Equity Release Scheme
A lump sum mortgage product is perhaps the most straightforward of all equity release schemes available in the marketplace. It does not come with many add-on features or options and is a very simple concept. This product is typically most suitable for the homeowner who wants a simple product that does not require any repayments against the loan balance.
Lump Sum Process
If you are interested in a lump sum mortgage scheme, you should be knowledgeable on the process of accessing one and how to apply for one. Before accessing any equity release product, you should make sure that you know how much money you want and need as well as your objectives for the cash. This will ultimately enable to you to know how much money you need to release in order to receive the cash amount you want.
To assess the maximum equity release available to you, your lender will use a number of factors including your age or the age of the youngest homeowner, if borrowing jointly and the property valuation. If you are older, you are likely going to receive a higher cash amount since your life expectancy is shorter. If you are younger, your payment may be lower. Your lender will let you know how much you can borrow but if interested, you should also inquire about borrowing more cash in the future, if needed. The process for qualifying for additional borrowing will include an equity release calculation to determine if extra funds are available to you.
The lender you choose will charge you a fixed interest rate on the amount of money you borrowed. With a lump sum product, you don’t typically need to make any repayments. There are some products and features, however, that do allow for some repayments. So, if you are interested in a repayment structure, there may still be a product for you. If your product does not allow for payments, or you choose to not make payments, the full balance of the loan and interest is due when the home is eventually sold. This typically takes place when the final homeowner either passes away or moves into permanent long-term care. At that point, any additional cash left over from the sale of the home, if there is any, is returned to your estate. Keep in mind that since you retain ownership of the property for the full lifetime of the loan, you are also able to capitalize on any increases in home values which may prove beneficial when the home is finally sold.
A lump sum mortgage scheme is typically most suitable for the homeowner who is over aged 55 and who is not interested in a lot of extra features or options. In addition, this product is ideal for the homeowner who does not want to be forced to make any repayments. So, this will typically be a good option for the homeowner who is unsure of their monthly income or who has an income that fluctuates. Lump sum mortgage schemes often offer a better interest rate since there are limited features or facilities available.