Frequently asked questions

Retirement Mortgage

Does the Retirement Mortgage conform to the standards laid down by the Equity Release Council?

No. The Retirement Mortgage has been designed to offer a choice for customers who are relatively income affluent, wish to make monthly interest payments and who may not consider traditional equity release products and the accompanying standards as relevant or necessary to their circumstances. The Retirement Mortgage differs from the standards in the following ways:

  1. Interest rate: ‘SHIP standard’ equity release products must offer lifetime fixed rates whilst the Retirement Mortgage offers the flexibility of shorter term rates. Interest rates could be higher after the initial fixed period.
  2. Tenure for life: as long as a customer taking out a ‘SHIP standard’ equity release product adheres to the terms and conditions of their contract then they can remain in that property for life. This also applies to the Retirement Mortgage along with the requirement for monthly interest payments (not a requirement of roll up equity release products)- failure to meet these monthly interest payments could result in your home being repossessed.

Will I have to make any repayments?

Yes. The Retirement Mortgage has been designed for those customers who have sufficient retirement income to repay the monthly interest. Unlike traditional equity release, the interest does not 'roll-up' and increase the overall debt over the life of the plan. You will not have to repay the loan capital until you die or move permanently into long term care.

How much can I borrow?

The amount we will lend you is based on an assessment of your ability to afford the loan. We will look at your retirement income (currently being paid to you or forecast to be paid to you on retirement) and any loans or financial commitments you have in place. This will allow us to work out a loan amount we feel should be affordable for you now and in the future.

Will my monthly payments change?

Your Retirement Mortgage will benefit from an initial interest rate that is fixed for the first five years. The interest rate will then revert to the standard variable rate. You will be able to switch to a new fixed rate at this time.

What happens if I can’t afford the monthly payments?

Please contact us as soon as possible. The earlier we become aware of any payment difficulties you may have, the more chance we have of helping you. We will always work with you to find, where possible, a solution or arrangement to address your problems.

However, you should be aware that, in the worst case, your home may be at risk of repossession if you can no longer meet your payments.

Can I repay the loan at any time?

The loan can be repaid at any time, however in the first five years there would be an early repayment charge* on a sliding scale ranging from 5% of the capital repaid in year 1 to 1% of the capital repaid in year five. From year 6 onwards, repayment of the loan or part of it would be free of any early repayment charge.

* Within the first five years overpayments of up to 10% can be made without incurring an early repayment charge utilising the Flexible Repayment Option.

Do I have to have a Financial Adviser?

Yes, we feel it is essential to obtain financial advice before applying as it is important to consider all options on the market and also consider benefits and grants which may be suitable.

Will I still own my property?

With a lifetime mortgage you retain 100% ownership of your property.

What happens if my circumstances change?

Your Retirement Mortgage is portable, and you can take it with you if you move house. However, you will be responsible for the costs involved in moving the plan.

Taking out the Retirement Mortgage could affect the options that are open to you in future years. Having to pay the interest on the loan will reduce the amount of retirement income you have available to fund your retirement, for example if you need to pay for care in the future. It is important that you discuss this with your adviser before you take out the plan.

This is a lifetime mortgage. To understand the features and risks, ask your Financial Adviser for a personalised illustration.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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