In today’s economy, earning some extra is something we all would like to do, therefore more and more people are looking into the equity tied up in their properties. We will show you how with a voluntary repayment lifetime mortgage plan you can release equity that’s tied-up in your home while protecting your estate . You can now secure your family’s inheritance with the voluntary repayment lifetime mortgage option that allows you to repay up to 15% of the cash loan annually.
I think we can all agree that, it’s challenging to understand everything about equity release, especially when the information out there is incorrect.
But no need to worry!
We’ve carefully considered the unbiased professional advice we got and checked out lifetime mortgage manuals. With all that information, here’s a guide on voluntary repayment lifetime mortgage plans.
What’s Voluntary Repayment Lifetime Mortgages?
This plan is the latest financial products in the equity release field. Best of all, you can save your inheritance and control the balance of your lifetime mortgage with this mortgage. As a homeowner, you’re only allowed to repay a percentage of the total loan after 12 months.
Best of all:
The interest on your loan doesn’t compound annually or roll-up. With the new and improved voluntary lifetime mortgage plans, you can repay up to 15% of the money you borrowed every year. It all depends on the provider, but most of them also don’t penalise you for it.
How Does It Work?
Almost any lifetime mortgage plan has a voluntary repayment option—plans like the traditional roll-up plans and drawdown plans, interest-only and impaired mortgage plans. More and more providers are leaning in that direction now and adapting. But only a few have transitioned completely.
- To qualify for this lifetime mortgage plan, you need to be 55 or older, and your house has to be valued at a minimum of £70,000.
- You need to choose between a lump-sum or drawdown lifetime mortgage plan.
- The provider will charge interest according to the terms of the plan you chose. But, instead of accruing interest, you make early repayments, and in turn, you repay part or all of the interest before the end of your plan.
- When your repayments are more than the interest, your eventual outstanding balance plus accrued interest will effectively be much lower.
3 Benefits Of Voluntary Repayment Plans
As with most other lifetime mortgage plans, this plan has its benefits:
- There’s no need to provide proof of income for you to qualify for the plan.
- The voluntary repayment mortgage plans are made according to the proprietor’s standards, and there aren’t any administrative fees or penalties to be paid.
- It’s your choice if you want to make repayments to make sure the maximum limit isn’t exceeded.
You can pay the loan with a cheque, debit card, online banking transfers or even a debit/standing order, depending on your provider.
3 Approaches In Managing Your Plan
Equity release is continually undergoing updates, changes and alterations. Meaning, the way you can change or manage your mortgages continuously change. However, mort providers on the market have come up with three repayment approaches or methods:
1. Making Interest-Only Repayments
With interest-only plans, you can have a level balance of your loan effectively, which safeguards the equity value in your property and the inheritance you’d pass on to your heirs.
2. Maximising the Voluntary Repayment Allowance
This allows you to repay the interest and some of the equity too. If your provider allows, you can go for the 15% voluntary repayment approach, and repay the total balance within 8-9 years!
3. Making Random Repayments Only
When you have some funds and consider using this plan to pay the balance, it helps to slow down the interest charge accumulating. However, the balance can still increase over time. The fantastic thing about voluntary repayment lifetime mortgages is that you aren’t required to make monthly repayments, and they can be easily changed to ‘on or off’.
If you think this plan’s for you and want to calculate the amount you can release, use the voluntary repayment calculator to get a rough idea. Then you’ll see how and if ad hoc repayments can work for you.
How Much Does This Plan Allow You To Borrow?
The amount you can borrow mainly depends on your lender’s qualification, maturity and property portfolio. However, there are other factors that some providers consider. They include the:
- The annual interest rate
- The yearly repayment plan you choose
Any additional factor will be based on your lender’s requirements.
The voluntary repayment plan comes in handy when you are looking to get financial freedom and continue owning 100% of your asset.
It’s time to enjoy your retirement.
If you need more information on lifetime mortgage plans though, be sure to click here and see how much equity you can release and chat with an expert.
Let’s Compare Some Voluntary Repayment Plans
|Pure Retirement||Classic elite super Lite||Fixed||2.35%||2.4%|
|More2Life||Flexi choice premier lump sum Lite||Fixed||2.49%||2.58%|
|Legal & General||Premier flexible black||Fixed||2.49%||2.6%|
|Scottish Widows||Lifetime mortgage LS1||Fixed||2.54%||2.6%|
|Aviva||Lifestyle flexible option||Fixed||2.62%||2.7%|
What's a Voluntary Repayment Lifetime Mortgage?
It’s a lifetime mortgage plan for those over the age of 55. It helps them to release any equity that’s in their property or estate. However, this voluntary repayment option lets you make repayments already after the first year. This is unlike other mortgage option. The voluntary repayment option enables you to secure your family’s inheritance and to level your financial balance.
The non-compulsory plan lets you make repayments of up to 15% of the original loan amount per year. Meaning, there won’t be rolled-up interest. However, it depends on your equity release provider.
How Do I Calculate the Amount I'll Receive From My Voluntary Repayment Mortgage?
You can see the amount of money that you’ll be able to release if you use the voluntary repayment lifetime mortgage calculator. The calculator requires you to input your:
- Age of the youngest homeowner
- The estimatedvalue of the estate
Is A Voluntary Repayment Mortgage Safe?
Yes, it’s safe! If your provider is an ERC member, they’ll protect you from:
- Plan providers who don’t have a ‘no negative equity guarantee.’
- Lenders who aren’t members of the ERC.
- Providers who charge high interest rates.
- Lenders who charge you very high repayments and who charge them early.
- Equity release firms that give you large loan amounts before they even analyse your circumstances.
Do I Qualify For A Voluntary Repayment Mortgage?
You must be 55 years or older (90 max) to qualify for this mortgage. The property you want to borrow against needs to be in the UK. Lastly, your property must be worth a minimum of £70,000 but not more than £6 million.
After reading all you need to know about the equity release type Voluntary Repayment Mortgages, you’ll most likely be able to decide if it’s the right choice for you. Most people prefer these lifetime mortgages because it offers many varieties and flexibility to suit your specific lifestyle and needs.
As we mentioned, we understand that in today’s market you have to analyze and assess all your options in earning some extra capital. We have advisors and specialists who are more than willing to assist you with finding out what is the most suitable arrangement for you and your specific needs. For more information, you can use our voluntary repayment lifetime mortgage calculator, and please don’t hesitate to ask us anything. We’re here to help.