A lifetime mortgage is just like a normal mortgage in that it is taken against a property and interest is calculated on it. However, it differs in that it does not have a fixed duration in that it lasts for the rest of your life. Hence the term lifetime! In order to apply and qualify for a lifetime mortgage, you need to be at least 55 years. It is also possible to apply for a joint lifetime mortgage; however, the youngest person applying for the lifetime mortgage needs to be at least 55 years.

The lifetime mortgage differs from a normal mortgage in that you do not need to make a monthly repayment. A normal mortgage calculates a monthly amount based on the initial loan amount and the interest. However, a lifetime mortgage does not calculate any monthly amount with the exception of the interest only lifetime mortgage.

The amount that you are allowed to borrow will be calculated based on your current age and the worth of your property. An equity release calculator is normally used to calculate this amount. In some cases, if your health is poor, you might receive a higher amount. The advantage of the lifetime mortgage is that you can be guaranteed that the initial loan amount will always remain the same and will never become higher than the current value of your property. (more...)

The need for a fixed source of income in your retirement period is very important. Many people plan for their retirement but sometimes, an extra source of income is needed in your retirement period. If you own your own property, equity release might be a solution for you. What is equity release ?

Equity release is a way for you if you are above fifty-five years to withdraw equity from your property. You can release equity from your property on a monthly basis or you can choose to withdraw an immediate lump-sum amount. It does not matter if you choose for an immediate amount or if you choose for a monthly amount, the amount that you receive is free from taxes. It is non-taxable. However, if you use this money to earn income, that income will automatically be taxable.

There are a number of options available if you are considering equity release. You can choose for a lifetime mortgage, an interest only lifetime mortgage, or a home reversion plan. The advantage of all of these plans is that you can obtain a loan against a property but you are not require to repay the loan until you die. So how exactly do you repay the load after your death? Your property is sold and the initial amount and in some cases the accumulated interest amount are repaid. (more...)

Finding a right mortgage is to meet your needs is very important so its time you to start considering your options. The basic thing to know is that there are two types of mortgages: open mortgages and closed mortgages. The difference being the flexibility and the privileges provided for prepayment. It is very important for you to understand the differences between the two especially if you are trying to decide if you need a closed mortgage or an open mortgage.

Open mortgage is a flexible mortgage plan and is often preferred for short term duration. It is suited to home owners who have plans to sell of their property in near future. Open mortgage is devoid of penalties and they give the burrower flexibility to reduce the principal amount. They range from six months to one year of duration. Closed mortgages on other hand are committed to specific terms and policies ranging the principal amount, taxes, insurance and interest rates. The term duration ranges from six months to ten years. In closed mortgages, you would need to pay penalty for the prepayment of the amount. Almost 20% of principal amount can be paid each year to lessen down the total amount. However, this type of mortgage has lower interest rates when compared to that of open mortgages.

Due to restrictive nature of closed mortgages, they allow lower interest rates, than the open mortgages which tend to be inconsistent with the forecast returns. Therefore open mortgages have higher interest rates. (more...)