People ask “Can you get a Lifetime Mortgage if you already have a mortgage”? Yes, you can.
This is a growth lending area for Lifetime Mortgages (LTMs). Many more people are carrying residential mortgage debt into retirement and a LTM can provide the repayment vehicle.
A LTM is a first legal charge on your home, just like a residential mortgage so when you take out a LTM you always remain the owner. Because historically you could not make payments towards a LTM, the debt would grow over the years. This is one of the reasons why the loan to value, or the amount you can borrow, is lower than with a conventional mortgage to allow “headroom” within the house valuation.
The average house price in the UK 25 years ago was about. £105,000, today it’s about £255,000. If a customer had borrowed say £75,000 on an interest-only mortgage at age 40 and has no provision to repay the mortgage, then they would still owe £75,000 today. If the younger life today was 62 for example, we could arrange a LTM at the current rate which would be fixed for life.
This would clear the existing mortgage in full and provide flexibility and choice. They needn’t make any payments if they don’t want to, or they could service the interest in part or in full, or they could pay down the mortgage within limits without penalties.
Check out our previous article here.