Chapter 3

Question 1

How does a lifetime mortgage work?

Answer 1

• borrower raises LT mortgage
  . Usually fixed rate
  . Lender restricts lending between 15-55%
  . Capital released
• no regular payments of captial or interest made

Question 2

Max lend

Answer 2

1 million or 2 million in London

Question 3

Leasehold properties

Answer 3

Required length varies. One lender requires 185 years less the age if the youngest applicant
Another lender varies the length required by the age of the applicant with a longer lease required for younger applicants

Question 4

Construction

Answer 4

Must be of standard traditional construction

Question 5

Life annuity

Answer 5

Historically cash generated from the plan may have been used to buy a life annuity, providing a guaranteed income for the rest of the borrower’s life
This does not exist any longer.

Annuity payments were taxable (interest)

Question 6

Holiday home

Answer 6

Holiday homes and second homes are not acceptable to lenders