Lifetime Mortgage advice

A Lifetime Mortgage is a way for homeowners over the age of 55 to release some of the equity in their property.

Equity is the untapped cash value available in your home. This cash is usually built up from mortgage payments over the years. However, you can still access this equity if you own your home outright.

The cash can then be used for things like to pay debt(s), help a family member or to go on holiday.

Do you qualify?


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Author: Carl Shave - CEO and co-founder
Last updated: 23 May 2024

What is a Lifetime Mortgage?

As mentioned above, a Lifetime Mortgage allows you to release some of the equity in your home.

The loan is secured against your property but, unlike a normal mortgage, you don’t have to make any regular repayments towards it.

Interest accrues on the amount you borrow, and the total amount is repaid from the sale of the property when you die or go into long-term care. Until then, the home remains yours to live in.

Most Lifetime Mortgages can be released either as a single lump sum of money up front, or in instalments. If you take a lump sum, interest will be charged on the total loan amount from the date the funds are released.

If, however, you opt to draw payments in regular instalments, you will only pay interest on what you take out.

An introduction to Equity Release Mortgages

Equity Release topics

Equity Release can be complicated, but it does not have to be - you can read more about your options here.

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What criteria do I need to meet to qualify for a Lifetime Mortgage?

Each Lifetime Mortgage provider will have their own requirements. Although, they all typically follow similar requirements as below:

  • Need to be between the ages of 55 and 85. This applies to both individuals if there are two applicants.
  • You own the property you wish to release the equity on. It must also be your main residence.
  • Your property must be in England, Scotland, or Wales.

If you comfortably meet this criteria then you should have very little problems applying. However, keep in mind that some lenders may impose a minimum borrowing amount. This could be £25,000, for example.

Finding the best Lifetime Mortgage rates

The interest rates available on a Lifetime Mortgage are usually linked to the value of your property and your age. Generally, the older that you are, the more you will be able to borrow.

Lifetime Mortgage interest rates are usually higher than on a conventional mortgage. This means that the amount owed can rise significantly over the years.

Obviously the market fluctuates all the time, so it can be hard to give exact figures. But, you will typically be looking at interest rates between 5% and 8%. The rates you are offered will completely depend on your personal circumstances.

If you want to ensure you are met with the most competitive rates, speaking to an experienced Lifetime Mortgage broker can be crucial.

Types of Lifetime Mortgages

The choice between whether to take a single lump sum or regular payments can be difficult to make. A solution that compromise between the two approaches is the Drawdown Lifetime Mortgage.

A drawdown scheme allows homeowners to take an initial lump sum, with extra money in a cash reserve. This cash reserve can then be taken out or “drawn down” at will.

The benefit of a drawdown mortgage is that you will only pay interest on the money which you have taken out. You are not charged interest on any undrawn balance remaining in the cash reserve.

There can be downsides to a Drawdown Lifetime Mortgage. One disadvantage is that the total amount you can borrow is usually lower than on a normal single-advance Lifetime Mortgage.

Every time you take money out of your cash reserve, you will likely be charged at current interest rates. This rate may differ from the initial advance, which can make it a little more difficult to keep track of how much you will be charged.

Sometimes known as an ‘Impaired Lifetime Mortgage’, a lender will rely on an assessment of your health and lifestyle.

If they believe you are ‘impaired’ you may be able to borrow more than a normal equity release plan.

Lenders will look at your medical records, and they may also require you to answer their own questionnaire.

What to consider before committing to a Lifetime Mortgage

Lifetime Mortgages can be a good way to obtain extra money in retirement, but they aren’t right for everyone.

Here are some things to consider if you’re thinking about taking out a Lifetime Mortgage

  • Interest is charged on the loan and, as there are no repayments, the total amount of interest accrued can rise quickly and substantially.
  • Lifetime Mortgages can affect any means-tested benefits that you may be eligible for, as well as the amount of tax that you pay.
  • The amount of inheritance that you leave your family or friends when you die will also be affected. This is because the loan amount and interest will be deducted from the value of your property when sold.
  • If you decide to move house, you will have to transfer your Lifetime Mortgage to your new home. The new property will have to meet the lender’s criteria as suitable security for the mortgage.
  • If you repay the Lifetime Mortgage early, there may be early repayment fees.
  • “No negative equity” guarantees will normally apply, meaning that the total amount borrowed plus interest will never exceed the total value of your property.

If you’re looking to obtain a Lifetime Mortgage, reach out today.

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Frequently asked questions

The costs involved with a Lifetime Mortgage will be similar to those of any equity release plan. Below we have highlighted some of the key costs involved.

Initial costs:

  • Arrangement fees – this is the cost paid to a lender in order to access specific products.
  • Valuation and legal fees – lenders require your property to be valued.
  • Broker fees – if you choose to use one.

Other costs:

  • Early repayment charges – these are imposed if you want to pay some or all of the loan back.
  • Insurance – to secure the loan against your property, you will need to insure it.

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