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Equity Release Mortgages

Over the last 25 years, some 350,000 households have benefitted from equity release, raising over £17 billion in the process.

More and more people now consider equity release as part of their financial planning for retirement.

As a founder member of the equity release trade body, Hodge Lifetime has been at the forefront of the equity release market for over 50 years. The products in this section meet the requirements of the Equity Release Council's SHIP Standards.

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Protecting your money

Your eligible deposits with Hodge Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme.

What is a Retirement Mortgage?

A flexible way to borrow in retirement

The Retirement Mortgage is a lifetime mortgage, meaning that the amount we lend you does not have to be repaid until you die or move permanently into long term care.

You have to pay the interest charged on the lifetime mortgage each month until the youngest borrower reaches age 80 or the 5th anniversary after taking out the loan (if later). Thereafter, you can choose to stop paying the interest, meaning it will be added to the loan instead.

The table below compares the Retirement Mortgage with other types of mortgage that may be available to you.

Traditional residential mortgage

Retirement Mortgage

Interest roll-up lifetime mortgage

Traditional residential mortgage

The loan term is fixed.

Retirement Mortgage

The loan term is not fixed - it lasts until you die or move permanently into long-term care.

Interest roll-up lifetime mortgage

The loan term is not fixed - it lasts until you die or move permanently into long-term care.

Traditional residential mortgage

The loan may be on a capital repayment or interest-only basis. If the loan is interest-only, a separate repayment vehicle to repay the capital is normally required.

Retirement Mortgage

This is an interest-only loan. The capital is repaid from the sale of your home.

Interest roll-up lifetime mortgage

This is an interest roll-up loan. The capital and interest is repaid from the sale of your home.

Traditional residential mortgage

You must make all of the monthly payments as they fall due, until the end of the mortgage term.

Retirement Mortgage

You must make all of the monthly interest payments as they fall due, at least until the youngest borrower reaches age 80, or the 5th anniversary of the loan (if later), when you can choose to have the interest rolled up.

Interest roll-up lifetime mortgage

You are not required to make any payments during the term of the loan.

Traditional residential mortgage

Your home is at risk if you do not keep up the repayments on your mortgage.

Retirement Mortgage

Your home is at risk if you do not keep up the repayments on your mortgage.

Interest roll-up lifetime mortgage

You have the right to remain in your home until you die or move permanently into long-term care.

Traditional residential mortgage

The amount you can borrow is normally based on your ability to afford the mortgage based on your employment income and your expenditure, up to a maximum loan to value ratio.

Retirement Mortgage

The amount you can borrow is based on your ability to afford the mortgage based on your retirement income and your expenditure, up to a maximum loan to value ratio.

Interest roll-up lifetime mortgage

The amount you can borrow is based on a loan to value ratio determined by your age.

Deciding on which plan is suitable for you can be a complex process, and it is a good idea that you obtain financial advice. In fact, we insist upon it. Read more about the role of the financial adviser.


Product Summary

What are the main features?

Mortgage type
Lifetime Mortgage
Product benefit
To provide a tax free cash lump sum.
Affordability assessment
Loan interest is repaid on a monthly basis. The loan must be affordable based on your current or projected pension income.
Current monthly interest rate
3.85% fixed for 5 years, reverting to SVR thereafter.
Overall cost for comparison
4.01% APR

The actual rate available will depend on your circumstances. ask your Financial Adviser for a personalised illustration.
Additional features
Interest roll up option – When the youngest borrower reaches age 80, or after the 5th anniversary of taking out the loan (if later), you can choose to stop paying the interest on the mortgage, and add it to the loan instead.

Flexible Repayment Option - During the first five years, you are entitled to make overpayments of up to 10% of the initial loan amount each year without incurring any early repayment charges. If you repay more than 10%, early repayment charges apply on the whole amount repaid in that year. Any unused capacity cannot be carried over to future years. No early repayment charges apply after five years.
No Negative Equity Guarantee (“NNEG”)
Provided that you keep making interest payments when they are due, if the sales proceeds of your home are not sufficient to repay the amount we lent you, this will be covered by the No Negative Equity Guarantee and no further sum will be payable by You. If you exercise the Interest Roll-up Option, the interest added to the loan each month will also be covered by this guarantee.
Minimum age (youngest applicant)
55
Maximum age (youngest applicant)
85
Minimum Property value
£100,000
Maximum age (youngest applicant)
£1,000,000

We may accept properties of more than £1 million on referral
Maximum Loan to value
Age 55 to 70: 50%
Age 71 to 75: 45%
Age 76 to 80: 40%
The actual loan amount will be determined based on an affordability assessment
Minimum loan
£20,000
Maximum loan
£500,000
Arrangement fee
£995
Early repayment charge
Yr1 - 5% of capital repaid
Yr2 - 4%
Yr3 - 3%
Yr4 - 2%
Yr5 – 1%
Yr 6 onwards – no early repayment charge is payable
Location
England, Wales, mainland Scotland

Eligibility

Am I eligible for the Retirement Mortgage?

When you apply for a Retirement Mortgage, we will ask you to demonstrate to us the level of retirement income to which you are entitled, and the level of outgoings you incur. If you are still working, we will also need to know your employment income. We will use this information to assess your ability to afford the loan.

You must therefore benefit from a reasonable level of income in retirement in order to be eligible for the Retirement Mortgage. The sources of income which we will take into account include:

- Pension income
- Investment income
- Rental income

Your property must also form a suitable security for the Retirement Mortgage. The table below summarises the types of property which are acceptable.

Type of property
Houses (freehold or leasehold)
Bungalows (freehold or leasehold)
Flats (leasehold) Mainsonettes (leasehold)
There must be a minimum of 90 years unexpired term on your property’s lease.

If your property is a flat, it must be in a private block of 7 stories or fewer.
Construction method
Your property must be of standard traditional construction:

Walls – brick, stone or block
Roof – concrete, slate or stone tiles
Past events
Your property must not have recently been affected by flooding, subsidence or other structural issues.

This table is only a summary. Please refer to our detailed property eligibility factsheet. If you have any doubts as to whether your property is acceptable to us, please contact us and we will be happy to help you.


Using an adviser

Entering into a Retirement Mortgage is a big decision

Taking out a lifetime mortgage could change your life for the better, but it is a long-term financial commitment. It is important that you understand all of the implications.

For this reason, Hodge Lifetime does not offer the Retirement Mortgage directly to the public. We require that all applicants obtain financial advice from a qualified adviser. If you do not already have an adviser, you can start your search using the www.unbiased.co.uk website.

If you wish to undertake some preliminary research and gain a better understanding of the implications of entering into a lifetime mortgage, a good starting point is the Money Advice Service.


How do I apply?

The application process

Your financial adviser will help guide you through the application process for your Retirement Mortgage. The guide below outlines the steps we will follow to consider your application.

Initial eligibility check

A calculator is available on our Adviser website. Your Financial Adviser will need details of your employment income, retirement income and/or pension savings, together with your age(s) and property value.

Obtain a personalised illustration

Your adviser will obtain a personalised illustration on your behalf.

The personalised illustration will explain in more detail the features and risks of the mortgage. The illustration is prepared in a standard format. This means that you can compare the plans of different providers more easily.

Obtain a decision in principle

If you wish to proceed to the next stage, your adviser will help you to complete an application for a decision in principle. Based on what you tell us, we will assess whether you are eligible for the loan amount you require. A credit search will also be performed.

We will communicate the decision to your adviser and issue an updated personalised illustration.

Submit a full application

When your adviser submits the full application, we will also need evidence to support your application. This will include statements of your pension entitlements and copies of your bank statements.

You will also be required to pay for a valuation of your property at this stage. This fee isn’t refundable even if the plan does not go ahead.

Property valuation

We will instruct a surveyor to visit your home and value it. The surveyor will agree with you a suitable time to visit.

The condition of the property will also be checked. If there are any urgent repairs required which affect the value of your home, you may be required to undertake these repairs as a condition of your loan.

Offer

Once your application has been verified and your property valued, we will finalise the proposed terms of your mortgage in an offer. If you decide to proceed, you will appoint your own independent solicitor to act for you through the conveyancing process.

Conveyancing

This is the process that takes place between your solicitor and ours in order for the legal charge to be taken on your property. Checks are made to ensure that the property is a suitable security for the plan and it is possible (although uncommon) that issues may arise at this stage once detailed searches are undertaken.

Completion

Once the legal charge is ready, your solicitor will arrange completion of the loan. You will be required to sign the legal charge, and a certificate confirming that the solicitor has explained the plan to you.

Please make sure that you are entirely comfortable with the terms of the plan, as once it is completed you will no longer have a right to withdraw.

On the same day, we will pay across your cash lump sum to your solicitors, and they will make arrangements to pass these monies on to you.

This is a lifetime mortgage. To understand the features and risks, ask your Financial Adviser for a personalised illustration.

Your home may be repossessed if you do not keep up repayments on your mortgage.


FAQs

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Compound interest is interest paid on the initial principle as well as the accumulated interest on money you have invested. You earn interest on the money you deposit, and on the interest you have already earned.

Not the product for you?

Why not browse our range of other accounts to see which might suit you best.

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Protecting your money

Your eligible deposits with Hodge Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme.

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Why Hodge

Doing the right thing is what we aim to do in all areas of our business – it guides our decisions.

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Our service to you

We do the right thing for our customers and are committed to providing good service. Banking with us is stress-free and straightforward.