The Benefits of a Lifetime Mortgage
A lifetime mortgage or more precisely drawdown lifetime mortgage is an important financial tool that can help you with your long-term goals. A lifetime mortgage differs from a traditional home loan in the respect that it has no set repayment schedule, and will not end until either the borrower or lender cancels it. In this blog post, we’ll discuss some of the benefits of having a lifetime mortgage for both borrowers and lenders.
Borrowers may benefit from having a lifetime mortgage in the following ways:
Interest is not paid on the loan. Instead, borrowers can take advantage of home appreciation without worrying about having to pay back their lender until they decide that it’s time to sell. This gives them more flexibility when dealing with significant expenses like healthcare or long-term care.
You have no fixed monthly payment amounts which makes budgeting easier and helps your cash flow during lean months. If you’re unable to make payments due to illness or injury, there are options available that will ensure you don’t lose your property, such as borrowing against future equity (see #). Borrowers who die before repaying their lenders won’t leave family stuck with an unpaid mortgage.
Lenders benefit from having a lifetime mortgage in the following ways:
The lender has no risk of default, which means they can offer better interest rates to borrowers. As home prices increase over time, so does their return on investment because equity is being built with every payment made by the borrower and there are fewer payments remaining until settlement occurs when the house sells (see #). The longer your money stays invested and earning a positive return for you, regardless of fluctuations in market conditions.