Lifetime mortgage FAQs
We've put together a list of frequently asked questions about lifetime mortgages.
Choose from the sales process or product related FAQs from Flexible (Flexible Lifetime Mortgage), OPLM (Optional Payment Lifetime Mortgage) or Income (Income Lifetime Mortgage).
What is Inheritance Protection?
Inheritance Protection can help secure a percentage of the net sale proceeds of your client's home for the beneficiaries of their estate when they die. They'll need to decide on the percentage that they would like to protect (the Protected Percentage) when they apply for the Lifetime Mortgage. If leaving an inheritance is important to your client, they should select this option. If your client chooses Inheritance Protection this will reduce the amount they can borrow.
Inheritance Protection cannot be added or the amount increased after completion of their lifetime mortgage but could be removed or reduced but only when the client takes additional borrowing or porting their mortgage to a new property.
How do we calculate an Early Repayment Charge?
The way we calculate an Early Repayment Charge is detailed in our all you need to know guides (depending what product your client has chosen).
- PDF file: Flexible Lifetime Mortgages - All you need to know Q0054380 PDF size: 596KB
- PDF file: Optional Payment Lifetime Mortgages - All you need to know Q0056890 PDF size: 9.6MB
- PDF file: Income Lifetime Mortgages - All you need to know Q0057783 PDF size: 10.3MB
These will provide you with more information on when an Early Repayment Charge can apply and how we calculate the charge.
Will my client have to make monthly payments?
With our Flexible Lifetime Mortgage and Income Lifetime Mortgage your client won't have to make monthly payments. Instead the interest is added to the amount owed each month. We charge interest on the loan amount plus any interest already added, which means the amount your client owes will grow quickly.
With our Optional Payment Lifetime Mortgage, your client can choose to pay some, or all, of the monthly interest by Direct Debit. They can also stop making monthly interest payments at any time.
The lifetime mortgage is usually repaid from the sale of your client's home when they or the remaining borrower (if the mortgage is in joint names) dies or moves out of their home into long-term care.
However, your client could choose to make Optional Partial Repayments with all of our Lifetime Mortgages subject to our PDF file: Lifetime Mortgages Terms and Conditions Q0054072 PDF size: 98KB .
How long does it take to get the money?
It usually takes around 7 weeks from the time you complete the application with your client to the time they'll receive their money (this could vary depending on the property).
Would my client be suitable for a lifetime mortgage?
To find out if your client is suitable, please view our PDF file: Lifetime Mortgage Suitability Criteria Q0052420 PDF size: 86KB
If your client does not meet this criteria, please complete and submit our View - Pre application query form.
Will my client still own their home?
Yes. With our Lifetime Mortgages, the property stays in your client's name and the loan is secured against their home. Our Lifetime Mortgages are designed to be repaid when the last remaining borrower dies or moves out of their home into long-term care.
Why do we apply an Early Repayment Charge?
The Early Repayment Charge recovers costs that we or our funding providers incur when setting up the lifetime mortgage. These costs include transactions costs incurred in reinvesting the money, or costs due to the changes in long term interest rates.
What commission will I be paid?
We’ll pay commission up to our decency limit of £10,000. All over-payments will be paid back to your client upon completion of business submitted by you.
The commission paid will depend on what you agree with your client and whether you're a member of a mortgage club. If you're a member of a mortgage club, please refer to them directly about commission paid.
For any subsequent drawdowns your client makes we'll pay 1.5% commission to you on new loans taken on or after 4 September 2019 or 1% for existing loans taken before 4th September 2019.
What are the current interest rates for each of your products?
You can find a summary of the rates and loan to values in our product summaries:
PDF file: Flexible Lifetime Mortgage Product Summary Q0052431 PDF size: 111KB
PDF file: Income Lifetime Mortgage Product Summary Q0057937 PDF size: 154KB
Will a lifetime mortgage affect any inheritance?
Yes. Interest is charged both on the loan amount and the interest that has already been added. This means the amount your client owes quickly increases overtime, reducing the equity left in their home and the value of any inheritance.
All of our Lifetime Mortgages offer the Inheritance Protection Option that can be chosen at the outset to protect a percentage of the value of your client's home for their beneficiaries. If your client includes the Inheritance Protection Option it will reduce the total amount your client can borrow.