Lifetime Mortgages: Understanding Your Options
- Penn Financial
- Apr 22
- 3 min read
Updated: Jun 4
Life Changes, So Should Your Plan
As Heraclitus said,
"The only constant in life is change."
Life events such as illness, separation, new relationships, or changing goals can impact your mortgage needs, your family, and potential beneficiaries.
Some plans may have been established only a short time ago. However, there have been numerous innovations and developments that are now available, which were not options in the past.
The Importance of Regular Reviews
Regular reviews are crucial for borrowers. They help ensure your mortgage plan aligns with your current life circumstances. This process allows you to explore alternatives, update terms, and potentially find better rates or features suited to your needs.
As life changes, so should your financial strategies. A thorough examination of your existing Lifetime Mortgage can reveal opportunities for better financial management.
Reviewing Your Options
Common inquiries include establishing repayment plans or borrowing more money that were not in place when the original plan was set up. A comprehensive review of what is available through the existing plan, as well as the possibilities that come from switching providers, is essential.
Consider how your borrowing needs may have changed. Perhaps you need access to more funds for home repairs, medical expenses, or supporting family members. This review ensures that your financial arrangements suit your current situation.
Understanding Further Advances
When contemplating borrowing more, interest rates play a significant role. Most plans allow for a "Further Advance," which does not affect the interest rate on the original amount. The original sum remains fixed for life. However, the additional money borrowed will be subject to the current interest rate.
For instance, let's say someone borrowed £50,000 seven years ago at a fixed interest rate of 5.5%. Now, they wish to borrow an additional £20,000. Assuming the current interest rate is 7.5%, they have two options:
Stay with the Current Lender: The original borrowing of £50,000 retains an interest rate of 5.5%. The new borrowing of £20,000 will incur a fixed interest rate of 7.5% for life.
Switch Lenders: Move the original loan to a new lender while borrowing an extra £20,000. This means the entire loan will now be charged at 7.5%. This option appears more expensive, but could offer advantages worth considering.
Now, if a new switch rate of 6.5% becomes available, the entire loan would be higher than the original plan rate but lower than the further advance rate. Careful analysis is critical in determining the best option for your specific circumstances.
The Importance of Personalised Analysis
Each borrower's needs and circumstances are unique. Therefore, it is essential to look at your position in detail. An in-depth analysis of all options available to you is vital for making informed decisions. Understanding the consequences of each choice you make can save you money and improve your financial situation.
Free Mortgage Reviews: A Service Worth Considering
We offer free reviews to people with existing plans, regardless of whether we were the original advisers. Our reviews provide reassurance and raise awareness of available options.
Book Your Free Lifetime Mortgage Review Today
Circumstances change, and so might your mortgage options. Whether we advised you originally or not, we are here to assist you in exploring what is possible.
Get clarity, confidence, and peace of mind.
0333 34 44 34 8
The information provided in this article is not intended to constitute professional advice. You should take full and comprehensive legal, accountancy, or financial advice appropriate to your individual circumstances from a fully qualified Solicitor, Accountant, or Financial Advisor/Mortgage Broker before you embark on any course of action.
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