Are lifetime mortgages on the rise?

It cannot be denied that great changes are taking place in the way we live and work, with people in the developed world living longer, in better health and many working later in life – in particular those who run their own businesses.

It is also evident that many are finding it harder to get onto the housing ladder with increased numbers entering the process at a later age than in previous generations. This has led to a growth in lifetime mortgages for those approaching, and beyond, the traditional retirement ages.

So, what exactly are lifetime mortgages?

Lifetime mortgages take various forms; from the traditional equity release style plans with no repayments to be made to more flexible plans where repayments can be made and there is the flexibility to pay off early without punitive redemption penalties.

Clearly, as is so often the case when it comes to financial planning, bespoke advice is essential and all avenues must be pursued as most people don’t wish to be in debt in their 70s or beyond.

This is one of the fastest growing areas in personal finance and with current trends and forecasts, it looks set to continue to expand as medical science progresses and state support shrinks.

It is therefore a strong option, if you are still borrowing and still working into your 60s and above; it can give you a little more financial freedom. You may want to keep your current home or move to that all important new – and less expensive – location; or you might even like to raise funds to continue to expand your business or help with that dream holiday, without high monthly outgoings. Yes, it is an option, though it’s vital that you understand the risks.

May 2018