Mortgage & Equity Release
Choosing the right mortgage can be one of the most important financial decisions you make. It can also be one of the most complicated. Whether you are a first-time buyer, moving home or looking to grow your property portfolio, it is important that you have the right mortgage in place, we can assist you in doing that.
Oakwood Financial services offer independent mortgage advice to help you find the right mortgage deal to suit your circumstances.
There are 3 types of mortgage repayment arrangement, this can be either:
- Repayment mortgage: This is the most popular type of mortgage arrangement. With a repayment mortgage you’ll make monthly repayments for an agreed period (known as the term) until you have paid back both the capital and the interest.
- Interest-only mortgage: As the name suggest, with an interest only mortgage you will pay off only the interest amount, and the loan amount will remain the same to the end of the term. Your monthly payments will be less than with an equivalent sized repayment mortgage, however you will still owe the amount you originally borrowed when you reach the end of the mortgage term. Lenders will make sure you have a repayment strategy in place, so that you have money to pay off the capital at the end of the mortgage.
- Part repayment/Part interest only mortgage: This is a combination of a repayment mortgage and an interest only mortgage.
The interest rate on all mortgage repayment arrangement can be fixed over the term or it can be paid back at a variable rate.
Mortgages also come with fixed or variable interest rates.
- If you have a fixed-rate mortgage your repayments will be the same for a certain period of time regardless of changes to interest rates elsewhere.
- If you have a variable rate mortgage, the interest rate (and therefore monthly amount) you pay could go up or down
Equity release refers to a range of products that let you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum, in several smaller amounts or as a combination of both.
There are two equity release options:
- Lifetime mortgage – you take out a mortgage secured on your property, provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family. You can choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care.
- Home reversion – you sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent-free, but you have to agree to maintain and insure it. You can ring fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan, your property is sold, and the sale proceeds are shared according to the remaining proportions of ownership.
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