What is a lifetime mortgage?
You borrow money secured against your home and will be charged interest on the money borrowed. Usually when people are talking about a lifetime mortgage they are referring to a lump sum plan with roll-up interest (sometimes called a roll-up lifetime mortgage). You take a lump sum of tax-free cash and typically no repayments are made. This means the interest is added to the loan amount and the balance effectively grows (compounds) over time.
Lifetime mortgages have increased in popularity over recent years thanks to their modern features and competitive interest rates, with many plans now below 3%.Calculate amount
Features of a lifetime mortgage
Lifetime mortgages are by far the most popular type of equity release plan. Here are some of the reasons why:
- Spend the money however you like – popular uses include repaying debts or an interest-only mortgage, making home improvements and helping loved ones.
- Get a fixed low rate for life – interest rates have dropped in recent years with many plans now below 3%. This is fixed for the life of the plan.
- Still provide an inheritance – to be sure of leaving an inheritance for your loved ones some plans enable you to protect a percentage of your property.
- No negative equity guarantee – whatever happens to the value of your home you can never owe more than the price it’s sold for, meaning no debt can be passed on.
- Repayments your way – there are typically no monthly repayments to make, but with some plans you can make payments to reduce interest.
- Live in your home for life – you have the right to live in your home (rent free) for life: until you pass away or move into long-term care.
Getting started with a lifetime mortgage
Get a quick quote
Use our free lifetime mortgage calculator to find out in minutes if you qualify and how much you could release.Calculate now
Speak to an adviser
Book a free adviser fact find call to find out from one of our experienced advisers if a lifetime mortgage is right for you.Book adviser call
Download our guide
Packed full of information, our guide is the perfect starting place for anyone considering taking out a lifetime mortgage.Download guide
Types of lifetime mortgages
A roll-up lifetime mortgage isn’t your only option. Here’s two other types of lifetime mortgages that your adviser will consider for you depending on your individual circumstances:
Drawdown lifetime mortgage
A drawdown lifetime mortgage is a type of equity release plan that enables you to take cash from your home in chunks, as and when you need it. Interest is only charged on the cash which you have drawn down, meaning this can be a cost-effective way of borrowing.Explore drawdown lifetime mortgages
Interest only lifetime mortgage
An interest only lifetime mortgage is a relatively new kind of equity release plan where you can pay the interest due on a monthly basis. This means the size of your loan never goes up, making them an increasingly popular option for over-55s.Explore interest only lifetime mortgages
Frequently asked questions about lifetime mortgages
Can I pay off a lifetime mortgage?
Lifetime mortgages aren’t designed to be repaid in your lifetime and doing so may incur early repayment charges (ERCs). However, many plans now come with fixed ERCs which decrease the longer you have the plan. If you may want to pay it off early because you are looking to sell your property in the future or are expecting an inheritance then your adviser will find you the plan which can accommodate this in the most cost-effective way.Speak to an adviser
What is the average interest rate?
Lifetime mortgage interest rates fluctuate constantly, with changes happening almost daily. Each lender sets their own rates which vary by plan and loan-to-value. Average lifetime mortgage interest rates have been declining in recent years and are now between 4%-5%, with the most competitive rates below 3%. With such an interest rate reduction, existing equity release borrowers could save significant sums, by switching to a new lifetime mortgage or lender.Switch plans
Do I qualify for a lifetime mortgage?
To qualify for a lifetime mortgage you must be over 55 and a UK homeowner with a property worth at least £70,000. If you are in a couple then you must both be over 55 and live in the property to be eligible. Any outstanding existing mortgage balance could also effect your eligibility, as you need to be able to release enough money to pay this off. Plus your home must be ‘mortgageable’ in the eyes of the lender (like with a traditional mortgage).Check eligibility
Is a lifetime mortgage the right option for you?
A lifetime mortgage might seem like a good option if you want some extra money and don’t want to move house. However, there are some important ‘Things to think about‘. You need to look at how it will affect your future choices and financial situation in later life too.
Our friendly advisers can help you to explore lifetime mortgages – and the alternatives – without it costing you a penny. Only if you decide to go ahead we charge an advice fee of £995, payable on completion.
Your adviser will be able to explain how:
- A lifetime mortgage is a loan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits.
- If you want to pay off the loan early repayment charges (ERCs) can be substantial.
Speak to an adviser
Don’t just take our word for it
From the outset our adviser encouraged us to explore our scepticism thoroughly and this inspired confidence. He listened patiently and carefully assessed our rather complicated set of requirements. He acted in a totally professional yet friendly way, continuously ensuring that we had understood the options and the implications of any decisions to be made. He encouraged us to move at our own pace, retracing steps – sometimes several times – ensuring that equity release was right for us.
Mr and Mrs JD, Berkshire
My husband and I were very happy with the advice our adviser gave to us re equity release. There were several questions I had in relation to releasing some money but had not thought them through. Our adviser explained everything very clearly and I didn’t feel the push to go ahead some firms give. I felt that either way the decision was ours to proceed or not.
Mrs Colley, Wales
Our adviser James was extremely helpful and went through all options with us. He listened to what we wanted and explained everything and took his time.
What really impressed me with James was that instead of thinking of himself he was genuinely trying to find the best option for us, which in today’s world does not happen. I would certainly recommend James to anyone as he is honest, reliable and makes you feel at ease.
Mrs D Pepper, Lancashire
Your lifetime mortgage safeguards
As proud members of the Equity Release Council, all of the plans we recommend meet their standards, so that you:
- Have the right to remain in your home for as long as you want, or until you move into full time residential care
- Have the freedom to move to another property without financial penalty (subject to criteria)
- Will never owe more than the value of your home with the no negative equity guarantee