What are the Eligibility rules for Equity Release Lifetime Mortgages?

The two eligibility rules for Equity Release that are most often cited are that you need to be over age 55 and be a homeowner. And that is quite correct. However, there are a number of other factors that are also taken into account by a lender when deciding whether to allow you to take a Lifetime Mortgage.

Age

The minimum age that you can take a Lifetime mortgage is 55. Where there are joint applicants, then this applies to the youngest age. If there are other people living in the property, but not owners of the property, then they will be asked to sign a “Deed of Consent” in order to remain living at the property.

Being a Homeowner

Not every home is acceptable to a Lifetime Mortgage Provider. And each provider has their own criteria as to which properties are acceptable. This is another good reason why you should take advice from someone who has access to all the lender’s in the marketplace.

Generally speaking, a property needs to have a minimum value of £70,000 to be eligible. The location, construction and proximity to commercial properties such as shops, hotels, pubs, railway stations and many other situations will affect the decision of a provider on whether to lend. The construction of the property will also be taken into account. A good adviser will establish before you make an application whether or not your application is likely to be successful.

If you are a leaseholder, then providers will want to know about the terms of your lease. These things will include things such as the remaining term of the lease and any ongoing costs such as ground rents and service charges. Age restricted properties can be particularly difficult to secure a lifetime mortgage on due to the many terms and conditions placed in the lease contract.

Shared ownership properties are acceptable to some lenders and it is even possible to purchase the remaining percentage of a shared ownership property in some cases.

Other Criteria

It is vital that the highest priority is given to protecting potential clients from making decisions while impaired, vulnerable or subject to improper persuasion. The advice process is focused on minimising the possibility of this happening.

You cannot take a lifetime mortgage if you are deemed to be “without capacity”. This means that you need to show that you understand what you are doing and why you are doing it. It is possible for an Attorney acting under a Lasting Power of Attorney can take a lifetime mortgage on behalf of a property owner, but as you would expect, such applications are carefully monitored by the advisor, the lender and your solicitor.