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What is a fixed repayment lifetime mortgage?
With this type of scheme rather than having to pay interest like an interest only lifetime mortgage or have interest build up to be paid at the end of the scheme like a roll up lifetime mortgage. A fixed repayment lifetime mortgage works differently. With this type of scheme you agree with your equity release provider that you will pay an agreed larger sum in the future when your home is sold. This amount is fixed and agreed upfront when you initially take out the mortgage. You can decide to take a lump sum payment now or regular income payments for life.
As with other types of lifetime mortgage the fixed repayment scheme is approved by the Equity Release Council and has a no negative equity guarantee. This means that you’ll never owe more than the value of your home even if the value of your home decreases in the future.
As with the other types of schemes available you, under the fixed repayment lifetime mortgage you can continue to live in your home until you die or go into long term care.
What are the benefits?
- The amount you repay is fixed therefore you have certainty of how much you will have to pay back.
- You can still fully 100% benefit from any increased value in your home as unlike a home reversion scheme you have not agreed to give up a percentage of your homes equity.
- You have the flexibility to choose a receive a lump sum payment now or a regular payment for life.
What are the disadvantages?
- The scheme doesn’t offer good value in the event that you were to die early.
- You may be limited to the amount you can raise when compared against other schemes such as a home reversion plan.
- There is a limited choice of fixed repayment lifetime mortgages available.
To get a complete picture of all the advantgages and disadvantages that are applicable to your personal circumstances we would recommend you speak with one of our equity release experts. They will be able to explain the fixed repayment product in detail and how it compares against other equity release options that are available to you.
Where can I get further advice on fixed repayment schemes?
Our equity release experts are approved and FCA regulated advisors who can provide you with independent advice and assistance on the options that are available to you. The type of lifetime mortgage that is best for you will very much depend on a range personal factor such as your age, condition of your health, home value and who much equity you wish to release.