Since forming in 1815, Scottish Widows has helped over 6 million people plan their finances. In this review, we’ll explore the pros and cons of Scottish Widows equity release products.
What equity release plans do Scottish Widows offer?
Scottish Widows is currently offer one equity release product; a lifetime mortgage.
This is essentially a loan, backed by the customer’s main residence, which will not be repaid until the applicant(s) die or into move into long-term care.
Interest builds and compounds throughout until one of these scenarios occur, but the applicant maintains 100% ownership of the property and can continue living there for as long as they wish.
There’s a no-negative equity guarantee, meaning applicants will never owe more than the total value of their home.
How does a Scottish Widows lifetime mortgage work?
You’ll have to apply this lifetime mortgage through an intermediary and using a financial adviser. These experts will be able to suggest the best financial product for your needs.
The maximum amount you can borrow will depend on your age and the value of your home, among other things.
You can choose to guarantee that a specific percentage of your home will be left to your heirs after the loan finishes, although this will reduce the amount you are able to borrow.
If you choose to borrow less than the total value of your home, you may be granted the opportunity to take a further advance after seven years.
After a successful application, Scottish Widows will transfer your lump sum to you. Interest will begin accumulating immediately and will continue to do so until the customer(s) die or move into long-term care.
There is no option to make regular monthly payments on this loan. However, customers can repay up to 10% of the loan balance per year without facing an early repayment charge.
All early repayment charges are waived after the 10th year of the loan. However, there is no need to repay anything until after both homeowners die or move into long-term care.
Is Scottish Widows equity release safe?
Scottish Widows is regulated by the FCA. You’ll have to apply with the help of a financial adviser, who will ensure you understand all the terms and risks.
Interest compounds quickly on these products, meaning you’ll leave significantly less to your heirs after you die.
Still, you have the option to protect a percentage of your home’s equity to ensure it is left to them – and there is no danger of owing Scottish Widows more than the the total value of your property.
- All applicants must be aged between 55 and 85.
- You must apply to borrow between £30,000 and £600,000
- You must be the owner of a property valued between £100,000 and £2 million.
- This property must be your main residence and based in England, Wales or Scotland (excluding Channel Islands and Isle of Man).
- If you have an existing mortgage or other debts, you’ll have to pay them off with the lump sum received.
How to apply
You can only apply for a Scottish Widows lifetime mortgage through one of its intermediaries.
Pros and cons
- You can protect a percentage of your equity to leave to your heirs.
- Repay up to 10% of your balance per year without facing an early repayment charge.
- Early repayment charges are waived completely after 11 years.
- You can port your mortgage with no early repayment charge.
- You can remain living in your home for as long as you wish.
- Home reversions plans are not available through this lender.
- You cannot borrow more than £600,000.
- Applicants over 85 are ineligible.
- Further advances are only available after seven years.
- Interest can compound quickly, leaving little for your heirs after you die.
Scottish Widows has some of the most lenient early repayment criteria on the market. However, its eligibility criteria is somewhat stricter than other equity release providers.
Frequently asked questions
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