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Equity Release ScotlandEquity Release Scotland
Here, we’ll go into some detail about what a voluntary plan involves, answer some common questions and explain how to get a little more info if it sounds like it might be right for you.
A voluntary repayment lifetime mortgage plan is a variation on existing lump sum and drawdown plans and actually allows you to repay up to 10% of the amount borrowed every year without incurring any penalty.
By making payments toward the balance, homeowners can minimise the amount of interest that builds up on the plan – and by doing so, control the balance in line with your own financial wishes, whether that’s for you, or for possible beneficiaries.
Voluntary repayment lifetime mortgage plans open a different source of lending for people approaching or already in retirement age – and the key is in the name – ‘voluntary’.
Because payments can be made, rather than have to be made, lenders do not require any proof of income as they would with traditional mortgage payments. As such, if you’ve looked at traditional mortgage payments but been hindered by your age or a reduced income after retirement, a voluntary plan could be perfect.
What’s more, there are generally no admin fees or early repayment charges, so you’re free to pay back as much or as little as you like, as frequently as you like too. There’s ordinarily a 10% cap on the amount you can repay annually – but a quick call to your lender will make sure you don’t breach this limit.
As with the rest of the lifetime mortgages we recommend, all our voluntary repayment plans are Equity Release Council approved, keeping you and your property fully protected – with your right to live in your home always safeguarded. In addition to this, lifetime mortgages do not impact your wider estate – so should there be a shortfall when the property is used to repay the loan, that impacts the lender – not your beneficiaries.
If you find yourself with some unexpected income, an underspend elsewhere or some savings that become accessible you can make random ad hoc payments toward the balance. By doing so you will slow the accruing interest.
If you maximise the amount you can repay (usually 10% of the overall balance each year) then you will fully cover any accruing interest and pay a small percentage of the capital off too. This will usually see the full amount of the mortgage repaid in somewhere around 15-17 years, depending on specifics of the plan.
With some help from your lender you can calculate exactly how much income you’re accruing each month and make a consistent payment that covers just this amount. By doing so you safeguard any increase in equity that becomes available over time and also safeguard any additional equity that could be passed on to beneficiaries further down the line
The size of the lump sum payment that you can access when releasing equity from a second home might change slightly versus a main residence. The exact figures depend on your age and the property value – as well as the perceived risk lending against a second property by a lifetime mortgage company.
The calculations can be complex – but we’re happy to do them for you so you get an idea of what you could release. You can call us at a time that’s convenient to you and we’ll be able to talk you through figures that are specific to you and your property. Get in touch by calling .
Current LTVs (Loan-to-Values) – Source: Canada Life June 2019
| Age | Over 55s Buy-to-Let Lifestyle | |
|---|---|---|
| 55 | 14% | |
| 56 | 15% | |
| 57 | 16% | |
| 58 | 17% | |
| 59 | 18% | |
| 60 | 19% | |
| 61 | 20% | |
| 62 | 21% | |
| 63 | 22% | |
| 64 | 23% | |
| 65 | 24% | |
| 66 | 25% | |
| 67 | 26% | |
| Age | Over 55s Buy-to-Let Lifestyle | |
|---|---|---|
| 68 | 27% | |
| 69 | 28% | |
| 70 | 29% | |
| 71 | 30% | |
| 72 | 31% | |
| 73 | 32% | |
| 74 | 33% | |
| 75 | 34% | |
| 76 | 35% | |
| 77 | 36% | |
| 78 | 37% | |
| 79 | 38% | |
| 80-90 | 39% | |
Does a voluntary repayment plan sound like it would be ideal for you?
If the answer is yes, why not give us a call and discuss your plans in a little more detail – we promise to listen carefully, answer all your questions and provide you with all the information you’ll need to take away, think over and discuss with people most important to you.
We’re extremely proud of the fact that we always provide a service that’s free from any pressure or obligation – we understand that an equity release is likely to be one of the biggest financial decisions you’ll make in your life.
You can call us on 0808 1000 170 – and when you speak with one of the Equity Release Scotland team, you’ll understand why we’re highly recommended by all of our customers.
You have the right to remain in your home for as long as you choose.
You will NEVER owe more than the value of your home due to the "no negative equity" guarantee.
You have the freedom to move to another property without financial penalty (subject to provider criteria)