May 19th, 2014

Living in London is often about fast paces, great places to eat, and plenty of entertainment. For everyday life it can be tantamount to an amazing amount of fun, yet there are times you want to slow down, enjoy your retirement, and see the country. There are products on the market that could help you fund a second home like a country retreat. A bespoke London equity release scheme, even an enhanced lifetime mortgage can be used to tap into equity in your London home to enable the funding of the purchase of a second home.

Looking at the Desire for a Country Retreat
It is great to live in a large city, but it can also become tiring. With plenty of pension money to spend on the entertainment, eating out, children, and life in general it could be risky to spend a huge sum of that pension on a second home. Luckily, those with prime London real estate have a few products they can use as a means of buying a second home.

Research has even suggested that it is a trend for London homeowners to buy a second home for well under the market value and definitely well under what their London home is worth. This is why equity release can be the perfect product. Using a home that has more than £1.1 million in value to purchase a property worth £160,000 in other parts of England or Wales ensures there is plenty of inheritance left for the children, but also a place to relax. The study states that 21 out of 32 boroughs of Londoners buy a second home or could buy that second home if they wish too.

Finding Lifetime Mortgage Products to Aid in a Second Home Purchase
Not every London equity release provider on the market it going to offer a lifetime mortgage with the ability to purchase a second home. As with any mortgage the situation you are in will dictate what is most affordable to you even in a product that does not require a repayment on a monthly basis. LV= or Liverpool Victoria Society Limited is one company willing to offer a lifetime mortgage to help you buy a second home. Their newest product is a lump sum mortgage with no monthly payments and a fixed interest rate for the rest of your life, no matter how long that might be.

This product is different from other options as you do need to be 60 years of age or over to be able to withdraw value from your current London home. The property has to be valued at £70,000, which is no problem for London homeowners. The minimum withdrawal amount is £15,000. LV= has a maximum amount that can be withdrawn too. The cap is based on your age, the life expectancy, and your property value. Under equity release codes of conduct no lender can provide you with a loan that would exceed your property value.

LV= has other advantages such as the early repayment fees. As with most equity releases if you repay it early you can be potentially charged upto 25% of the original amount borrowed, but LV= will only charge 5% for the first 5 years and 3& for the next five years. After 10 years of the loan, there is no early repayment fee. Good deal.

Types of Equity Release Best Suited for Home Two
Like LV= products there are certain lifetime mortgages that are better used on a second home. Enhanced lifetime mortgages are a consideration only if there is a health issue and in most instances buying a second home is not a possibility. Speak with an equity release adviser to see if there are exceptions such as buying a second home for health purposes or perhaps to become the main home after one spouse passes away. Enhanced lifetime mortgages are for those who need cash now, and the maximum amount allowed for a peaceful few years.

A better product could be the interest only lifetime mortgage. With this product, and there are plenty of companies willing to offer it for second homes, you pay interest on a monthly basis. The interest is an APR that is broken down into monthly payments. Your principle balance remains untouched as long as interest is paid. At the end of the mortgage you repay only the capital sum. It is affordable and saves the inheritance of both properties. Companies such as Stonehaven and more2life offer such deals.

Whether buying a second home is your desire or you have a health need that works better with an enhanced lifetime mortgage one thing is for certain: your home in London could be used with an equity release to purchase a second location.