Your guide to lifetime mortgages

Transcription

1 Your guide to lifetime mortgages 1

2 What is a lifetime mortgage? 1 How you spend the money is up to you 2 We offer two Lifetime Mortgages 3 What difference could a lifetime mortgage make? 4 Discovering a lifetime mortgage 5 Repaying an interest-only mortgage 6 Our most frequently asked questions 7 What is a lifetime mortgage? More and more people are choosing to take a lifetime mortgage in later life. It s a loan that s secured against your home to give you a tax-free sum, that you can take all at once, or in smaller amounts when you need them, up to the full loan amount. If you take smaller amounts later, a different interest rate may apply to each amount you take, depending on the interest rates available at the time. Do you qualify for our Lifetime Mortgages? 10 Why is advice so important? 11 Five steps to our Lifetime Mortgage 12 1

3 How you spend the money is up to you You could use it for: Home or garden improvements. Repaying an interest-only mortgage or other debt, although it s important to think carefully about securing a debt against your home. Helping a family member get on the property ladder, by giving them their inheritance now rather than later. Supplementing your pension income and improving your general standard of living, helping you enjoy a better quality of retirement. If it s right for you, it could make a big difference whether that s home improvements, helping family or just enjoying life more. We offer two Lifetime Mortgages Flexible Lifetime Mortgage With our Flexible Lifetime Mortgage, you won t have to make any monthly payments. Optional Payment Lifetime Mortgage With our Optional Payment Lifetime Mortgage, you can choose to pay some, or all, of the monthly interest by Direct Debit. If you choose this product, it could help you reduce the overall cost of the loan. You can stop making monthly payments at any time. With both our Lifetime Mortgages, any unpaid interest is added each month to the amount you owe and will increase quickly over time. Interest is charged on the loan plus any interest already added. A lifetime mortgage will reduce an inheritance and the equity left in your home. Our Lifetime Mortgages are usually repaid from the sale of your home when the last surviving borrower dies, or moves out of their home and into long-term care. Of course, any money left over would be available to you or your beneficiaries. Your adviser will help you decide which is the right one for you. A key decision is whether or not you d like to make monthly payments towards the interest. It s a big decision, and there are many factors to consider. That s why you can only get a lifetime mortgage through a lifetime mortgage adviser. 2 3

4 What difference could a lifetime mortgage make? Discovering a lifetime mortgage with Gill and Jim Family You could give family members their inheritance earlier, which could help with the deposit on their first home. 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. Interest-only mortgage A lifetime mortgage could be used to repay the balance of an interest-only mortgage. You may have to pay an early repayment charge to your existing lender. 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. Remember 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. A lifetime mortgage could make a big difference to you and your family, but there are important factors to consider. You should consider using savings and investments before taking out a lifetime mortgage, and look into other options to borrow money that may be more cost-effective. A chance to help their family Gill and Jim are real-life Legal & General customers. They ve 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. 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. They spoke to a lifetime mortgage adviser who helped them consider all their options, and explained that taking out a lifetime mortgage would reduce the value of any future inheritance. Their adviser also explained how the total amount owed would grow quickly, because any unpaid 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 would have the money when she really needed it. If you give the money away, the recipient may have to pay inheritance tax in the future. 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. 4 5

5 Repaying an interest-only mortgage with Nigel and Jenny Staying in the family home Nigel and Jenny are real-life Legal & General customers, and have lived in their beautiful cottage for nearly 20 years. They had an interest-only mortgage, but as the end of the loan term approached, they still had a substantial amount of the mortgage to repay. It looked like they would have to sell their family home to repay the outstanding mortgage, which would have meant relocating and downsizing to a smaller home. It was something that caused sleepless nights and worry for them both. But then they found out about lifetime mortgages. They sought advice from a lifetime mortgage adviser, discussed it with their family and decided that a Legal & General Lifetime Mortgage would provide them with an alternative solution to their problem. Their Legal & General Lifetime Mortgage has enabled them to repay their outstanding interest-only mortgage completely, and allowed them to continue living in the home and location that they love, surrounded by friends and family. Since we have the lifetime mortgage we feel relaxed. We are not worried any more, we feel safe. Find out more For more examples of real-life customers, please visit landghomefinance.com/videos Our most frequently asked questions Will I still own my home? Yes. With our Lifetime Mortgages, 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 moves out of their home and into long-term care. Do I need professional advice to take out a lifetime mortgage? Yes. You can only get a lifetime mortgage through a lifetime mortgage adviser. Your adviser will check that you re eligible, and help you review your options. Independent financial advisers can give advice on all lifetime mortgages available in the market. Can I pay my interest? With our Optional Payment Lifetime Mortgage, you can choose to pay some, or all, of the monthly interest by Direct Debit. If you choose this product, it could help you reduce the overall cost of the loan. If you stop making monthly interest payments on our Optional Payment Lifetime Mortgage, or if you choose our Flexible Lifetime Mortgage, you can still pay part of the mortgage off early with no Early Repayment Charge using the Optional Partial Repayment feature subject to our Terms and Conditions. What is your Optional Partial Repayment (OPR) feature? With our Lifetime Mortgages, you can pay part of the mortgage off early with OPRs, subject to our Terms and Conditions being met. Please see Can I repay my lifetime mortgage early? for more information. Will I have to make monthly payments? If you take out our Flexible Lifetime Mortgage, you won t have to make monthly payments. With our Optional Payment Lifetime Mortgage you can choose to pay some, or all, of the monthly interest, but you can also stop making monthly interest payments at any time. Please remember, if you stop making monthly interest payments, the unpaid interest is added each month to the amount you owe. This means that interest is charged on the loan amount plus any interest already added. 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. In addition, you may have to pay advice and legal fees. Your adviser will discuss this with you. 6 7

6 Will a lifetime mortgage affect any inheritance? Is a lifetime mortgage right for me? How long does it take to get the money? Will my State Benefits be affected? 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 be less. Our Lifetime Mortgages offer Inheritance Protection which can help you secure a percentage 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? With our Lifetime Mortgages, you stay in your home until you die or move out of your home and into long-term care, as long as you meet the Terms and Conditions of your lifetime mortgage. Your adviser will explain these to you. Failure to meet these could result in the forced sale of your property and the loss of your right to Inheritance Protection, if this has been chosen. Can I repay my Lifetime Mortgage early? 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. An Early Repayment Charge will not apply when the loan is repaid after the last borrower reaches age 88, as long as this is ten years or more after the loan was taken out. 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 one through a lifetime mortgage adviser. How is interest calculated? With both our Lifetime Mortgages, any unpaid interest is added each month to the amount you owe and will increase quickly over time. Interest is charged on the loan plus any interest already added. However there are repayment options, which could help you manage the interest you owe. What is the No Negative Equity Guarantee? The guarantee means that when your property is sold after the last surviving borrower dies or moves out of their home and into longterm 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. After you apply, it usually takes around seven weeks, and your adviser will keep you updated. 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. 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. 8 9

7 Do you qualify for our Lifetime Mortgages? Are you aged 55 or over? Why is advice so important? There is a lot to think about when considering a lifetime mortgage. That s why you can only take a lifetime mortgage out through a lifetime mortgage adviser. Is your property your primary residence? 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 at over 100,000 ( 150,000 for ex-council,exhousing association or ex-ministry of Defence properties)? We re sorry, you don t qualify. Expert advice Lifetime mortgage advisers are experts who have passed detailed, professional exams, meaning they can look at your situation and work out if it s 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. Do you own your property? Do you want to make monthly interest payments by Direct Debit? Great news! You may be eligible for our Optional Payment Lifetime Mortgage. Now it s time to seek advice. Great news! You may be eligible for our Flexible Lifetime Mortgage. Now it s time to seek advice

8 Five steps to our Lifetime Mortgages 1. Talk to your family 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 Mortgages. You could even include them in the meeting with your adviser. 2. Prepare for your meeting 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: have a copy of your title deeds or last mortgage statement. Do some research of properties in your neighbourhood to get an idea of what you think it s worth. 4. Start your application Once you re ready, your lifetime mortgage adviser will complete and submit your application for 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. Decide whether or not you would want to make monthly interest payments. If you do, you ll need to have your bank details ready so that you can set up a Direct Debit. Talk through the final application with your adviser and confirm any changes. Request a redemption statement or repayment figure from your existing provider, if you re using the money to repay a debt such as a loan or outstanding mortgage. We will then arrange for your property to be valued by a specialist surveyor. 3. Speak to a lifetime mortgage adviser 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 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 and setting up a Lasting Power of Attorney if you don t have one already. 5. Enjoy your retirement 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. After you apply, it usually takes around 7 weeks, and your adviser will keep you updated. 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 Q Mar 18 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.