How to turn the dream of a sunny hideaway into reality
For centuries, the British weather has been unpredictable and varied. As a small island in the North Atlantic, it is likely to be warm in the summer and cool in the winter, but these are not reliable assumptions.
However, the early indicators suggest that the winter of 2023-24 will follow the usual, expected pattern. The December mornings are marked by mists and frosts, which are consistent with the season. It seems fair to anticipate a long, gloomy stretch of cold weather for this period. And as the winter gets harsher in the coming months, the central heating will be on all day, and we will need an extra ten minutes to dress up in scarves, hats, gloves and cosy, sturdy shoes.
The British weather is erratic and diverse, with summers that are not always sunny and winters that are often harsh. This has long motivated many people to say goodbye and move to warmer places, either permanently, or just for a while. Those of us who stay behind feel a bit envious, but also secretly admire the courage of the family who took the leap, a feeling that grows stronger every time we get an email from them telling us how much nicer the weather is in the Mediterranean, or the Gulf of Mexico, than in Britain.
Having a home abroad used to be a dream that only a big Lottery or Premium Bond prize could make come true. But these days, more and more people don’t have to rely on luck; instead, they take out a lifetime mortgage, the most popular way of releasing equity for the over 55’s.
You may have heard about equity release, a product that has become more popular among people over the age of 55. You may have heard about the benefits of getting a tax-free cash lump sum to help improve your home, or even buy a property abroad with the money. However, you may not know much about lifetime mortgages – so what is a lifetime mortgage exactly?
A ‘lifetime mortgage’ is a type of loan that lets you access some of your property wealth, tax-free, while you still own and live in your home.
There are many types of lifetime mortgages, each designed for different needs, from helping you buy a new main home to giving money to your family to help them buy their own home – there are endless possibilities.
Lifetime mortgages are a later life mortgage for people who are 55 or older, and they have a special feature: the homeowners do not have to pay back anything every month after they receive their money. But if they want to leave more inheritance for their family, they can choose to make voluntary payments whenever they want, thanks to the modern and flexible plans available today.
This optional payment feature makes the mortgage very attractive for those looking to control their future balance, but there is another thing to consider if you are thinking about equity release. You should only get a lifetime mortgage from a lender that is approved by the Equity Release Council (ERC). Why? Because these lenders offer a very important safeguard: a no negative equity guarantee.
What does this mean? It means that after you have died, or moved into long term care, you will never have to pay back to the lender more than what your home is worth, and you will not leave your family with a debt that they cannot afford.
“Once people are told of this important safeguard, it helps puts their mind at rest,” says Mark Gregory, chief executive of Equity Release Supermarket, the UK’s largest independent equity release broker.
“We only deal with lenders who are members of the Equity Release Council, because it means we can assure people that their beneficiaries will never personally be left with a lifetime mortgage debt,” adds Mr Gregory.
The peace of mind that comes built-in to an ERC-approved lifetime mortgages has encouraged thousands of homeowners to buy their sun-soaked holiday bolthole.
Mr Gregory tells of how one couple, who identified their “dream apartment” while on holiday in Portugal, were initially a little unsure about equity release. Upon returning home, they voiced their concerns when meeting with an equity release adviser who explained how the process worked. The adviser described the full range of plans on offer and produced a personalised recommendation which took account of the couple’s current financial situation, explaining how it might change once the equity sum they required had been released from their home.
Feeling assured by this guarantee, the couple were able to purchase their Algarve flat at a good discount after noticing the Equity Release Council’s safeguards with equity release – which are sometimes ignored. Once the lifetime mortgage paperwork was completed and the tax-free money moved to their bank account, they had enough cash to buy the flat outright, a situation they used to their advantage when bargaining for their Portuguese retreat.
“There is a suitable option for most homeowners, thanks to the wide range of lifetime mortgage plans on the market right now,” finishes Mr Gregory. Good news for those of us who need to keep warm as winter arrives and we dream of sunny places.