Qualifying for a loan when you get older can be difficult, as you may be retired before the loan is paid off. Banks and other lending institutions generally do not want to lend money to people on fixed incomes, as they may default on the loans.
However, if you are a homeowner, you can use the equity in your house to get the money you need to pay for medical expenses, take a once-in-a-lifetime holiday, or renovate your house. Equity release mortgages are structured specifically for people over the age of 55, as long as they qualify for the programme.
Qualifying for Equity Release Mortgages
The main criteria for an equity release mortgage, also referred to as a lifetime mortgage, is that the applicant must own their home, and it must be their main residence. Secondly, the property must be located within the United Kingdom, although being in the UK doesn’t mean the application for the mortgage will be accepted. Some residents located on islands in the UK, such as the Isle of Man, may not be accepted for a mortgage, and those living in areas which flood easily could have their applications rejected as well.
Minimum Property Value
The location of the property can partially determine how much money you can qualify to receive from an equity release lender. In addition, the value of the property has to be considered as well, because most lenders will not accept properties whose value is below £60,000. The condition of the property is also considered before lifetime mortgages are approved, and if your home is in disrepair, then the application could be rejected, depending on the severity of its decline.
Most equity release schemes accept applicants who are sixty years old and older, but there are some lenders who accept applicants as young as 55. Some lenders impose maximum age restrictions, but the ages vary by lender with some approving applicants as old as 100. To find out about the age limits of the lender you are considering, search their website, such as responsibleequityrelease.co.uk, for more information.
How Much Do You Need?
Depending on the lender, there could be a minimum amount of money you will need to ask for before the application is approved. A lifetime mortgage isn’t really meant to be used for small loans, as most homeowners could probably qualify for a personal loan. The minimum amount for many lenders is £10,000, though there are some who set their minimum at £15,000.
The amount approved by lenders usually depends on the age of the property owners, including the age of the youngest co-applicant if there is one, the value of the property, and the health and lifestyle of the applicants. Since there are different types of equity release mortgages, you should evaluate your current and anticipated future monetary needs to choose the one that is right for you. An equity release mortgage has several benefits for homeowners, but you should discuss with a financial advisor whether or not one is right for your needs.