Lifetime Mortgage to clear existing Mortgage

Golactico

Good Afternoon,

A relative of mine is single, aged 56, with no dependants. They own their flat worth circa £140K, with an outstanding mortgage of £80K. They are considering taking early retirement and using the £30K pension lump sum due, to reduce the outstanding mortgage debt to £50K.

With no dependants, protecting the value of their estate for inheritance reasons is not an important issue. My question is, could they get a £50K equity release lifetime mortgage to clear the existing mortgage and remain in their flat, mortgage free? I realise that the equity release company would do very nicely out of this arrangement, but as previously mentioned, there are no children who would feel that they were being short changed with regard to inheritance.

Many thanks for any advice on this.

Linton

From my experience of buying one, I dont believe there is any chance of an 56 year old getting a 50/140=35.8% of value ER mortgage.   65+ and 30% may be doable. You may think the ER company would do very well out of it, but remember they wont get any of their money repaid nor receive any interest  for perhaps 30-40 years.

To get an ER mortgage your relative should talk to an appropriately qualified advisor/broker.