Lifetime Mortgage Option
With the Lifetime Mortgage Option a legal charge is secured on your client's home and a cash sum is provided by Hodge Lifetime, which they may spend as they choose. For as long as they live and continue to occupy their home, they don’t have to make any repayments on the loan.
What happens to the interest charged on the lifetime mortgage loan?
Loan interest, at a fixed rate compounded monthly will be ‘rolled up’ and added to the loan.
As a result, there is nothing to pay until your client's death (the surviving partner’s death in the case of joint plans), unless they decide to sell up permanently. The outstanding lifetime mortgage balance (plus any interest and charges that have accrued) is repaid from the proceeds of the
sale of their property.
A statement of their account showing the interest added to the loan will be issued each year.
How much cash can be released?
The older your client is the higher the benefit that can be released in relation to the value of their home. This is because the term of the loan will be based on their life expectancy (the life expectancy of the youngest applicant in the case of a joint application).
To find out if your client and their property are eligible here are some examples:
Age of youngest applicant |
Max loan as a % of property value |
Age of youngest applicant |
Max loan as a % of property value |
|---|---|---|---|
| 55 | 15% | 71 | 31% |
| 56 | 16% | 72 | 32% |
| 57 | 17% | 73 | 33% |
| 58 | 18% | 74 | 34% |
| 59 | 19% | 75 | 35% |
| 60 | 20% | 76 | 36% |
| 61 | 21% | 77 | 37% |
| 62 | 22% | 78 | 38% |
| 63 | 23% | 79 | 39% |
| 64 | 24% | 80 | 40% |
| 65 | 25% | 81 | 41% |
| 66 | 26% | 82 | 42% |
| 67 | 27% | 83 | 43% |
| 68 | 28% | 84 | 44% |
| 69 | 29% | 85 | 45% |
| 70 | 30% |
Minimum property value = £100,000. Properties below this value will be considered on referral, subject to a minimum loan of £15,000.
Who is eligible for a Lifetime Mortgage Option?
- A Lifetime Mortgage Option plan can be arranged for either one or more people, who own and live permanently in their own home, which is located in England, Scotland or Wales. Plans are available to couples, relatives or friends. N.B. Where there are two applicants, the property Title must be held in joint names.
- The property must be in sound condition, of standard construction, and worth at least £100,000. If any essential repairs are identified when the property is inspected, release of the cash sum (or an appropriate part of it) may be withheld until they are complete.
- If the property is leasehold, there must be at least 90 years left to run on the lease.
- If there is an outstanding mortgage or charge, it must be low enough to be repaid from the cash sum expected at completion, unless redeemed earlier from your client's own funds.
Commercial property, freehold and ex public sector flats, sheltered/retirement housing, park homes and non traditional concrete/steel framed dwellings are not acceptable.
Please ask for advice if you are unsure about property eligibility.
Does my client have to pay any fees?
Yes, your client will have to pay Hodge Lifetime a valuation fee when they submit their application and an application fee which is deducted from the cash lump sum we pay to them.
For all lifetime mortgages, your client will have to pay their own legal fees and may be charged a fee by a Financial Adviser.
Can additional borrowing be arranged?
Your client may apply for additional borrowing, provided at least three years have passed since the last loan was taken. When considering their application, we will take into account:
- The amount of the existing loan and interest already secured against their home
- The maximum percentage of the property value that they can release depending on their age at the time
- Whether they have sufficient equity left in the property
- The lending criteria at the time of application
A surveyor will re-value the property at their expense, and they will have to pay an application fee. Interest on any additional borrowing will be charged at the interest rate applicable at the time.
Loan Repayment
Can the lifetime mortgage loan be repaid at any time?
If your client wishes, the lifetime mortgage loan and interest may be repaid at any time.
In certain circumstances an early repayment charge will be applied (please refer
to summary of current charges).
This charge will be waived if they repay the lifetime mortgage loan after moving
into long-term care on medical or other specialist advice.
What about moving house?
Your client will be free to transfer their lifetime mortgage to a new home of their choice, so long as it provides adequate security for the Equity Release Plan. If the loan and the interest they owe is more than the amount they are eligible to borrow on the value of the new home, they may need to repay part of their existing loan from the sale proceeds. No early repayment charge is made in this event. If they move to a higher value home, no repayment will be necessary. Your client will be responsible for any costs related to the transfer, including our Solicitors’ fees for work which they will need to carry out (even if the move falls through).
What would happen to the Lifetime Mortgage Option upon marriage or remarriage in the future?
If a single planholder marries, it may be possible to revise the terms of the lifetime mortgage to give the new partner a right of occupation. The new occupant will need to meet the age requirement for the plan and, if younger than the planholder, a part-repayment will be due. This will be calculated by taking into account the amount of the loan and interest outstanding. If a right of occupation is not arranged, the new partner will have to sign an agreement to vacate should the planholder die or move out permanently.
What happens when the property is vacated, or upon death?
Your client, or their personal representatives, should arrange for the sale of the property as soon as it is clear that your occupation has ceased. Interest will continue to be added to the lifetime mortgage loan until it is repaid. To avoid the risks associated with vacant property, and the accumulation of interest, the earlier it is sold, the better.
The lifetime mortgage loan, interest outstanding, plus any fees and expenses related to the sale will be due to Hodge Lifetime from the sale proceeds. The balance of the sale proceeds will remain with your client or form part of their estate.
Should their absence be due to an extended holiday, or a term of hospital care, for example, Hodge Lifetime would only require your confirmation that the property would be adequately secured during this period.
The lifetime mortgage loan and interest will become repayable if they leave the property for longer than six months without our written agreement.
What if the value of the property doesn't cover what is owed at the end of the plan?
Hodge Lifetime gives a watertight guarantee that if the proceeds from the sale of your client's property are insufficient to pay off their liability, no further sum will be payable by the client. This will ensure that no outstanding mortgage debt is left to them, or to their estate.
This 'no negative equity' guarantee is provided free of charge.
Alternatively, if on the sale of their property the net proceeds are more than the outstanding balance on the loan and accrued interest on it, their estate will retain the surplus.
View our Summary of Current Charges
Find out more about
Hodge Lifetime by calling our
Broker Support Unit on:
0800 731 4076