Getting on the property ladder is tougher than ever. Rising house prices and large deposit requirements make it challenging for young people to buy their first home. If you’re over 55 and own your home, a lifetime mortgage could be the solution to support your children without straining your finances. Here’s how it works, how it can help, and what to consider.
What Is a Lifetime Mortgage?
A lifetime mortgage is a financial product that lets homeowners aged 55+ release some of the cash tied up in their home’s value. In a nutshell:
- Ownership stays with you: You don’t sell your house, you just borrow against its value.
- No monthly repayments needed: The loan, plus interest, is usually repaid when the last borrower dies or moves into long-term care.
- Tax-free funds: You can use the money for anything, including helping your children with their first home.
How Can a Lifetime Mortgage Help Your Children?
- 1. Providing a Deposit
- For many first-time buyers, the biggest hurdle is saving a deposit.
You can use the funds from your lifetime mortgage to gift your children money for a deposit. In turn, a bigger deposit can help your children secure a lower interest rate on their mortgage, making their monthly repayments more affordable.
2. Early Inheritance
Instead of leaving your children money in your will, a lifetime mortgage lets you help them when they need it most.
By gifting them money now, you can reduce the total inheritance tax if you live for at least seven years after the gift. You’ll also witness the impact of your support as they move into their new home.
3. No Immediate Repayments
Lifetime mortgages offer a degree of flexibility that traditional loans don’t. There are no required monthly payments and some plans allow you to pay off the interest as you go, reducing the overall cost.
Things to Consider
While a lifetime mortgage can be a great option, there are important factors to consider.
1. Impact on Inheritance
Releasing equity reduces the value of your estate. This could mean less money for other beneficiaries.
2. Interest Accumulation
If you don’t make repayments, interest will grow over time, increasing the total amount owed. Compounding interest can add up quickly.
3. Eligibility and Costs
Factors like your age, the value of your home, and its condition will affect how much you can borrow. There are also setup fees and legal costs to consider.
4. Get Professional Advice
A financial adviser will help you weigh the pros and cons to determine if a lifetime mortgage fits your goals.
How Justizia Can Help
At Justizia, we make financial decisions simple and stress-free. We support families considering lifetime mortgages because it could be the key to getting their children on the property ladder while securing their own financial future. With the right advice and support, it’s a win-win for the family.
It isn’t for everyone though, and that’s why clear guidance is essential. Our trusted partners at the UK Mortgage Centre make it easy, empowering you with the information and the choice.
Ready to explore what a lifetime mortgage could mean for you and your family? Click here to fill out the form you need to get started.
Your home, your choices - make them count for your children.
