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Freestyle Lifetime Mortgage from Standard Life Bank - Frequently Asked Questions


  • Who is eligible to take out a Freestyle Lifetime Mortgage?
    The following conditions must be met before applying for a Freestyle Lifetime Mortgage on your client's behalf:
    • Applications can be single or joint. For joint applications, the applicants need not be related but must both hold full title to the property.
    • The minimum age of the younger applicant is 60. There is no maximum age.
    • Most properties of standard construction in the UK are acceptable.
    • The applicant must either own their home outright before applying or use the funds provided by the Freestyle Lifetime Mortgage to clear any outstanding debt secured against the property. After starting the Freestyle Lifetime Mortgage, the property may not be used as security by any other lender.
    • On application, your client's home should only be occupied by people who hold title to the property. If anyone else lives with them who is not a co-owner of the property, they will not qualify for a Freestyle Lifetime Mortgage.
    • The property must be the main residence of applicants and normally be occupied by them on a full time and continuous basis.
    No medical or credit checks will be required as part of the application process for a Freestyle Lifetime Mortgage.

    For further information on eligibility, please read the Lending Terms in the 'Related Links' box.

  • How much can my client borrow?
     The amount that we will advance will depend on your client's age and the value of their home. The borrowing limits and conditions leaflet describes the percentage of the property's value that we'd be willing to advance assuming your client met the other criteria (see Lending Terms). Your client can borrow between £25,001 and £250,000 tax-free, subject to lending terms. This money, is secured against their home and can be used however they wish. Importantly, the client continues to be the owner of their home with nothing to pay in their lifetime. Favourable tax treatment of lump sums may change in the future.

  • How is the loan repaid?
     In most cases, the Freestyle Lifetime Mortgage will be repaid when the borrower dies or moves into long-term care. Usually, the repayment will be made from the proceeds of the sale of the borrower's property.

    In the case of joint applications, the mortgage will be repaid when the remaining applicant has either died or moved into long-term care.

    The interest charged will be calculated at the fixed rate which is set at the beginning of the mortgage or at the beginning of any further advances.

    The mortgage may also become repayable if for any other reason your client wishes to repay part or all of the loan early or decides to sell their home. During the early repayment period, an early repayment charge will apply. Early repayment charges apply for the first 10 years. The charges are expressed as a percentage of the initial loan and any subsequent drawdowns, or in the case of a partial redemption the sum repaid (subject to minimum partial repayment of £2,500). With regards to subsequent drawdowns, the penalties will commence from date of relevant drawdown. The mortgage can be taken to another property as long as it meets our criteria. If the new property has a lower value, some of the mortgage may have to be repaid but no Early repayment charges are applicable. A redemption discharge fee may apply, if so this will be specified in the offer.

  • What is the 'no negative equity' guarantee?
    We offer a 'no negative equity' guarantee. This means that the amount repaid can never be more than the best reasonable market price that the property obtains when it is eventually sold. Even if the amount borrowed (plus compounded interest) is more than the selling price, the client will not have to repay any more than the amount the property is sold for.

  • Is there a Cash Reserve facility available?
    If the amount we are willing to lend is more than your client wants to borrow, the difference will be held in a Cash Reserve facility. Clients can withdraw amounts from this facility at any time during the first five years of the mortgage (subject to a minimum of £5,000 each time). Any further amounts taken in this five year period (and the interest charged on them) are simply added to the outstanding balance. The interest rate for each withdrawal will be fixed when the money is released. No fee applies for this facility. Please note, Cash Reserve applications will be accepted via financial advisers only. Drawdowns on your client's Cash Reserve will increase the amount secured on your client's property.

  • Can my client borrow more money in the future?
    Applications for further advances after five years (which must be made by a financial adviser) will be subject to a valuation and an assessment of the application. A fee applies for this but will only be charged if the application is successful. This process can be repeated every five years (subject to criteria). The minimum amount your client can borrow at any time is £5,000.

    Please click on the tariff of charges link in the Related Links box above for full details.

    Commission is also paid on further advances as a percentage of the amount borrowed.

  • What happens if my client's circumstances change?
    If your client wishes to move home, the mortgage can either be repaid or taken to the new property. Please note that a move to a property of a lesser value may involve a partial repayment of the mortgage but no charges will apply. If the mortgage is repaid in full, charges will apply. Details of these can be found in the client's Key Facts Illustration.

    If your client wishes to change the ownership of their home i.e. from single to joint, the loan may become repayable. Each change of ownership will be individually assessed by Standard Life Bank.

    Clients should be aware that they must inform Standard Life Bank if anyone else moves into their home. In these circumstances, we may write to the new occupant to tell them about the Freestyle Lifetime Mortgage.

    Your client should let us know if they move into long-term care. It is your client's estate executor's responsibility to inform us of their death.

    Clients will receive a yearly statement detailing the balance of their mortgage and the interest applied.

  • What costs will my client incur?
    Your client should be aware that they will incur a number of different fees including their own and our solicitor's costs, your own charges, an application fee and a valuation fee.

    If your client wishes, they can add the arrangement fee to their mortgage. This will increase the amount they owe.

    Please click on the tariff of charges link in the Related Links box above for full details.

  • What happens if my client wants to repay all of their mortgage early?
    Any full repayment within the agreed period of 10 years will incur early repayment charges (other than following the death of your client or their remaining partner or following a permanent move into long term care). Early repayment charges are expressed as a percentage of the initial loan and any subsequent drawdowns, or in the case of a partial redemption the sum repaid (subject to minimum partial repayment of £2,500). With regards to subsequent drawdowns, the penalties will commence from date of relevant drawdown. A redemption discharge fee may apply to some mortgages, if so this will be specified in the offer.

    If your client wishes to repay part of their loan within the early repayment period, early repayment charges will apply.

    Please click on the tariff of charges link in the Related Links box above for full details.

  • Are there any other considerations my client should know about?
    There are several things that you will want to discuss with your client before you apply for a Freestyle Lifetime Mortgage on their behalf.
    • Your client may want to consider moving house as an alternative way of freeing up the equity built up in their home.
    • The impact upon your client's estate, taxes and state benefits should be discussed with your client before application.
    • It is a condition of the loan that the borrower keeps the property in the same good standard as it is at the time of application.
    • Property cover must be in place before we release the funds and must remain in force throughout the term of the mortgage. This must be for at least the minimum rebuilding cost. There is no life assurance requirement.

  • What is SHIP?
    The Freestyle Lifetime Mortgage complies fully with the guidelines set by SHIP (Safe Home Income Plans). SHIP is a company supported by the leading providers of home income and lifetime mortgages. Standard Life Bank is a member of SHIP and is committed to following their strict code of practice. This code ensures that we provide a fair, easy to understand, full presentation of our Freestyle Lifetime Mortgage. This also includes the need for the customer to employ an independent solicitor to carry out legal work on the client's behalf and give advice on the Freestyle Lifetime Mortgage. As a SHIP member, Standard Life Bank also offers a 'no negative equity' guarantee. for more information about SHIP, please call 0870 241 60 60 or visit www.ship-ltd.org

  • What happens next?
    Once you have discussed the Freestyle Lifetime Mortgage in principle with your client, you should take the following steps:

    • Ensure that your client understands all the product details and financial implications.
    • Request a Key Facts Illustration to show what the costs to your client would be.
    • Encourage your client to give their relatives a copy of the Family Guide and ask them to discuss it with them.
    • Check that your client has a solicitor who can provide them with independent legal advice and act for them. We will also send the solicitor a guide.
    The application process is detailed in the Freestyle Lifetime Mortgage checklist. Once your client has agreed that they want you to go ahead with their application, you should complete a copy of the Freestyle Lifetime Mortgage Checklist then give us a call on 0845 609 0254.

    When the application is under way, we will arrange a valuation of your client's home. Funds will be released to your client's solicitor. From start to finish, we aim to offer you the best possible service and make the entire process as smooth and simple as possible - for you and your client.



     




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