Roll-up lifetime mortgages
A rollup lifetime mortgage is a type of lifetime mortgage whereby the interest element is rolled up (compounded) and is to be repaid at the end of the scheme. The benefit to this type of lifetime mortgage is that you don’t need to make any interest repayments during the lifetime of the mortgage. A roll-up lifetime mortgage is popular for those who are 55 or over and wish to maximise the amount of money they have to enjoy and don’t wish to have any further expenses into retirement or later life.
The interest that has accrued over the period and the principle loan amount is ultimately paid from the proceeds of your house sale when you die or go into long term care.
It is important to consider that the overall debt interest at the end of the scheme will be significantly greater with a roll-up mortgage when compared to a interest only lifetime mortgage whereby a monthly contribution is made towards the interest element.
What are the advantages?
- No interest repayments to make for the lifetime of the mortgage.
- Available to applicants who are 55 or over.
- The money received from a rollup lifetime mortgage is free of tax and you can spend the money as you wish.
- Live in your home as normal for the rest of your life.
- Has a no negative equity guarantee which means the debt will never be more that the value of your home. This benefits your children or any beneficiaries to your estate after you die.
What are the disadvantages?
- The amount available under the scheme is likely to be less than the amount achievable with a home reversion plan.
- The amount you leave behind to your children or beneficiaries will be significantly less.
- If you wish to repay the plan earlier than anticipated there is likely to be early repayment penalties.
Where can I get further advice?
If you are interested in a roll-up lifetime mortgage or any type of equity release solution then our regulated lifetime mortgage experts can help. They can offer independent advice and guidance on what options are available to you and how much equity you would be able to release. Our experts are regulated by the Financial Conduct Authority and are members of the Equity Release Council and abide strictly by their code of conduct.