Lifetime Mortgages

A lifetime mortgage is a form of equity release scheme where a loan is secured against your property to provide you with a cash to spend as you wish, typically with no monthly repayments to meet.

Lifetime mortgages have become a highly popular form of equity release over the past few years, prompting many providers to offer a variation of a lifetime mortgage called a drawdown plan which allows you to release equity as and when you need it, rather than taking a lump sum or regular income.

Another option is to take the money as a regular income, although this is usually a less popular choice.

Usually interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold, usually when you move into long term care, or when you and your partner die. You can typically release between 18-50% of the value of your home with a lifetime mortgage, depending on your age.

Advantages of a lifetime mortgage

A lifetime mortgage gives you the choice of a cash lump sum or income, typically with no monthly repayments to meet
You retain full ownership of your home
Lifetime mortgages are available to younger people (aged 55+)
Some lifetime mortgage plans let you guarantee an inheritance for your family

Disadvantages of a lifetime mortgage

The amount you leave as an inheritance will be reduced
The interest applied can grow quickly as it is compounded
You can’t usually raise as much money with a lifetime mortgage as you could with a reversion plan, especially at younger ages
If you repay the lifetime mortgage early, you may have to pay an early repayment charge

You can get an idea of how much equity you could release with a lifetime mortgage by using our equity release calculator.

If you are thinking about taking out an equity release plan, you should read through ‘Is it right for you?’ carefully.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.