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Mortgage Glossary
Roll-Up Mortgages
 
There are three types of Lifetime Mortgages and one of them is the Roll-Up Mortgage. What you must know about Roll-Up Mortgages is that it is a loan, which is justifiably attached to the value of your belongings, possessions and personal goods. The loan interests are only being paid after you sell your property, so it is not obligatory to do any repayments before that happens. The most common forms of equity release are Drawdown Mortgages and Roll-Up Mortgages.

How does it work? Firstly you get a monthly payment or an agreed sum of money from the lender, or both of them, depending on the value of your property. The client does not have to pay any extra charges, including the loan interest. As a replacement for the interest reimbursement, the interest itself it is “rolled-up” on the loan.

Year by year this roll-up process leads to an increased interest loan. This means that you must deal with the risk of reaching a very high level of interest rate, in some cases even larger then the value of your property. If this happens, then you as the owner have nothing to worry about, because all the duties, obligations and tasks are the responsibilities of the lender. In case of a Roll-Up Mortgage there are more risks for the lender, then for the homeowner, who can not be forced either to sell or to move from their property. As a result it is very important to have a good equity guarantee in order to get free access to a Roll-Up Mortgage.
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The amount of money that you can borrow differs from one lender to another. Most Lifetime Mortgages including Roll-Up Mortgages are accessible from the age of 60. There are very few businesses that will offer one, to those who are 55, or under the age of 60, while there are some companies who won’t even talk with you only if you are at least 65 years old. It depends on the firm’s policy whether they consider other ages then above 60. In some cases a prolonged existence, a lengthened lifetime can lead to such growth of the loan, that eventually becomes much larger then the value of your property. This phenomenon is called negative equity.

To protect yourself and also the future beneficiaries of your home, from the consequences of the negative equity, you can sign a practice code called SHIP (Safe Home Income Plan). The main policy of SHIP is no negative equity. This can guard your best interests when a negative equity occurs, and save you from spending extra money for the loan, in case it turns to be more then the value of the home
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Advantages of Roll-Up Mortgages: one of them is no negative equity guarantee. This means that you can not be forced to leave your home, even if your loan is higher then the value of the property. Legally you have all the rights to live there. You pay the loan only the time you are alive, after your death, there are no debts left behind. Roll-Up Mortgages are very flexible, allowing you to borrow a smaller amount of money. This type of mortgage is very popular, so you can choose from a lot of companies, who are in tight competition on the mortgage market. As the number of mortgage providers increases, in the same time the interest rates decrease. It can be accessible from the age of 55. Conveniently Roll-Up Mortgages are movable, easy to manage, due to its flexibility.

Disadvantages of Roll-Up Mortgages are: high interest rates, compared to other traditional mortgages, the property might loose its value, during the years, and surpass it, leaving nothing to future beneficiaries, after you die. You also might be deprived by State benefits, bonuses, so it is worthwhile considering Roll Up mortgage options thoroughly and meticulously. Original payments are tax free, but in case you decide to use this money to increase your personal income, instantaneously a tax will be applied. You can not use this type of mortgage for shelters, retirement flats; few lenders will offer you a loan.

Mortgage, loan or credit card companies will assess your credit report score when deciding if you are a suitable customer. Click the following link for a free credit report check, which includes help, tips and advice for people with a low credit score, or those in need of help with debts or to get approved for finance.