If you're a homeowner, you've probably seen the value of your property rise over the years.
But how can you benefit from the money that's tied up in your home, if you don't want to sell up and move?
A Retirement Interest-Only Mortgage from the Scottish could be the answer. It lets you unlock some of the cash from your property, to use however you wish.
It could help you turn as much as 50% of the value of your property into a cash lump sum. So, for example, if your property is worth £150,000, you could borrow up to £75,000. The maximum mortgage amount is generally determined by your income - which can include your pension income.
YOUR QUESTIONS ANSWERED
Q. How much can I borrow?
A. The maximum mortgage amount is generally determined by your income(s), which can include pension income. We consider each applicant individually. We will carry out an assessment of your net income and outgoings to make sure that the mortgage is affordable now and in the future, whether you are working or retired. If we are unable to offer you a Retirement Interest-only Mortgage, we can refer you to a third party who may be able to help. Please ask for further details.
Q. How long does it take to arrange a Retirement Interest-only Mortgage?
A. It usually takes about eight weeks for you to get your money, once we’ve received your application. If the Retirement Interest-only ortgage is to provide you with a cash sum, this will be paid to you via your legal adviser.
Q. Is there an Arrangement Fee?
A. For a variable rate Retirement Interest-only Mortgage you are required to pay an arrangement fee of £799, which can be added to the loan. For a fixed rate Retirement Interest-only Mortgage you are required to pay a £100 booking fee upfront plus a £699 arrangement fee, which can be added to the loan.
Question How can I pay my mortgage?
A. The easiest and most convenient way to pay is by banker’s direct debit each month. The form for this is included with your mortgage application. We will make the necessary arrangements to collect the required payment from your bank account each month, and you need take no further action. You can also make payments by standing order or regular transfers from a savings account.
Q. What if I want to move home later on?
A. If you move home and want to transfer this mortgage to a new property, you can do so if the application satisfies the normal lending criteria of Scottish Building Society. If the new property is of a lower value, you may be required to repay part of the amount outstanding on the mortgage.
Q. What if my circumstances change?
A. If you want someone else to move into your home with you, for example a member of your family, you must obtain the permission of Scottish Building Society before they move in. Similarly, if you wish to change the ownership of your home from single to joint (for example, if you were to marry), the mortgage may become repayable. Scottish Building Society will assess each change of ownership individually.
Q. Can I make overpayments?
A. Yes, you can make overpayments on your mortgage to reduce the capital. If this is during the initial period where early repayment charges apply (see below) you may repay up to 10% of the capital balance of the mortgage each year without penalty.
Q. What happens if I decide I don’t want the Retirement Interest-only Mortgage any more?
A. If for any reason you no longer want the Retirement Interest-only Mortgage, you can repay the amount you owe to the Society at any time. There may be a charge for early repayment (see below). You should let us know if you intend to move, or have moved, into long-term care. It is your estate executor’s responsibility to inform us of your death.
Q. What are the early repayment charges?
A. If you repay the loan in full during the first three years of the mortgage, an early repayment charge, equivalent to 3% of the loan amount, will apply. If you overpay by more than 10% of the loan amount in any 12-month rolling period during the first three years of the mortgage an early repayment charge, equivalent to 3% of the total amount overpaid, will apply. After the first three years, the Society will not make an early repayment charge if you choose to repay the mortgage. However, there will be certain redemption fees that will need to be paid (see our Details of Charges leaflet for more information).
Q. What if I want to borrow more money in the future?
A. The Society may be willing to lend you more in the future, if your income and/or the value of your home goes up significantly.
Q. Could my tax position or entitlement to benefits be affected?
A. A cash lump sum could affect your tax liabilities. If you are looking at a potential inheritance tax bill, a retirement interest-only mortgage may help mitigate this. It may help to get more information or advice on tax issues before taking out a retirement interest-only mortgage. The law relating to taxation could change in the future. You could contact HM Revenue & Customs to check how your tax position may be affected. A cash lump sum could also affect your entitlement to welfare benefits (such as pension credit and housing benefit) depending on your financial circumstances. You should contact the Department for Work & Pensions or the Citizens Advice Bureau if you need to talk through any welfare benefits issues in more detail.
Q. Anything else I need to think about?
A. You must arrange Buildings Insurance for your property before funds can be released.