What is a Lifetime Mortgage?

What is a Lifetime Mortgage

A Comprehensive Guide to Retirement Mortgages in the UK

A lifetime mortgage refers to the access you get to financial services that’ll enable you to release tax-free equity from your home when you are age 55 and beyond.

What does this mean for you?

You can borrow the cash whilst using your home as leverage, considering its value. And you can maintain total ownership of the property for as long as you live. There will be no need for you to make any monthly payments once you erase any withstanding charges against your home; you can spend the money to meet your satisfaction; as you see fit.

To add to that...

A lifetime mortgage runs through your entire life. Accessing just a fraction of the equity accumulated in your home can be a superb option for you to gather capital and an excellent substitute for utilising your savings. Although, the interest also rolls up with time.

Simply put:

A lifetime mortgage is simply an equity release loan held against the leverage of your home. It provides you access to the new wealth locked in your property’s value and also permits you to continue occupying it.

What is a Lifetime Mortgage?

Your eligibility to repay only gets activated after you are deceased or move into long-term care.

The Important Facts about a Lifetime Mortgage Scheme

A lifetime mortgage is a method used to access a tax-free lump sum of cash or perhaps receive sizeable amounts as necessary, to spend on your immediate financial needs. The money you borrow uses your home as leverage. And you will only pay the interest charged on the sum of money you have borrowed, although you can opt to save some of your property’s value as an inheritance for your family.

As if that's not enough...

You still keep ownership of the home and will only pay off your loan after they sell the property, after your passing, or shift into permanent care. You also assume the responsibility for the property’s maintenance.

The beneficiaries to your inheritance assume responsibility for the lifetime mortgage if a balance remains from the sale of the property—considering that the total amount might be inadequate.

Now, look at this:

Most lifetime mortgage providers in the UK also offer a guarantee against paying negative equity (you only pay back your property’s value, nothing more). The beneficiaries to your estate can pay off the loan without selling your home if they’d desire so.

How Can I Get a Lifetime Mortgage?

All you need is to be a property owner that’s 55 years old and above, and you can apply for a lifetime mortgage. Perhaps you’re a couple; you and your partner need to be 55 and above to qualify for a lifetime mortgage. Although, you may lose your eligibility if the outstanding lease on your house is fewer than 75 years.

Why Must You Choose a Lifetime Mortgage?

Increasing Your Income

It’s rare for a pension to provide the needed amount of money for you to live a sustainably retired life. It enables you to access the extra cash held in the property’s value, and you also get some rational income.

Bolstering Your Family’s Growth

More often than not, it’s highly profitable to assist your children to become financially self-sufficient as you live, rather than making them wait to collect an inheritance you’ll leave.

Releasing some equity using a lifetime mortgage gives you a more straightforward means to provide an early inheritance for your beneficiaries or other immediate reasons for providing financial help, like investing.

Home Renovations

It is easier for you to upgrade your home and make renovations that’ll render a more adaptable and accessible home as you grow older.


What is a Lifetime Mortgage?

A lifetime mortgage enables you to bring your travelling dreams to life when you retire. Most people would like to travel the world and take their dream holiday after they retire.

What Are The Rates For a Lifetime Mortgage?

Given that your lender is already in the registers of the Equity Release Council, regardless of the amount of equity you release using a lifetime mortgage, you will only repay an amount equal to the value of your house.

When you draw a lifetime mortgage, you may choose whether to release your equity at a fixed interest rate for life, or a varying rate.

Most people will opt to get a fixed rate because it will enable you to understand what you repay precisely. Although a plan with a variable rate may initially offer lower rates, it remains subject to increments.

The Benefits of Lifetime Mortgages:

You maintain ownership of your property:

Every plan for a lifetime mortgage permits you to keep your property’s ownership; you use it as leverage as you borrow.

Zero rigidity:

A lifetime mortgage offers a high range of flexibility, which is one of the most significant benefits you can enjoy.

Controls all your debt:

Because of the stringent regulations by the Financial Conduct Authority (FCA), a lifetime mortgage provides various safeguards for customers, especially if your lender has approval from the Equity Release Council. For instance, the rule that you don’t pay back more than the total value of your home.

Not forgetting that if you want to move but still want to maintain the equity release money, you can leverage your plan using another property that fulfils all suitable criteria.

Different Lifetime Mortgages Plans

An Enhanced Lifetime Mortgage

An enhanced lifetime mortgage is a loan that’s available for people with particular medical conditions, and it enables you to release larger amounts of cash from your home.

A Roll-Up Lifetime Mortgage

A roll-up lifetime mortgage allows you to receive money using monthly payments, and you are to repay the total sum along with all interests after they sell your home when you are deceased or move into permanent care.

A Drawdown Lifetime Mortgage

A drawdown lifetime mortgage is a loan you get by releasing equity only when you need it, and the interest you repay is only for the amount of cash you take out.

An Interest-only Lifetime Mortgage

Instead of letting your interest roll-up, you may get access to a cash lump sum of your home’s equity and be able to repay the interest monthly rather than annually.

A Flexible Lifetime Mortgage

A flexible lifetime mortgage is the equity release plan to go for if you want the option to make repayments regularly and reduce the charges on your equity release.

Contrasting a Lifetime Mortgage and Home Reversion Plan?

Both forms of equity release permit you to release the cash valued in your property whilst enabling you to occupy the home until you’re deceased or move into permanent care.

What is a Lifetime Mortgage?

Just think about it:

When you release equity as a lifetime mortgage, you will get a loan using your home as leverage, whilst a home reversion plan will require you to sell a portion of your home, at a lower price than its actual market value.

Simply put:

A home reversion plan gives you the option to make monthly payments until your contract ends.

A lifetime mortgage permits you to repay the loan when you die or shift into permanent care.

Lifetime Mortgages Advice

Releasing a lifetime mortgage is a decision that requires in-depth contemplation. You will need to make some composite calculations to assess the perfect way that equity release will help you in your particular situation.

Therefore, you must seek professional advice.

You can speak with our friendly experts freely via live chat, or maybe you might like a callback from the team to help you determine whether a lifetime mortgage will work for you, and how.

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