NEWS
- GUARANTEED INVESTMENTS FOR UNCERTAIN TIMES
- EXPATS LOSE THEIR HOMES PAYING FOR CARE
- A GROWTH INVESTMENT AND PENSION YOU CAN BANK ON
- WHY THE NEED FOR CAPITAL PRESERVATION?
OVER 60'S MONEY
In case you are still none the wiser , let me explain what is meant by a Lifetime Mortgage, a very common and popular scheme in UK, but which has only recently become available in Spain.
Until now Equity Release in Spain meant borrowing on your property and then reinvesting all or most of the money borrowed, in the hope it would provide a higher rate of return than the loan interest rate. The lender takes a charge on both your property and the investment, so cannot lose! In current market conditions to achieve an investment return above that of the loan interest rate is far from certain, and hence these schemes can lead the customer into bad debts, and in the worse case scenario losing their home. This Lifetime Mortgage on the other hand is a 100% safe way of unlocking some of the value built up in your home, without you having to move. Furthermore you can do what you like with the money, you don’t have to invest it unless you wish to.
You have no mortgage payments during your lifetime, as the interest accumulates with the loan, and is repaid when you die from the sale proceeds of your property. If you have a partner it is only repaid on second death, or of course if you permanently leave the property first. Due to the fact the Lifetime Mortgage is a debt to your estate which notionally reduces the value of your property on death, it can also reduce Spanish & UK Inheritance taxes which may otherwise be payable by your dependants. The latter may therefore be no worse off financially due to you taking out this Lifetime Mortgage. This can be another good reason to take out a Lifetime Mortgage in Spain, whether you need the money or not!
This particular scheme has been scrutinized by the FSA and meets the UK's SHIP rules (safe home income plans). It incorporates a guarantee that, come what may, you cannot go into negative equity. In other words, on death the loan plus accumulated interest cannot exceed the value of your home, even if the latter goes down in value. Another safeguard is the fact that MBS offer a fixed interest rate for life. Having arranged these schemes in UK for some 20 years now, my own preference is the peace of mind provided by a fixed rate that cannot go up. This currently stands at 6.99%.
You have no mortgage payments during your lifetime, as the interest accumulates with the loan, and is repaid when you die from the sale proceeds of your property. If you have a partner it is only repaid on second death, or of course if you permanently leave the property first. Due to the fact the Lifetime Mortgage is a debt to your estate which notionally reduces the value of your property on death, it can also reduce Spanish & UK Inheritance taxes which may otherwise be payable by your dependants. The latter may therefore be no worse off financially due to you taking out this Lifetime Mortgage. This can be another good reason to take out a Lifetime Mortgage in Spain, whether you need the money or not!
This particular scheme has been scrutinized by the FSA and meets the UK's SHIP rules (safe home income plans). It incorporates a guarantee that, come what may, you cannot go into negative equity. In other words, on death the loan plus accumulated interest cannot exceed the value of your home, even if the latter goes down in value. Another safeguard is the fact that MBS offer a fixed interest rate for life. Having arranged these schemes in UK for some 20 years now, my own preference is the peace of mind provided by a fixed rate that cannot go up. This currently stands at 6.99%.
The amount you can borrow will depend on you and your partner’s ages. If you have an existing Mortgage of any type, then this will need to be repaid from these loan proceeds.
Contact us for more details on how this scheme can work for you!
Contact us for more details on how this scheme can work for you!