Octopus Lifestyles

Helping older home owners make the best use of their property wealth

Many of us find a significant amount of our wealth is tied up in property. Octopus Lifestyles has been built to help older home owners make the best use of their property wealth.

We aim to design lifetime mortgage products that provide a smart, efficient way to fund a good retirement.

Our customers may be looking for what could be the best way for them to fund care, help their family with house purchases or school fees, gift or simply to improve their lifestyles. Or they may just be interested in maximising the amount they are able to leave to their family when they pass away.

We try to make sure that our products are good value, tax efficient, and as easy as possible to understand.

It is important to get financial advice to determine whether Octopus Lifestyles products are suitable for the customer requirements, which is why we ensure all our products need to be advised.

What is a lifetime mortgage

An Octopus Lifestyles lifetime mortgage is a loan secured against a property by an older customer on which no repayments typically need to be made until the customer dies. Interest can be rolled up until that point.

Because interest is rolled up, the size of the loan will increase by more each year reducing the equity in your property, however, our no negative equity guarantee will ensure you do not pay more than the value of your property. For more information on key risks please see the risks section below, or refer to the product brochures.

Funding Care

One in four 1 of us may need long term care or support in later life, but few of us like to think about it until it happens. The cost of care can be significant and more and more people manage this, without having to move home, by using their existing properties to help meet the costs. 1 Help the Aged, 2008

Retirement Income

The costs of retirement have been growing faster than general inflation. Low interest rates means that many people’s savings are worth less than they had hoped. Equally consistent rises house prices may mean that properties are worth more than expected. So it can make sense to use your home to provide you with an increased income or cash lump sum to enhance your spending power in retirement.

Estate Planning; Inheritance tax

(IHT) Some inheritance tax planning is simple: you just make a gift to someone and if you live more than seven years no one will ever pay inheritance tax on it. Lifetime mortgages can provide money for these gifts. But sometimes it can be a bit more complex. Octopus Lifestyles is developing products which, if suitable for you, may help you make your legacy as big as it can be.

Estate Planning; Capital Gains Tax

(CGT) You may have a second home or a rental property which you have owned for a long time. With the way property prices have increased, you may incur a significant capital gains tax charge if you sell this property before you die. But if you can hold onto it for your whole life the tax liability will fall away. A lifetime mortgage could help to release equity from this property without paying capital gains tax.

The Family Wealth Plan

The Family Wealth Plan is designed to help older homeowners fund later life needs in a tax-efficient way. It provides an income which can be used to pay for care, increase your retirement income or enable estate planning through minimising inheritance tax (IHT) exposure. Sometimes it makes sense to use the family wealth plan to reduce the amount you draw from your pension.

The Family Wealth Plan uses a combination of the Later-life Mortgage, a lifetime mortgage, and the Estate Transfer Trust, a trust specially developed for Octopus Lifestyles customers.

Mortgages on second homes and rental properties

Octopus Lifestyles offers two loan products which can be secured against homes which are not your principal residence: the Second Homes Mortgage, a lifetime mortgage, for holiday homes and the Property Portfolio Mortgage for rental properties.

These may be useful to refinance existing mortgages or release equity without incurring capital gains tax.

Understanding Key Risks

The size of your loan increases over time

The money you release from your property will come from a mortgage secured against your home. Neither the loan nor the interest will typically need to be repaid in your lifetime – but because of this, the amount your family will have to pay will get bigger year on year. As a result they may not be able to inherit your property or get its full sale value as a result. However, they'll never have to pay back any more than what your home can be sold for at the time.

There are charges for repaying the loan early

If you choose to repay the mortgage early, in certain circumstances you may be liable to pay an early repayment charge. This charge is 5% of the loan amount for the first five years and 3% for the next five. Thereafter there are typically no repayments.

Tax rules can change

Any money released through the mortgage is the customers and will not be subject to tax. However, customer using the Family Wealth Plan or taking out a lifetime mortgage as part of any other tax planning should bear in mind that tax rules could vary in future. The value of tax reliefs will depend on your personal circumstances and prevailing tax legislation.

Please see brochures for further information on product specific risks.

We are part of the Octopus Group

Our aim is to have an impact in everything we do, and to make a vital contribution to the UK economy by helping people, companies and institutions generate wealth.