Lifetime Mortgage dilema,,,,

johno1968

Hi all

I am after some advice on issue concerning a lifetime mortgage.
My now mother/father in law had taken out a lifetime mortgage on their house about 7 years ago (as for as i can gather term is over 15yrs) , but now due to their age and fitness the house is house/garden is getting to much for them to run, so possibly looking at down sizing.
They don`t particularly want to move to sheltered accommodation or wait till death to get the agreement terminated.
There is enough equity in their house to sell and pay off the existing amount owed to the lending company and to get them into a down sized home
My question is,,
Is the house theirs to sell ?, as for as i read in the contract ,they only mention that the lifetime mortgage terminates when , the owners move into sheltered accommodation, or both parties have passed away, or the present outstanding amount is paid in full.

Any knowledge /advice on the matter would be appreciated

thanks,,

kingstreet

Lifetime mortgage is a general heading.

The answer to your question can only really be provided by the lender concerned, as we are unable to guess at the type of product they selected.

It could be interest-only, interest roll-up, or they could have sold part of the equity in their home in return for a lump sum.

Leon_W

" or the present outstanding amount is paid in full "


This covers the sale of the property to downsize. Your in laws should be fine, but to put their minds at rest they probably ought to phone the lender to confirm it.

johno1968

The loan was approx £35,000 when they first took out plan with interest fixed each yr at 6.4% amounting to approx £88000 owed at 15yrs term

mrsnobody

It may be worth asking the lender if it will allow the lifetime mortgage to be ported (transferred) to another property. Any lender who is a member of the Equity Release Council (formerly SHIP) undertakes to allow customers to port to another suitable property. A partial repayment may be required if the new property is of a lower value to the current one.

With regard to the term, a lifetime mortgage has an open-ended term, it will run until the loan is repaid following death/permanent move to Long Term Care of the borrower(s). If the loan is repaid earlier then most lenders will apply early repayment charges.

Definitely worth discussing all options with the lender.

magpiecottage

kingstreet wrote: »

they could have sold part of the equity in their home in return for a lump sum.

I realise you know this really kingstreet but that is not a lifetime mortgage, it is a home reversion.

With a home reversion, as you say, the house, or part of it, is sold, and thus no longer the occupiers' to sell again!

With a lifetime mortgage, it remains the property of the occupier but they have to repay the outstanding debt on selling the property. Most lifetime mortgages have a "no negative equity" guarantee but if interest is simply added to the loan rather than repaid there might not be enough left to buy a new home.

kingstreet

Yeah, that's why I prefaced with "lifetime mortgage is a general heading," which some organisations use to cover all the equity release-type schemes available to older borrowers, whether they be home reversion or traditional mortgages.

I think I was using it as the species, rather than the genus, if that makes sense...

It also fits with the extended permissions needed for lifetime mortgages which I believe include equity release products like home reversion.

Wh05apk

Depending on when the mortgage was taken, there may also be early redemption penalties, which could be quite sizeable, so they really need to contact the lender, if there are, it may be more beneficial to port the mortgage to the new property.