Revisiting Your Lifetime Mortgage: Reviews, Options, and Opportunities
- Penn Financial
- 11 minutes ago
- 3 min read
People with existing Lifetime Mortgages should be taken through regular reviews. This can be with the original adviser, or any suitably qualified and authorised adviser.
Life Changes, So Should Your Plan
As Heraclitus said,
"The only constant in life is change."
Life events like illness, separation, new relationships, or changing goals can all impact your mortgage needs, your family and potential beneficiaries.
Although, some plans may have been taken a relatively short time ago, there have been a number of innovations and developments that could now be available that weren’t an option in the past.
Reviewing the Options
Common things that we are asked include putting in place repayment plans and borrowing more money, that were not in place when the original plan was set up. A thorough review of what is available through the existing plan, and the possibilities presented by switching providers is essential when recommending a way forward.
Understanding Further Advances
When looking at borrowing more money, interest rates play an important part in weighing up options. Most plans allow for a “Further Advance” which does not change the interest rate on the original amount borrowed, as it is fixed for life, but will be subject to the interest rate charged now for the additional amount borrowed. Switching lenders means that the whole amount will be subject to the current interest rate.
A simple example would be in a case where someone borrowed £50,000 7 years ago at a fixed interest rate of 5.5%. They now wish to borrow an additional £20,000. For the purposes of illustration, let’s assume that Interest rates are now 7.5%, giving the borrower two options:
Firstly, they can stay with the current lender and the original borrowing of £50,000 will continue to have an interest rate of 5.5%. The new borrowing of £20,000 with attract a fixed interest rate of 7.5% for life.
The second option is to move the original loan to a new lender and take an additional £20,000 at the same time. This will result in the whole new loan being charged at 7.5%. This is obviously a more expensive option and will be a significant element when deciding what to do, but there can still be many reasons why it is the one that is chosen.
Now imagine a new switch rate could be obtained for 6.5% - that means the whole loan would be charged at higher than the original plan rate but lower than the further advance rate. What then? Well, a very careful analysis needs to be undertaken to work out which option is the best for you in your particular set of circumstances.
The important thing is that the borrowers' current needs and circumstances are looked at in detail and that the outcomes of each option are explained in detail.
We offer free reviews to people with existing plans, whether we were the original advisers or not. It gives reassurance and raises awareness of what options are available.
Book Your Free Lifetime Mortgage Review Today
Circumstances change, your mortgage options might too. Whether we advised you originally or not, we are here to help you explore what’s 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 and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.
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