In short, a lifetime lease is a legally binding agreement that lets a person live in a property they’ve purchased, free of rent, mortgage, or interest payments, for the rest of their life. By doing this, they are registered as the Lifetime Owner at Land Registry, which lets them live in the home completely legally for the rest of their life.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Lifetime leases in depth
Lifetime leases are similar to sell-and-rent-back options, as they are also unregulated, and they were created for individuals who wish to move house but for whatever reason — usually lack of funds to outright purchase the home — cannot do so.
The proprietor of the lifetime lease buys the house on behalf of the potential homeowner who then buys a lease from the provider, which allows them to live in the property for as long as they live.
After the home-dweller dies, ownership of the property falls back to the lease provider, which means the total price of the lease is normally below the true value of the property and is based on the age of the clients holding the lease.
Benefits of a lifetime lease
A lifetime lease may or may not be a great option for you, so it’s important to shop around for the best kind of financial aid to help you achieve your home buying dreams. There are a few perks of a lifetime lease though and these include:
- living in a property that you might not have been able to afford without help
- being able to live in your property for as long as you care to stay
- having money available to put you in a better place financially, for retirement.
The key to why lifetime leases are beneficial is “discounted price.” This means that you, the person leasing, reap the rewards of being able to live in your dream home, without rent or mortgage payments, for the rest of your lifetime.
Coupled with the fact that you are legally protected whilst living there means you needn’t worry about a place to live ever again. For those approaching retirement, this is especially appealing – the additional funds a discount frees up can help pay off old debts and fund retirement travel and adventure.
There are alternative options
While lifetime leases are certainly a viable option, they are not for everyone. Luckily, they’re not the only way forward. Instead, you might find that a lifetime mortgage is right for you. This will delay any payment on your mortgage until after you die or go into care.
A plan to pay back the loan must be organised well before any chance of that happens. This lets you outright own the home you live in and hold on to any equity that develops after owning your home for an extended period of time.
Get financial advice to help you make the right decision
When the government was proposing reversion regulation, many believed lifetime leases should have been included in the legislation, but they ultimately were left out. Financial watchdogs urge consumers to review all available options before digging into lifetime leases as the market is currently unregulated.
Don’t get caught out making an uninformed decision – one that will greatly affect the rest of your life. Consider working with a qualified financial professional who will help you narrow down all available options for you and advise on the best plan for your individual circumstances. Don’t wait, call today.
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