Through this outline of the ins and outs of a retirement mortgage you can make a more informed decision about how to make your property work for you. After all, the smartest investors not only buy homes to live in but also invest in property to create a lifestyle from.
What is a retirement mortgage?
Based on an overview in stepchange.org a retirement mortgage is a new type of lifetime mortgage that falls somewhere between an equity release plan and a residential mortgage. In their outline Stepchange.org specify that, “unlike a conventional residential mortgage it's not linked to a specific term but is instead repaid only when your property is sold.”
The advantages of a retirement mortgage
A retirement mortgage offers numerous advantages, one of which is that it provides a flexible way to get the most from the equity of your property.
The mortgage interest is managed so the borrowed amount doesn’t increase. Your repayments will never be more than you can afford because the amount you release is determined by your retirement income.
What is the security on your retirement mortgage?
Your retirement mortgage is secured against your home so you always keep full ownership of your property.
What is the difference between a retirement mortgage and equity release?
You can get far better interest rates on a retirement mortgage than an equity release mortgage. When it comes to the latter the interest rate is fixed for life but for a retirement mortgage the rate is fixed for five years. On reaching this point the mortgage’s interest rate could be fixed for another five years, paid free of penalties or you can switch to an equity release plan.
Further advantages to the retirement mortgage which have in the past only been available through an equity release plan are the fact that you can get a “no negative equity guarantee” which means that if the sale of your property is ultimately insufficient to pay back the capital amount the shortfall won’t be your liability.
A retirement mortgage also offers the “an option to switch to a lifetime mortgage when the policy has been running five years and the youngest borrower reaches 80 years of age.” This lifetime mortgage would then not require repayments.
Is a retirement mortgage right for you?
A retirement mortgage offers flexibility when it comes to borrowing in retirement. If you’ve been considering investing in Calpe property for sale but have been unsure of your mortgage plan options, perhaps a retirement mortgage is right for you. It could be the opportunity you’ve been looking for to expand your property portfolio. It’s always wise to get sound financial advice when it comes to your assets and financial well being but a retirement mortgage might be just the thing to help you turn your dream home on the coast into a reality.
For more information about homes on the Costa Blanca and Calpe property for sale that is ideal for retiring to a more laid-back lifestyle in a setting that’ll every day have you thanking your lucky stars, contact Grupo Esmeralda, leaders in the local real estate market.