Woolwich Mortgages Lifetime Mortgage

Feb 16, 2023 | Article

Woolwich Mortgages

Woolwich Mortgages is a division of Barclays Bank and offers a wide range of financial products, including mortgages, remortgages, and lifetime mortgages. In this article, we will focus on Woolwich Mortgages’ lifetime mortgage offering, including the features, benefits, and costs of the Barclays Lifetime Mortgage.

Page last updated – 16th February 2023

Checked for accuracy by:

Chris - Equity Release Editor

Woolwich Mortgages’ Lifetime Mortgage

The Woolwich Mortgages’ Lifetime Mortgage is a type of equity release scheme that allows homeowners to release equity from their property in a lump sum or in regular payments. The amount that can be released is dependent on the age of the youngest homeowner and the value of the property. The interest rate is fixed for the life of the loan, and borrowers can choose to pay the interest or let it roll up over time. The Woolwich Mortgages’ Lifetime Mortgage also includes a no-negative-equity guarantee, which means that the amount to be repaid will never exceed the value of the property.

Eligibility Criteria

The Woolwich Mortgages’ Lifetime Mortgage is available to homeowners aged 55 and over who own a property valued at a minimum of £100,000. The property must also be located in England, Wales, or mainland Scotland, and must be the borrower’s primary residence.

Benefits of Woolwich Mortgages’ Lifetime Mortgage

The Woolwich Mortgages’ Lifetime Mortgage offers several benefits to homeowners who are looking to release equity from their property. These benefits include:

  1. Tax-Free Cash: The money released from a Woolwich Mortgages’ Lifetime Mortgage is tax-free and can be used for any purpose, including supplementing retirement income, home improvements, or paying off debts.
  2. No Monthly Repayments: Unlike traditional mortgages, Woolwich Mortgages’ Lifetime Mortgage does not require any monthly repayments. Instead, the loan is repaid when the borrower either dies or sells the property.
  3. No Negative Equity Guarantee: The Woolwich Mortgages’ Lifetime Mortgage includes a no-negative-equity guarantee, which means that the amount to be repaid will never exceed the value of the property.
  4. Flexible Payment Options: Borrowers can choose to receive the money from a Woolwich Mortgages’ Lifetime Mortgage in a lump sum or in regular payments, depending on their individual needs and circumstances.
  5. Fixed Interest Rate: The interest rate on a Woolwich Mortgages’ Lifetime Mortgage is fixed for the life of the loan, providing borrowers with greater certainty and predictability.

Costs of Woolwich Mortgages’ Lifetime Mortgage

While there are several benefits to the Woolwich Mortgages’ Lifetime Mortgage, there are also several costs that borrowers need to consider before proceeding. These costs include:

  1. Higher Interest Rates: The interest rate on a Woolwich Mortgages’ Lifetime Mortgage is typically higher than that of a traditional mortgage, reflecting the fact that the loan does not require any monthly repayments.
  2. Accruing Interest: The interest on a Woolwich Mortgages’ Lifetime Mortgage is typically added to the outstanding balance, which can increase rapidly over time. This means that the total amount owed can quickly grow, potentially reducing the amount of equity that the borrower’s estate is able to retain.
  3. Reduced Inheritance: As the interest on a Woolwich Mortgages’ Lifetime Mortgage accrues over time, it can reduce the amount of equity that the borrower’s estate is able to retain, potentially reducing the amount that can be left as an inheritance to beneficiaries.
  4. Early Repayment Charges: If the borrower decides to repay the loan early, they may be subject to early repayment charges, which can be costly.

Comparison with Other Lifetime Mortgage Providers

There are several lifetime mortgage providers in the UK market, each offering their own unique products and services to homeowners looking to release equity from their properties. In comparison to other providers, Woolwich Mortgages’ Lifetime Mortgage offering is relatively competitive, with a range of flexible payment options, a no-negative-equity guarantee, and a fixed interest rate for the life of the loan. However, the interest rates on Woolwich Mortgages’ Lifetime Mortgage tend to be higher than other providers in the market, which can be a downside for borrowers.

According to the Equity Release Council‘s Autumn 2021 Market Report, Woolwich Mortgages had a 4.7% share of the lifetime mortgage market in the first half of 2021, placing it in the top 10 providers in the market by market share. The report also noted that the average interest rate on a lifetime mortgage had decreased slightly over the year, with the average interest rate on a new drawdown lifetime mortgage in the second quarter of 2021 being 3.75%.

Conclusion

Woolwich Mortgages’ Lifetime Mortgage is a competitive equity release product that offers a range of flexible payment options, a no-negative-equity guarantee, and a fixed interest rate for the life of the loan. However, the interest rates tend to be higher than other providers in the market, which can be a downside for some borrowers. Overall, Woolwich Mortgages’ Lifetime Mortgage is a solid option for homeowners looking to release equity from their property and should be considered alongside other lifetime mortgage providers in the market.