Lifetime Mortgage
Loan granted to senior homeowners, secured by their property, repayable only on death or sale.
Full definition
The lifetime mortgage (PVH) is a loan intended for homeowners over the age of 60, secured by a mortgage on their main residence. Its particularity: no repayment is required during the borrower's lifetime.
The amount borrowed depends on the value of the property and the borrower's age (generally 20% to 50% of the value). The interest accumulates with the capital (capitalised interest). On death or when the property is sold, the loan is repaid from the proceeds of the sale. The heirs may choose to repay it themselves in order to keep the property.
The lifetime mortgage differs from the life annuity: the borrower remains the full owner, keeps the property and can pass it on to their heirs (less the loan). However, the amount obtained is lower than with a life annuity, the interest accumulates, and the total cost can be high over time. It is a solution suited to one-off liquidity needs rather than to a regular supplementary income.
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Related terms
Life Annuity
Property sale where payment is made in the form of an annuity paid to the seller until their death, with or without an initial bouquet.
Mortgage
Property guarantee registered on the property to secure payment of the life annuity to the seller.
Sale with Right of Repurchase
Sale with a repurchase option allowing the seller to recover their property within a set period, a solution to avoid seizure.
Sale on Deferred Terms
Property sale with payment spread over a fixed, predetermined period, unlike the life annuity which depends on lifespan.
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