What is the difference between equity release and a lifetime mortgage?
As specialists in later life mortgages, we are often asked what is the difference between Equity Release (Lifetime mortgage) and a Retirement interest only (RIO) mortgage? Both mortgages release equity from your home but a retirement interest only (RIO) mortgage is something to consider before an equity release mortgage.
RIO mortgages are less restrictive than Equity Release mortgages in terms of the tie in period. They are similar to standard mortgages where, for example, you choose a fixed rate period of 2 years and at the end of that fixed rate period you either see what new rate the current lender will offer, move to a different lender offering a better rate or pay off the mortgage in full with no penalty. Whereas an equity release mortgage is long term and has a long tie in period so is more restrictive.
One of the main differences is the RIO mortgage lender will require the monthly interest to be paid. This is unlike the Equity Release mortgage where interest is compounded (added to the mortgage), although it can often be paid monthly if preferred.
There are many other differences and many options to look into and consider when deciding to apply for later life borrowing which is why it’s important to speak to a qualified adviser to find the right option for you.
RIO mortgages are less restrictive than Equity Release mortgages in terms of the tie in period. They are similar to standard mortgages where, for example, you choose a fixed rate period of 2 years and at the end of that fixed rate period you either see what new rate the current lender will offer, move to a different lender offering a better rate or pay off the mortgage in full with no penalty. Whereas an equity release mortgage is long term and has a long tie in period so is more restrictive.
One of the main differences is the RIO mortgage lender will require the monthly interest to be paid. This is unlike the Equity Release mortgage where interest is compounded (added to the mortgage), although it can often be paid monthly if preferred.
There are many other differences and many options to look into and consider when deciding to apply for later life borrowing which is why it’s important to speak to a qualified adviser to find the right option for you.
Our equity release process
Your adviser will complete a full assessment of your situation and provide a detailed report of their reasons why they recommend a particular solution.
The lender will calculate the maximum mortgage available based on affordability of income and expenditure, so often the amount available will be less than what a client can get with an equity release mortgage depending on income.
As opposed to equity release where monthly interest can be compounded so the lender will not look at affordability, they will calculate the maximum mortgage available using age and the value of the security property.
The lender will calculate the maximum mortgage available based on affordability of income and expenditure, so often the amount available will be less than what a client can get with an equity release mortgage depending on income.
As opposed to equity release where monthly interest can be compounded so the lender will not look at affordability, they will calculate the maximum mortgage available using age and the value of the security property.
FREE EQUITY RELEASE CONSULTATION
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We are whole-of-market independent specialists in later life mortgages; we will discuss all options with you and recommend the best solution.
~ Retirement interest only Mortgages ~ Equity Release (Lifetime Mortgages) Make your time of life what you want it to be! |
What is an equity release mortgage?
What is equity release?
Equity release unlocks the value built up in your home as a tax free lump sum. There's no need to move out and you'll still own your home. Lifetime mortgages are the most popular type of equity release product and are available to homeowners who are 55 or over.
Equity release unlocks the value built up in your home as a tax free lump sum. There's no need to move out and you'll still own your home. Lifetime mortgages are the most popular type of equity release product and are available to homeowners who are 55 or over.
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At AK Partnership we have a specialist team who are specifically qualified to advise on these mortgages. We trade under separate division Time Of Life Mortgages: www.timeoflifemortgages.co.uk.
We are a member of the Equity Release Council (ERC). A voluntary body which aims to ensure that its members are highly professional and act with integrity and transparency in offering high-quality products and services to customers. More details of this organisation are detailed here. |
We adhere and give advice that complies with the ERC standards and ensure that all our recommended providers and their products are members of the ERC and that they also adhere to the standards laid down by this Standards Board.
Equity Release mortgages are often referred to as "Lifetime Mortgages", "Home Reversion Plans" or "Retirement Interest Only Mortgages".
For more information and to understand whether this type of mortgage is suitable for you please get in contact with us here.
Equity Release Standards (PDF document)
Equity Release mortgages are often referred to as "Lifetime Mortgages", "Home Reversion Plans" or "Retirement Interest Only Mortgages".
For more information and to understand whether this type of mortgage is suitable for you please get in contact with us here.
Equity Release Standards (PDF document)
*** February 2021 - AK Partnership/Time Of Life Mortgages are waiting for our membership of the ERC to be finalised. We understand there is a delay in processing due to the COVID pandemic.
AK Partnership
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Address
35 Berkeley Square Mayfair, London, W1J 5BF |
Phone 0207 100 1822
Email adrianknott@akpartnership.co.uk |