What is a protected lifetime mortgage?
If you would like to take advantage of equity release but you would also like to consider holding back on some of your homes equity to use as an inheritance for your children or loved ones when you die then this is where a protected lifetime mortgage can benefit you and your family.
A protected mortgage basically means that you have elected to “protect” or hold back some of your home’s value to be used as an inheritance later on. This type of lifetime mortgage is in some cases also referred to as a guaranteed inheritance scheme. As the name implies this type of lifetime mortgage guarantee to provide a set percentage of your home’s value to be used as an inheritance for your beneficiaries when you die.
How does a protected lifetime mortgage work?
At the initial quotation stage you would decide how much as a percentage of your home you would like to protect to be used as an inheritance. For example, if your home was worth £300,000 and the elected to protect 30% then this would leave an inheritance figure of £90,000.
How much equity can I release?
The exact amount of money you can release will vary from provider to provider and will also be considered by your age, health condition, home value and how much you with to protect for the future.
The percentage amount you wish to protect is a decision you will also need to carefully consider. The percentage amount you wish to protect will impact the amount of money you can release today as a cash lump sum. For example you should consider that the more you wish to leave behind as an inheritance later on the less you will be able to receive now and versus versa
It’s important to note also that protected lifetime mortgages are only available on lump sum payment schemes and not via drawn down schemes whereby you would receive regular payments.
Your scheme provider would then apply and discount the protected 30% figure and provide you with a quote based on the remaining amount available for equity release. This means that as per this example you can be assured that there will be a guaranteed £90,000 to be paid out to your beneficiaries at the end of the scheme.
How can I find out more?
To truly understand the benefits of a protected lifetime mortgage we would recommend getting an personal quote and advice from our approved equity release experts. They will be able to provide you with a quote based upon your personal circumstances and advise you on the equity release options that are available to you.
You can be reassured that our experts are regulated and authorised by the Financial Conduct Authority and members of the Equity Release Council.