There are a number of products that could realistically be classified as retirement mortgages. A retirement mortgage is defined as a loan secured against the homeowner’s property either before retirement begins or at some point during retirement. You as the homeowner may choose a product that lasts for your remaining lifetime or you can choose a product that is fixed for a designated number of years.

Retirement mortgages do require that you make payments against your loan in the form of capital and/or interest repayments. The structure and frequency of the payments will be outlined in the mortgage deed and will affect the overall balance dependent upon if they are capital repayments, interest repayments, or a mix of the two. If you are paying only interest, then your balance will remain constant. If paying both capital and interest, your balance will actually decline over time.

If you choose a product that lasts for your full lifetime, the balance of the loan will be due when the final homeowner has either passed away or moved into permanent long-term care. The home is then sold and the full debt repaid. Any remaining profit from the sale of the home is returned to your estate to be divided as you had previously determined.

Finding the best retirement mortgage will depend on your particular circumstance, including any changes you anticipate in your lifestyle as well as your overall financial situation. Retirement mortgage lenders will use your income and financial situation to determine your eligibility in acquiring this product so you should be prepared to document proof of your income and financial stability. Other factors determining your eligibility and the amount of equity that you can release will depend on your age or the age of the youngest homeowner as well as the valuation of your property.

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