I am in my early seventies and my husband is quite a lot younger at age 54. We own a house together and don’t want to downsize, so would like to look at borrowing against the house to give us extra cash for holidays and home improvements. However, we don’t want to have monthly mortgage repayments. Can we do an Equity Release type of mortgage?

Diane Fish of Smith & Pinching responds:

Lifetime lending – also known as Equity Release – is limited to those age 55 and over, and where a home is jointly owned both owners must be over this age. This means that you would need to wait until your husband reaches age 55 before you could borrow in this way.

Most lifetime lending companies offer the possibility of a drawdown plan where you agree on a maximum amount to be borrowed, but only take the amounts you need when you need them. This can save on interest payments as interest is only charged on the amount you have actually borrowed. Interest will be charged at the prevailing rate when the withdrawal is taken.

However, there are other borrowing options that might be more suitable for you and I think it would be helpful for you to discuss these with a specialist mortgage adviser before taking any decision. An independent financial adviser specialising in this field will look at the bigger picture of your finances and recommend the most suitable route.

Retirement interest-only mortgages (RIOs), for example, are a potentially cheaper route than lifetime lending in terms of the interest charged, but this would be for a set period, typically two to five years. This type of lending is based on income and overall affordability. RIO lenders may be more accommodating in respect of your current ages, but this is something that would need to be specifically researched for you.

A Lifetime Mortgage will mean that the value of the estate you leave to your family when you die will be reduced. This can be the case for some RIO mortgages which have no upper age limit regarding full repayment. Lifetime lending may also affect your entitlement to any means-tested benefits both now and in the future. Lifetime lending can be more expensive when compared to a normal residential mortgage. In addition, you will still be responsible for maintaining the property.

To understand the features and risks, for either a Lifetime or a RIO mortgage, ask for a meeting and personalised illustration.

There will be a fee for lifetime lending/RIO mortgage advice. The precise amount will depend upon your circumstances. Smith & Pinching charges an advice fee of £1,100 for Lifetime Lending/Equity Release and 1pc of the borrowed sum with a minimum fee of £950 for a RIO or Standard Mortgage.

Any opinions expressed in this article do not constitute advice.

For more information, please visit www.smith-pinching.co.uk