If you already have a lifetime mortgage, you’re likely familiar with the benefits it brings, including the ability to unlock tax-free funds from your home without the need to move. But what if you need additional funds down the line? Whether it’s for home improvements, gifting to family, or covering unforeseen expenses, a further advance could be the answer.
Here’s a step-by-step guide on how to secure a further advance on your existing lifetime mortgage:
1. Review Your Current Lifetime Mortgage Terms
First, it’s essential to understand your existing lifetime mortgage terms. Most lifetime mortgage lenders allow further advances, but specific criteria may apply. A financial advisor can help you check:
- Minimum Loan Amount: Most lenders will have a minimum amount for further advances.
- Loan-to-Value (LTV) Limit: Your lender will have an LTV cap, which limits how much equity you can access.
- Interest Rate: The rate for further advances may differ from your original rate.
If you need assistance navigating your terms, your advisor can clarify any questions and guide you through the next steps.
2. Consult Your Financial Advisor
Reach out to your financial advisor to express your interest in a further advance. They will liaise with the lender on your behalf and review your application based on:
- Current Home Value: The lender will assess the current market value of your property.
- Age Requirements: Age is a factor in determining the amount of equity you can release, as well as the LTV limit.
- Purpose of the Advance: The reason for the further advance will also be considered, whether it’s for home renovations, debt consolidation, or gifting to loved ones.
If the initial criteria are met, your advisor will proceed with the application.
3. Property Valuation and Assessment
Once the application is underway, the lender will arrange for a property valuation. Since property values can fluctuate over time, the valuation will determine how much additional equity is available to release. The valuation process includes:
- Scheduling a Surveyor Visit: A surveyor appointed by the lender will inspect the property to assess its current market value.
- Receiving the Valuation Report: The lender will use the valuation report to calculate the further advance amount based on their LTV limits.
If the property value has increased, you may have more equity available for release, which can increase the amount you’re eligible for in the further advance.
4. Approval and Offer for the Further Advance
After completing the valuation and review, the lender will send an offer detailing the terms of the further advance. This document will include:
- New Interest Rate: The rate for the further advance may differ from your initial rate.
- Repayment Terms: Since lifetime mortgages are typically repaid when the property is sold, the further advance will be added to your total balance.
- Additional Fees: Any fees associated with the further advance, such as application or arrangement fees, will be outlined in this offer.
It’s wise to review this offer with your financial advisor to ensure it meets your needs and aligns with your long-term financial goals.
5. Receiving the Funds
Once all the paperwork is complete, you’ll receive the funds directly into your bank account. This process can take a few weeks, so make sure to account for this timeframe, especially if the funds are for time-sensitive purposes.
6. Review Your Plan Regularly
Lastly, as with any financial commitment, it’s good to regularly review your lifetime mortgage plan. A further advance can provide you with flexibility and additional resources when needed, but it’s always wise to consider how it aligns with your overall financial goals. If you’re unsure about any aspects, or need further assistance, consulting with a later life lending specialist can provide clarity and help you make the most of your options.
Final Thoughts
A further advance can be an effective way to access additional funds when you need them, using the equity you’ve already unlocked through your lifetime mortgage. By following these steps and staying informed, you can make the process as smooth and efficient as possible, empowering you to enjoy your retirement with greater financial flexibility.
Ready to find out more? Visit our dedicated later life lending page to arrange your free 10 minute discovery call!
Mike Jones
Later Life Lending Specialist
Mike Jones is a dedicated later life lending specialist, leading the “Mewstone Later Life Lending” service with a focus on providing personalized financial solutions for those navigating the complexities of retirement and home ownership. With years of experience in retail banking and a deep understanding of later life lending, Mike is well-equipped to guide you through critical decisions such as equity release, retirement interest-only mortgages, and more.
Releasing money from your home is a significant choice, and Mike understands the importance of ensuring you are fully informed about your options. His approach is rooted in offering unbiased, expert advice tailored to your unique circumstances. Whether you’re looking to improve your retirement lifestyle or need help planning your financial future, Mike is committed to finding the right solution for you—without any preference for particular lenders or products. His ultimate goal is to help you make informed, confident decisions that suit your long-term needs and give you peace of mind.
At Mewstone, Mike believes it’s not about “selling” a product but about finding the right fit for each individual. You can trust that, when working with Mike, the focus is always on what’s best for you and your financial future.