lifetime mortgage 8 Do you qualify? 10 Why is specialist advice so important? 11 Six straightforward steps 12 It s a loan that s secured against your home to give you a tax-free cash sum or smaller amounts that you can take as and when you need it. You won t have to make monthly payments. Instead the interest is added to the amount you owe each month. This means we charge interest on the loan plus any interest already added. The amount you owe will go up quickly over time, reducing the equity left in your home. It could also affect any entitlement to State Benefits. The lifetime mortgage is usually repaid from the sale of your home when the last surviving borrower dies or goes into long-term care. If you decide to repay the loan before this, you may need to pay an early repayment charge. 1

3 Unlock the value of your home A tax-free cash sum could give your retirement income a boost. With a lifetime mortgage, you could use the money locked up in your home to make your retirement more comfortable. If it s right for you, it could be a very positive step. It s a big decision, and there are many factors to consider. That s why you can only get a lifetime mortgage through a specialist lifetime mortgage adviser. 2 3

4 What difference could a lifetime mortgage make? Family You could give family members their inheritance earlier, which could help with the deposit on their first home, for example. Doing this would reduce the value of any future inheritance. If you give the money away, the recipient may have to pay inheritance tax in the future. Debt You could relieve the pressure of monthly repayments and pay off any outstanding debts, although it s important to think carefully about securing a debt against your home. A holiday The holiday of a lifetime for you, or for the whole family. Income It could supplement your pension income and improve your general standard of living. Improvements Many people use a lifetime mortgage to improve their home or make it more manageable so they can stay in it for longer. Retirement Day to day, you could enjoy a better quality of retirement. Remember A lifetime mortgage could make a big difference to you and your family, but there are important factors to consider. You won t have to make monthly payments. Instead the interest is added to the amount you owe each month. This means we charge interest on the loan plus any interest already added. The amount you owe will go up quickly over time, reducing the equity left in your home. You should consider using savings and investments before taking a lifetime mortgage and look into other options to borrow money that may be more cost effective. Our most frequently asked questions Will I still own my home? Yes. With our Lifetime Mortgage, the property remains in your name and the loan is secured against your home. Unless you choose to repay it early, a lifetime mortgage is usually repaid from the sale of your home when the last surviving borrower dies or goes into longterm care. You may opt to repay the loan early, over and above our Optional Partial Repayment feature. However, this might result in an early repayment charge, which could be substantial. Do I need professional advice to take out a lifetime mortgage? Yes. You can only get a lifetime mortgage through a specialist lifetime mortgage adviser. Your adviser will check that you re eligible, and help you review your options. You can talk to your own specialist adviser or you may prefer to talk to The Retirement Lending Advisers (TRLA). Who are TRLA? TRLA are specialist regulated lifetime mortgage advisers. They re not part of Legal & General, they re a separate company. You can only get a lifetime mortgage through an adviser. TRLA, who can only advise on our Lifetime Mortgage products, won t charge you an advice fee. For our customers who were charged an advice fee by an independent financial adviser, the majority paid 1,034 or more. This fee could have been saved if they had used TRLA to advise them on their Legal & General Lifetime Mortgage. Savings are based on advice fees paid by Legal & General customers between January and June Independent financial advisers can give advice on all lifetime mortgages available in the market. Advice fees vary and any actual savings will depend on your individual circumstances. Will I have to make monthly repayments? No. The lifetime mortgage is usually only repaid from the sale of your home when the last surviving borrower dies or goes into long-term care. With our Lifetime Mortgages you can pay part of the mortgage off early with Optional Partial Repayments (OPR), subject to our terms and conditions being met. Please see Can I repay my lifetime mortgage early? for more information. 4 5

5 Our most frequently asked questions (continued) What fees will I have to pay? Initial costs vary. For more information please ask your adviser for the latest copy of our Tariff of Charges. You may have to pay an advice fee. If you get advice from TRLA, they won t charge you an advice fee. Will a lifetime mortgage affect any inheritance? Yes. You can access the equity now to use as you wish, but this means that the value of any inheritance you leave after your death will reduce. Our Lifetime Mortgages offer Inheritance Protection which can help you secure a proportion of the net sale proceeds of your home for the beneficiaries of your estate when you die. If you take the inheritance protection option it will reduce the amount you can borrow. Could you make me leave my home in the future? No, you stay in your home until you die or go into long-term care, as long as you meet the terms and conditions. Your adviser will explain these to you. If you don t comply, you could be forced to sell your property and lose the right to inheritance protection, if you chose it. Can I repay my lifetime mortgage early? It s usually only repaid from the sale of your home when the last surviving borrower dies or goes into long-term care. However, you can make Optional Partial Repayments (OPR) if terms and conditions are met. If you decide to repay the loan early outside of OPR terms, you may need to pay an early repayment charge which could be substantial. An early repayment charge will not apply when the loan is repaid after the last borrower reaches age 88, as long as this is 10 years or more after the loan was taken out. Will my State Benefits be affected? They could be. Everyone s situation is different, which is why we encourage you to look at the alternatives too. Your adviser can help you understand how any benefits you are receiving may be affected. Is a lifetime mortgage right for me? It s important that you consider using any savings or investments you have before you think about taking out a lifetime mortgage. There may be other options to borrow money which may be more cost effective and won t secure a loan against your home. It s an important decision which is why you can only get a lifetime mortgage through a specialist adviser. Will I pay interest? Yes. Interest is added to the amount you owe each month. This means we charge interest on the loan plus any interest already added. The amount you owe will go up quickly over time, reducing the equity left in your home. It will usually only need to be repaid from the sale of your home when the last surviving borrower dies or goes into longterm care. If you decide to repay the loan before, you may need to pay an early repayment charge. Will this lifetime mortgage affect my tax position? The money you receive is tax free. Depending on what you do with the money, tax may become payable. Your adviser will help you find out how it may affect your tax position. How long does it take to get the money? It usually takes six to eight weeks, and your adviser will keep you updated. What is the No Negative Equity Guarantee? The guarantee means that when your property is sold after your death or when you go into long-term care, you or your beneficiaries will never have to pay back more than the amount your property is sold for, even if your home goes down in value. This is provided it is sold for the best price reasonably obtainable and you have met the terms and conditions. For an overview of how a lifetime mortgage works and more about Legal & General visit 6 7

6 Discovering a lifetime mortgage with Gill and Jim 8 Gill and Jim have been married for 52 years, own their own home, and have lived there for over 50 years. By releasing some of the equity in their family home through a lifetime mortgage, they knew they could help their granddaughter put her foot on the property ladder. A chance to help their family Gill and Jim wanted to use the value of their home to help their family, because for them that s what life is all about. They discussed it with both their daughter and their granddaughter, and decided they were all happy about Gill and Jim taking out a lifetime mortgage. They wanted their granddaughter to have the same opportunities in life that they d had like buying her first home. The reason that we wanted to get the lifetime mortgage was to help our granddaughter put [her] foot on the ladder. [She] was looking for a house, and no way could [she] save the deposit we wanted [her] to have the same chance we had. They spoke to a specialist lifetime mortgage adviser who helped them consider all of their options, and explained that taking a lifetime mortgage would reduce the value of any future inheritance. Their adviser also explained how the total amount owed would grow quickly, because interest is charged on the total loan amount on top of any interest already charged. They talked things through with their daughter first. She was all for it. It meant that their granddaughter has had the money when she really needed it. If you give the money away, the recipient may have to pay inheritance tax in the future. Find out more For more examples of real life customers please visit

7 Do you qualify? Why is specialist advice so important? Are you aged 55 or over? Are you living in (or buying) your own home with a small or no mortgage? Do you want to borrow a minimum of 10,000? Is your property made of standard construction, in a good state of repair, free of any tenancy restrictions and in England, mainland Scotland or Wales? Is your property valued 100,000 or over ( 150,000 for ex-council, ex-housing association or ex-ministry of Defence properties)? We re sorry you don t qualify Great news! You may be eligible for our Lifetime Mortgage. It s time to get specialist advice. There s a lot to think about when considering a lifetime mortgage. From whether you are eligible, to the other options you may have and the impact it could have, for example, any State Benefits you are entitled to. Expert advice You can only take a lifetime mortgage out through a specialist lifetime mortgage adviser. They re experts who have passed detailed, professional exams about lifetime mortgages. This means they can look at your situation and work out if a lifetime mortgage is right for you. They ll also help you compare different options, complete an application, and because you will need independent legal advice, help you find a solicitor too. Where can you get specialist advice? Financial adviser if you have one already, talk to them and see if they can advise you about lifetime mortgages. The Retirement Lending Advisers (TRLA) we can put you in touch with a separate company who only advise on our Lifetime Mortgages. They won t charge you an advice fee. Equity Release Council visit council.com where you can search for qualified advisers in your area

8 Six straightforward steps to our Lifetime Mortgage 1. Use our calculator 2. Talk to your family 3. Prepare for your meeting 4. Speak to a specialist lifetime mortgage adviser 5. Start your application 6. Enjoy your retirement It only takes a minute or so and you ll find out instantly how much equity you could release from your home. Try it at finance.com/ltm today. You don t need precise figures. A rough idea will do as long as your home s worth over 100,000 ( 150,000 for ex-council, ex-housing association or ex-ministry of Defence properties). Do you qualify? It s always your decision but we encourage you to talk to your family about your plans and explain why you re interested in finding out more about our Lifetime Mortgage. You could even include them in the meeting with your adviser. To qualify, you have to be over 55 and own a property in England, Wales or mainland Scotland valued at least 100,000 (or 150,000 for ex-council, ex-housing association or ex-ministry of Defence properties). When you make an appointment with an adviser, you ll need the following information: About you: the adviser needs to see proof of your age, identity and address. Your income: make a note of things like your salary, pension, State Benefits, bank and building society accounts, and any investments. Your outgoings: list all of your regular outgoings like bills and food, and less regular expenses like birthdays or trips out. Your property: write down a few details and what you think it s worth. They can help you understand all the benefits and risks involved. Take time to go through the personal Key Facts Illustration they give you. Feel free to take notes and ask questions as you go. Then explore all of your options in depth and think about the plans you d like to make for leaving an inheritance. Now s also a good time to consider making a will if you don t have one already. If you don t have an adviser, you could use The Retirement Lending Advisers (TRLA). They re not part of Legal & General, they re a separate company of specialists that only advise on our Lifetime Mortgages. If you use TRLA, they won t charge you an advice fee. Once you re ready, you can get underway with the application. It won t take long and your specialist lifetime mortgage adviser will help you. You ll need to: Confirm if you d like us to arrange Inheritance Protection, and if so, the percentage of your property s value to secure for your estate. This will reduce the total amount you are able to borrow. Choose whether you d like a one-off lump sum or access to smaller amounts as and when you need them. Talk through the final application with your adviser and confirm any changes. Wait for us to arrange for your property to be valued by a specialist surveyor. If approved, we ll send you an offer along with a copy for your solicitor. Your solicitor will go through the legal aspects, and as soon as the documents come back to us, we ll release the money. This usually takes just six to eight weeks. Then you can start spending your money. Whether you ve planned home improvements, want to take the holiday of a lifetime, or are simply looking forward to a more comfortable retirement, the choice is yours

9 Find out how much you could release with a Legal & General Lifetime Mortgage Visit For more information, including: examples of real life customers, short videos that show what the product is and how it works, and our easy to use calculator, to see how much money you could release from your home. Speak to The Retirement Lending Advisers: The Retirement Lending Advisers (TRLA) are specialist regulated lifetime mortgage advisers. They re not part of Legal & General, they re a separate company. You can only get a lifetime mortgage through an adviser. TRLA, who can only advise on our Lifetime Mortgage products, won t charge you an advice fee. Monday to Friday, 9am to 5.30pm. TRLA s call centre is UK based. They may record and monitor calls. Q / / Oct 2017 Legal & General Home Finance Limited is a wholly owned subsidiary of Legal & General Group plc. Registered in England and Wales number Registered office: One Coleman Street, London EC2R 5AA. Legal & General Home Finance Limited is authorised and regulated by the Financial Conduct Authority.