Assessing Homes for Lifetime Mortgage Products

Are you heading into retirement? Perhaps you have a situation where you need money and you own property? Sometimes retirees are property rich, but cash poor. In fact, this is the case with many retirees who have either retired at 65 due to employment issues or retired before the two recessions and are now suffering from a significant loss to their pension savings and investment accounts. If you are in trouble, but you own your property, then consider the interest only mortgage. You have a mainstream interest only product that is great for anyone who has yet to retire. You also have a lifetime mortgage that allows you to pay interest on the loan, but with different principles than the mainstream mortgage. Let’s take a look at both and consider the evaluation of your home that is required.

Lifetime Mortgage Explanation
With a lifetime mortgage you ask a lender to provide you with funds you can use during your retirement. In return you put your home up for collateral by using its value to tap the equity it has. You will have to repay the loan; however, it is set up for repayment at the end of your life, when you sell, or when you decide to move to a nursing home. The repayment will only have interest tacked onto it if you elect to choose another option besides the interest only choice. For example lump sum, drawdown or enhanced lifetime mortgages have compounding interest where you pay the interest along with the principle at the end of the mortgage.

For the interest only lifetime mortgage product you actually pay a monthly interest amount based on the APR for the loan. You make these monthly payments for the life of the loan. For this type of retirement loan you can be 55 years of age, but if you are in good health there is no reason you cannot wait until you are 65 and retire.

Process for Equity Release
Whether you are going with a mainstream loan or something created for retirees the mortgage process is similar. A few differences are age, income, and health. With equity release for retirees your age is going to factor into how much is released in cash form. It also determines the projected amount of time you will have the loan outstanding. Health is a factor because you can release more money upfront if you have health issues. You can also use this to determine a shorter time period for the loan. As far as income, you only have to show you have enough disposable income to make the interest payments. You do not have to show that you have a significant income that would cover the entire loan.

After the Application
Once you have turned in your equity release application the mortgage company will start to do their work. They have standards that will help the application pass or not. If these standards or qualifications are met you get the loan. Part of this process is assessing your home. It is important to note there have been some reports of late with regard to surveys and home evaluations.

The survey reports have targeted issues that could make it difficult to get the loan you need. Many of the home evaluations are looking for structural soundness, but some homes are being found to have weaknesses. However, should the survey report highlight potential weaknesses in the property and structure then a more detailed report may be required.
A homebuyer or if movement has occurred, a full structural survey may be necessary and will involve great expense at the hands of the applicant. Consideration should be given as to whether to still proceed with such property investment. In other words, if you are unable to pay for the more in depth survey you may have issues getting the loan. It is up to you to keep your home in good condition, so you can receive loan products when you need them.

Dependent of the type of loan will also determine the analysis needed. Lenders providing such finance as an interest only lifetime mortgage would require must less stringent requirements than an equity release scheme. This means the interest only equity release for retirees would require a more in depth survey.

Traditional mortgage companies such as Halifax and Abbey who offer such mortgages even provide free valuations on remortgaging from another lender. Therefore, do the research first before committing to any fees for mortgage valuations. If you want to have an interest only mortgage you will need an evaluation, but with free options out there it could be a good idea to try one company with free valuations.

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