Lifetime Mortgages Flashcards
Lifetime mortgage providers base eligibility criteria around what two variables?
Potential lifetime mortgage customers must meet the lenders eligibility criteria regarding
1) their property
2) and their age.
What is optional partial payment?
Where the borrower can choose to make voluntary repayments to reduce the amount that would be owed at the end of the mortgage
With rolled up interest mortgages, what is the difference between taking a cash lump sum and releasing via a drawdown plan?
If the plan is used to provide a cash lump sum this can be used as the borrower wishes.
The drawdown plan establishes a maximum borrowing limit then the home owner is able to withdraw a small initial sum and then further withdrawals in the future as and when required.
The drawdown plan has the benefit that interest is charged only on the amount that is being withdrawn.
What is meant by the term loan to value?
The ratio between the value of the loan taken out and the value of the property expressed as a percentage
Under an inheritance protection guarantee if a customer only needs 75% of the maximum loan available to them what percentage of the homes future can be guaranteed for their beneficiaries?
The remaining 25% of their homes, future value can be guaranteed for their beneficiaries.
How does downsizing protection benefit a borrower?
The borrower can repay their plan without an early redemption charge, If they move to a home outside the lenders lending criteria. This may be applicable after a defined period of time.
What would happen to an existing mortgage on a property that is used as security for a lifetime mortgage?
The new mortgage will be secured as a first charge. The existing mortgage must be paid either from the borrowers own funds or more likely from the proceeds of the release.
What is the main advantage of using a drawdown plan to take several withdrawals over a period of time rather than taking a single lump sum at outset?
Less is borrowed initially the effect of interest being compounded is reduced resulting in less money being owed at the end of term.
in what circumstances may a lender waive the early repayment charge?
If the borrower chooses to repay their plan on a spouse, partner or joint application passing away or moving into long-term care.
