Top Up Retirement Income - Lifetime Mortgage

Many pensioners are struggling to get by on a small pension and limited savings, whilst living in a property that has, over the long term, soared in value. A lifetime mortgage is a way to unlock the cash tied up in your home and increase your retirement income.

Combining a Retirement Protection Trust with a Lifetime Mortgage - you can use the equity in your property to increase your ‘income’ whilst simultaneously increasing the protection of your family’s wealth and ultimately, your legacy.   

Example: assumes your home is worth £ 1 Million & an average property growth of 5% p.a. until your death in say 15 years time.

• Currently, your legacy after Inheritance Tax would be £ 1,428,105.
• By taking a Lifetime Mortgage and drawing £ 1,000 /m; your legacy will have reduced to £ 1,241,360.
• However, by combining the Lifetime Mortgage & drawing £ 1,000 /m with a Retirement Protection Trust your legacy would increase to £ 1,676,910.

Simultaneously:     

• Increasing your ‘income’-  Money released from your property is free of tax.  
• Increase the protection of your family’s wealth - from care funding, creditors and divorce. 
• Increase your legacy

Structure 

A Lifetime Mortgage  - allows you to borrow money against the value of a property, usually; but not necessarily your home.  The mortgage provider agrees a loan facility, which may be drawn as a lump sum &/or a regular monthly payment.  

The loan available on a lifetime mortgage will be determined by a combination of your age (min 55), and the property’s value.  If you are borrowing with someone else the lender will use the younger of your ages to determine the amount available to borrow.  The older you are the greater the loan available. 

Unlike a conventional mortgage, with a lifetime mortgage interest payments are allowed to roll up until the house is eventually sold.  You retain ownership of your property and if you wish to move, you can usually transfer your lifetime mortgage to another property.

The mortgage is repaid either if you move into sheltered accommodation or after your death.  If you are borrowing with someone else, then it would be repaid either after the last borrower dies or they move into sheltered accommodation.  

On repaying the amount you owe to the lifetime mortgage provider; any money left over belongs to you or your estate; which means that you can leave this to whomever you wish.   

If you take a lifetime mortgage on its own - the legacy you leave would be reduced, as the value of your estate will have been eroded by the accumulated loan and interest.  

Advice 

The above is general information only and does not constitute advice. You should not rely on this information to make any decisions.  

There are two components to the  RPT strategy; the trust structure is not regulated by the Financial Services Authority, however, the underlying equity release product is. 

We will gladly provide a personalised illustration of the Trust strategy and work with your existing adviser(s); alternatively, we  work closely with a network of nationwide Independent Financial Advisers (IFAs) that can provide the regulated advice on mortgages and any investments.