A Lifetime Mortgage is a housing loan, but with no immediate repayments and the borrower can continue to live in their own home. This type of loan is usually offered only to home owners who are in their 70’s and are mortgage free.
In this case an older home owner can borrow funds on the security of the property, on an interest only basis and usually at a fixed rate. The interest payments are not paid but added to the loan amount, i.e. capitalised or ‘rolled up’ each year. So the loan is continuously increasing.
The loan term is usually until the death of the home owner, or earlier if they move into long term residential care or move out of the property. In the meantime, the borrower can reside rent free in the property. The amount of loan available is typically 10%-50% of the value of the property. The older the borrower the higher the loan percentage he or she can borrow, the loan can be taken as a lump sum or in instalments.
Repayment of the loan is …