Involving Family in Your Lifetime Mortgage Journey

As well as helping them to better understand what a lifetime mortgage entails and how it works, it also gives them the ability to hear first-hand what it might mean in terms of their inheritance. Additionally, it gives them an opportunity to learn about what they’ll need to do when you enter long-term care or pass away, and to ask any questions you might not have thought of.

When should I involve my family?

If people choose to involve their family in their lifetime mortgage journey, they usually do so from the outset. Inviting those near to you along to your initial meetings with your financial adviser means that your relatives can gain a better understanding of your goals, what your options are, and the things to consider.

Even if you choose not to involve your family during your initial meetings it’s still worth letting them know, even if it’s not until after the loan has completed. That way it’s not a surprise to them later on, and they’re better prepared to deal with it once you pass away or enter long-term care.

What are the benefits of involving family?

As well as widening their understanding of how a lifetime mortgage works, including your relatives in discussions may provide a different perspective, and result in questions being asked that you hadn’t thought of, which in turn will help you to make an informed decision.

Including family in your meetings with advisers, or even having informal conversations with them yourself, can also help them understand the reasons why you’re taking out a lifetime mortgage – for instance, you might want to see them enjoy their inheritance while you’re still around.

But perhaps more importantly, family involvement means that they’ll gain a better understanding of what it means for their inheritance when you pass away, and their obligations when it comes to repaying the lifetime mortgage.

How does a lifetime mortgage affect the amount I leave my family when I pass away?

All lifetime mortgages offer the ability to make penalty-free optional repayments each year (the exact amount you can repay each year will depend on your provider and specific lifetime mortgage). As these repayments are optional, many people instead elect to let the interest roll up over time, which in turn affects the amount left to the estate when you pass away.

It’s important to note that if your lender is a member of the Equity Release Council then the lifetime mortgage will benefit from a ‘no negative equity guarantee’, meaning your family will never owe more than the value of your home.

How do my family members repay the lifetime mortgage?

Once your family have informed us that you’ve passed away or entered long-term care, the expectation is that the balance of the lifetime mortgage is repaid within 12 months. Most people choose to do so through the sale of the property – however, if your family are keen to retain your home and other sources of funds are available, those could be considered as an alternative.