When is Equity Release repaid?
Regarding Lifetime Mortgages, the plan is intended to run for the remainder of your life and be repaid upon death or entering long-term care, and is deemed you wont be returning back out. L&G for instance, allow 1 year after your death for the debt to be paid off so your loved ones wont have to rush to sell the house immediately. If is taken as a joint plan, it isn't due until you both die or both enter long term care.
The amount you owe is usually deducted from the proceeds of the house sale, any remainder goes directly in to your estate not to the lender.
You can choose to repay the Lifetime Mortgage early however you will likely face Early Repayment charges. These will either be fixed charges, for instance 5 years is ...%, 8 years is ... % which will be clearly stated when your plan commences OR it will depend on the interest movement on government borrowing (GILTS) index. If this is the option chosen, you can contact the lender at anytime to find out what the repayment charges would be at that specific time.
Typically, there aren't any Early Repayment Charges if:
* You repay the debt after you (or if joint, the youngest of you) reach 88 years old.
* The index at the time you repay is higher than or equal to the Benchmark rate shown in your Lifetime Mortgage Offer.
* The loan is repaid after you die or enter in to long term care.
* A joint plan, the surviving partner repays within 3 years of the others death or entering long term care.
* Optional repayments are made up to an annual maximum of 10% of the over all balance.
You should always check the terms and conditions of your plan, which will be clear and explained to you prior to a plan commencing. Some plans ERCs stop after 10 years of the plan so if this is a potential plan, discuss with your adviser prior to taking out a plan.
To discuss your circumstances further, in your own home at a time which suits - call to book your free appointment.