Why Lifetime Mortgage is Important and How if Would Affect What You Leave Behind
When you need to supplement your retirement or need some extra money to purchase a second home, renovate your existing home or invest in another way, an equity release plan can really make your dreams come true. That said, just like any financial decision, it is important to understand how a lifetime mortgage would affect what you leave behind.
A lifetime mortgage essentially means that you are selling off parts of your property, but you will not be forced to move out of your home. Upon accepting the terms of a lifetime mortgage set out by the lender, you will need to keep in mind that the homeowner is not liable for any form of repayment. Payment is only due when the homeowner either passes away or moves into a long-term care facility. At this time, your home will be sold in order to repay the equity release amount. If the amount raised from the sale of the house exceeds the amount that needs to be paid back to the equity release lender, it will be yours to do with as you wish.
Lifetime Mortgage and Monthly Expenses
Should the homeowner be moved into a long-term care facility, they may use the remaining funds from the property sale to fund their monthly expenses. Alternatively, should the homeowner pass away, any remaining money will be divided amongst the beneficiaries should there be more than one. Of course, if a homeowner does not take out a lifetime mortgage, you will have more to leave behind.
When taking out a lifetime mortgage, it will most certainly affect the value of your estate and how much you leave behind. That said, after years of hard work, would be beneficiaries (in most cases children) agree that they would much rather have their parents enjoy their retirement than worry about leaving too much behind.
In addition, if homeowners choose to us their equity release to purchase an additional property and this will boost the overall value of their estate. This second home can be left behind to whomever the homeowner sees fit or sold, and the money divided between multiple beneficiaries.
Would Lifetime Mortgage Increase Your Line of Credit?
Another advantage of taking out a lifetime mortgage rather than using any other form of credit is that homeowners can take comfort in knowing that they will not be burdening their loved ones with any debt once they do eventually pass away. They can still enjoy financial independence without worrying about increased debt due to inflation, interest rates and other similar factors.
Credit in the real estate business is as important as making your monthly payment. Lifetime mortgage is not as complicated as many people think, with some knowledge you could be ahead of the game. Don’t rely on your lifetime mortgage alone to improve your line of credit, make your monthly payments on your credit cards and other bills like you’ve been doing but make sure they are paid “on time” and in full.