Put simply, equity release is a method for releasing some of the money stored up in your home, without the need to move. How much equity you release depends on how old you are, how much your home is worth and how much you choose to borrow.

You may also have heard some equity release products described as ‘Home Reversions’ or ‘Lifetime Mortgages’. These are two different types of regulated equity release plans, and here we will be talking about Lifetime Mortgages.

With a Lifetime Mortgage, you can choose not to make any payments throughout the life of the mortgage. Instead, the mortgage (and the interest accumulated and any charges) will be repaid at the time of your death or move into long-term care, using the cash generated from the sale of your home.

With a Lifetime Mortgage you will always retain ownership of your home, and your home will never be repossessed (as long as you abide by the terms and conditions of the loan). All Lifetime Mortgage products are regulated by the Financial Services Authority. Remember however, before taking out a Lifetime Mortgage, we recommend you discuss it thoroughly with your equity release financial adviser, an independent legal adviser and we recommend you discuss it with your closest family.

Is a Lifetime Mortgage right for me?

At this point, it is important to point out that taking out a Lifetime Mortgage is a long-term commitment as it is designed to be paid back only when you die or if you move permanently into long-term care. If you are looking for a more short-term arrangement then there may be more suitable ways of raising money.

You should also consider what other options you have before committing to a Lifetime Mortgage. For example, moving to a smaller home or using your savings could both be viable ways to raise the cash you need.

A Lifetime Mortgage could also have an impact on your eligibility for means-tested state benefits and could affect your tax position. Finally you should also consider talking this through with your beneficiaries as this may impact any future inheritance they might receive.

Am I eligible?

As with most lending products, there are several key requirements that you will need to meet in order to be eligible for a Stonehaven Lifetime Mortgage.

The most basic requirements are:

• You must be aged over 55

• You must be a homeowner and a UK resident.

• It must be your main residence

• Your home must be based in England or Wales

The other requirements are related to your personal circumstances and your property.

Your circumstances

Applicants can be joint or single. Joint borrowers do not need to be married, but they both must hold full title to the property.

Your property

Your property must be in England or Wales and must be your main residence. Some restrictions may apply over the type of property that you own.

Outstanding mortgages

If there is a mortgage outstanding on your property then this must be repaid either before or at the start of the Stonehaven Lifetime Mortgage. The funds provided by Stonehaven can be used to clear this debt.

Other occupiers

On application, your home should be occupied by people who hold title to the property. If there is anyone else living in the property aged 17 or over, they can continue living in the property but they must seek independent legal advice and must sign a legal document called a ‘Deed of Consent’.

Will it affect my family?

Taking out a Lifetime Mortgage is a big decision and it is likely to affect your family’s inheritance. For this reason we encourage you to get your family involved as frequently as possible throughout the process if you want to ensure they are happy with the decisions that you make.

You should consider whether passing on an inheritance is important to you. If so, then your financial adviser will bear this in mind when recommending a solution for you.

Common Product Features

Will I leave a debt for my beneficiaries when I die?

No. Stonehaven offers a no negative equity guarantee. This means that when your property is sold for the best price reasonably obtainable, if the proceeds after solicitors’ and estate agents’ fees are not enough to pay the amount owed to Stonehaven, we will not ask you or your beneficiaries to pay the shortfall.

Will I ever have to move out?

No. If you take out a Lifetime Mortgage you can stay in your home until your death or move into long-term care. If there are two of you and your partner dies or moves into long-term care, you just need to inform us, but you won’t be asked to move out of the property.

What do you mean by ‘abiding by the Terms and Conditions of the loan’?

Our products have certain Terms and Conditions that both Stonehaven and you must abide by. Your main obligations to us are that you keep the property in good condition, you keep the property insured and you let us know if any of your circumstances change.

What is a 'No negative equity' guarantee?

We guarantee that when your property is sold for the best price reasonably obtainable, if the proceeds after solicitors’ and estate agents’ fees are not enough to pay the amount owed to Stonehaven, we will not ask you or your beneficiaries to pay the shortfall.

Are the interest rates at a fixed rate?

The rate of interest is ﬁxed for the duration of the loan (further advances are also at a fixed rate, but the rate can be different from the rate of the initial loan).

How is the loan repaid?

The loan, and all outstanding interest and charges, is usually repaid from the sale of your home when you die or move into long-term care (or when the last surviving borrower dies or moves into care). Your estate will receive any remaining equity.

You retain full ownership of your home until it is sold.

Do I have to make any payments?

Because the loan is usually repaid from the sale of your home when you die or move into long-term care, with our standard Lifetime Mortgages you do not have to make any repayments during the term of the mortgage, instead the interest is added to the loan each month. This is different in the case of the Interest Select product, where you elect to make interest payments for a chosen period of time.

Do I retain ownership of my home?

With any Lifetime Mortgage, as long as you abide by the Terms and Conditions of the loan, you will always retain ownership and control of your property.

Will my property be repossessed?

Because these are all Lifetime Mortgages you will be able to stay in your home until your death or move into long-term care (as long as you abide by the Terms and Conditions of the loan), without the concern of your property being repossessed.

Are Lifetime Mortgages Regulated?

Lifetime mortgages are regulated by the Financial Services Authority.

What is protected equity?

With all Stonehaven Lifetime Mortgages you can choose to protect a percentage of the eventual sale value of your home. This means that the percentage you choose to protect is guaranteed to be available to you or your beneficiaries in the future.

Lump Sum Options

How do I apply for additional borrowing?

You may qualify for additional borrowing if sufficient equity exists in your property. If you believe this may be the case, you will need to obtain financial advice and the financial adviser who helped with your original Lifetime Mortgage will usually be able to help. Alternatively, any suitably qualified financial adviser should be able to lead you through the process. We may require an up to date valuation of your property as part of this process.

What can I spend the money on?

You can choose to spend the money on whatever you wish. Some people just need a little extra cash for home improvements or to improve their lifestyle, whilst others may wish to gift their children or grandchildren a lump sum. Of course, you may have something else in mind, ultimately it’s up to you what you spend the money on.

Interest Select

What happens if I stop making payments earlier than originally planned on my Interest Select Lifetime Mortgage?

If you stop paying the interest earlier than originally planned, the following will happen:

• We will immediately stop your monthly direct debit. The interest payment part of the loan will switch to an interest roll-up loan and the interest rate charged on it will switch to a new interest rate

• The new interest rate will be your original rate + 0.2%

• This new interest rate will be fixed for the life of the loan and interest will be added monthly to the outstanding balance until your Lifetime Mortgage is repaid.

• You will also be charged an administration fee at our then standard rate as set out in our tariff of charges for the change.

• The interest roll-up part of your loan will be unaffected by this change and will continue to roll-up on its original term

Your home will never be repossessed (as long as you abide by the Terms and Conditions) if you cannot keep up the interest repayments.

What happens if I want to extend the payment term on my Interest Select Lifetime Mortgage?

You are not able to extend the interest payment term.

Costs

Can I pay the valuation fee by credit card?

No. The valuation fee has to be paid upfront by cheque.

Can I pay the valuation fee on completion of the loan or can I add it to the loan?

Because we have to pay a third party to carry out the valuation, we ask that the valuation fee is paid upfront to help cover these costs. It cannot be added to the loan.

Can I pay the completion fee upfront?

You are not able to pay the completion fee upfront by cheque or in cash. However, if you don’t want the completion fee to be added to the loan, simply request to have the £650 taken off your initial loan amount.

Will you part refund the valuation fee if the house is valued at less than I thought?

No. When we appoint the valuer, they are paid based on the initial estimated property value, not the actual value of the house.

Early Repayment Charges

What is the term of the mortgage?

The term is the estimated length of time that the mortgage is due to last based on your age at the start of the mortgage.

The process

How long will it take to get my money?

Once your application has been submitted, a Valuer will contact you (generally within a week and sometimes earlier than this) to arrange an appointment. Once this has taken place, an Offer Letter will be issued to you generally within a couple of days.

If you are taking out a Stonehaven product, at this stage we will notify our solicitors who will get in touch with your solicitor to start the legal process. This process is generally what takes the most amount of time as all the necessary checks and searches take place. This can take between 4 and 6 weeks, sometimes longer for a more complex case (for example unregistered properties).

Once we have received all the documentation from your solicitor, the necessary checks will be carried out in relation to the title of your property. In the majority of cases, we will then release the cash to your solicitor who will arrange for the funds to be transferred to you.

What is a Key Facts Illustration (KFI)?

A Key Facts Illustration (KFI) is a document containing certain information about the loan you are about to take out. It includes a description of your mortgage, the features, benefits, risks, how much you will owe, fees and costs. It is presented in a standard format so that you can easily compare KFIs between different lenders and between different products This format is defined by the FSA.

Other

Will this affect my pension?

If you decide to take out an equity release plan it won’t affect your State Pension or any personal pensions.

Do I have to pay tax on the money I receive?

Under current legislation, any cash sum drawn from your home will not attract Income Tax or Capital Gains Tax.

Does eligibility for the plan depend on my income or health and will I need to take a medical?

Neither your income nor state of health has any bearing on your eligibility for a Stonehaven Lifetime Mortgage. However, it might affect the type of product that is suitable for you. Your financial adviser will be able to recommend the most suitable product for you.

How is my Lifetime Mortgage paid off?

Unlike a standard mortgage, there is no set repayment term and there are no monthly repayments to be made (unless you have taken out an Interest Select mortgage).

Instead, the loan will be repaid when your home is sold usually following your death or move into long-term care (or in the case of joint borrowers, when the surviving borrower dies or moves into long-term care). When repayment is due, the full amount must be repaid.

What happens to my home when I die or move into long-term care or sheltered accommodation?

When you die (or in the case of joint borrowers, on the death of the survivor), your executors must get in touch with us. They will be responsible for selling your property and will have 12 months to repay the loan. If you (or the surviving borrower in the case of a joint loan) move into long-term care you will also have 12 months to repay the loan. Interest will continue to be charged until the loan is repaid.

What will happen to my state benefits if I take out this Lifetime Mortgage?

If you are receiving state benefits you must consider the implications of taking out a Lifetime Mortgage. A Lifetime Mortgage may reduce or even cancel your entitlement to some means tested state benefits. If you are not claiming any state benefits, you may be entitled to claim. Either way your financial adviser should be able to help. Alternatively you can contact the Citizens Advice Bureau, HM Revenue & Customs, the Pension Service or the Benefits Agency for further information.

Is there anything that I’m expected to do after I’ve taken out the Lifetime Mortgage?

Yes, abide by the Terms and Conditions of this mortgage which includes making sure that you keep the property in good condition, you keep the property insured and you will let us know if any of your circumstances change.

What happens if I move home?

You can transfer your Lifetime Mortgage with the same Terms and Conditions to your new home as long as your circumstances and your new property meet our lending criteria at the time. Please contact us as early as possible to find out if your new home meets our lending criteria. If you move to a property of lower value, it may mean that we cannot lend you the same amount that you currently owe. In these cases you may have to repay part of the loan or it may reduce or cancel any Cash Release payments that you are due to receive. It may also affect your Cash Reserve Facility. Full details are provided in your Key Facts Illustration.

What happens if my circumstances change?

You must advise us if your circumstances change, for example if you get married, as they may impact the contract that you have with us.

What if I want to repay early?

Your loan may be repaid in full, or in part, at any time. However, our plans are designed to last for the rest of your life so an Early Repayment Charge (ERC) may be payable. Please go to our Early Repayment Charge section for more information. Your financial adviser will explain when and how you may have to pay this. It is also explained in your Key Facts Illustration.

How much can I borrow?

The amount that you can borrow depends on your circumstances, which include your age and the value of your home. If there are two of you borrowing together, the amount available depends on the age of the younger borrower. Go to our ‘How much can I borrow?’ section to find out exactly how much you can borrow.

How do I know how much is outstanding on the loan?

Each year we will send you a statement that lets you know how the Lifetime Mortgage is progressing.

What do you mean by long-term care?

Long-term care means that you have chosen to leave your property because you are no longer able to carry out two or more Activities of Daily Living (ADL) without the assistance of another person, or because you have become cognitively impaired (which is basically a loss of mental ability). When you leave the property, you can choose to go into professional care or move in with members of your family.

What is a Deed of Consent?

A Deed of Consent is a legal document which must be signed by anyone over the age of 18 who is living in your property and who isn’t part of your lifetime mortgage application. By signing this document they are waiving their rights to live in the property when the mortgage becomes repayable. They will need independent legal advice at this stage.

Can I move home?

If you move home to a new property that is acceptable to Stonehaven, you can move the loan under the same Terms and Conditions.

Email this page

Call us now on Freephone 0800 068 0212

(Monday to Friday, 9am to 5pm)

Have you got a question you’d like to ask?

Send us your questions and we’ll add the answers to this page.

Send a question

Need more information?

Download our brochure