Home Income Plan

These are available to retired people, aged 70 or over, who wish to increase their income. The plan combines a mortgage with an annuity. It is only applicable to those homeowners who do not have an existing mortgage.

The lender provides a mortgage of up to 80% of the value of the property. The loan is then used to buy a life annuity in order to provide an income.

Interest is payable on the loan and tax relief is at the flat rate of 23% regardless of the rate of tax paid by the borrower. Since 9 March 1999 tax relief has not been available on new loans. Where the loan offer was made before then, tax relief was only given on loans up to £30,000. This is often the maximum loan offered by lenders.

The loan remains outstanding on death unless it is repaid earlier. The loan will be repaid from the sale of the house or from the estate. Any equity in the property is made available for the deceased heirs.