What is a lifetime mortgage?

A lifetime mortgage, also referred to as equity release, allows homeowners over 55 to access money tied up in the equity of their property. This can be in the form of a lump sum or regular payments, without needing to move out of their home.

Why use a lifetime mortgage?

• Extra retirement income

  Lots of people use the extra income to support themselves in retirement. This can be used for covering living expenses and leisure activities that you now have time to do.

• Healthcare costs

  Whether its for private care or adapting your house to your needs with stair lifts and grab bars, the extra money from a lifetime mortgage can provide the financial flexibility needed for managing these expenses.

• Helping family

  Not everyone wants to wait to have to leave behind an inheritance to help out their children and grandchildren financially. A lifetime mortgage can allow you to help cover a house purchase, education costs and any other financial needs.

• Debt consolidation

  A lifetime mortgage can be used to pay off debts such as credit cards or other loans. Consolidating debts into a single more manageable payment can help keep down monthly expenses and simplify finances.

Advantages

• Retaining ownership

  When taking out a lifetime mortgage you keep ownership of your home, meaning you can still live in the property for as long as you wish.

• Tax free cash

  The money from a lifetime mortgage is tax free from income tax, meaning you get the most you can out of the value of your property.

• No monthly repayments

  With a lifetime mortgage, monthly interest payments are not needed. Instead, any interest from the loan is repaid from the sale of the property that equity is being released on.

• Flexibility

  Whether it’s a lump sum or regular payments, a lifetime mortgage gives you a variety of options with how you access and use funds from your property.

• No negative equity

  The lenders we use guarantee no negative equity. This means that when the property is sold, if the sale price doesn’t cover the loan amount the lender will write off any excess amount owed.

Disadvantages

• Accrued interest

  With lifetime mortgages, the interest is compounded (interest is charged on the interest) which can lead to a much larger repayment than expected when the property is sold. Please see the results from our Lifetime Mortgage Calculator that clearly illustrates this.

• Impact on benefits

  Your eligibility to receive state benefits such as pension credit could be affected by taking out a lifetime mortgage. It is important to consider this before deciding to take out a loan.

• Inheritance impact

  A lifetime mortgage can largely reduce the amount of value in your property since the loan is repaid upon sale of the house. This can lead to a large reduction in the amount you can pass down as inheritance.