Lifetime Mortgages

  • Unlock your home’s equity
  • Homeowners aged 55+
  • Stay in your home
  • Tax-free cash
  • Lump-sum or income
  • No monthly repayments
Equity Release Mortgage

What is a Lifetime Mortgage?

A lifetime mortgage is a form of equity release. If you are a homeowner aged over 55 you can unlock a portion of your home’s value while not having to worry about making monthly repayments and still being able to live in your property.

A growing number of people are using lifetime mortgages as part of their retirement planning to supplement their pension. This has become important because:

  • pensions are not as generous as they once were
  • people are living longer and so having longer retirements – these days a 65-year-old person could have a 20 to 25-year retirement.

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  • Borrow up to 55% of your home’s equity
  • Use for any purpose
  • Plans are tailored to your needs
  • Protect your inheritance
  • Stay in your home
  • Lump-sum or drawdown options

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How does a Lifetime Mortgage work?

The basic principle is the same as any other mortgage you may have had. The differences are that:

  • You don’t repay the mortgage until either you pass away or move into residential care
  • The interest incurred on the loan is not repaid monthly but instead rolled up and paid off together with the capital
  • You must be aged over 55

 

What are the types of Lifetime Mortgage?

There are two main types of lifetime mortgage – lump sum and drawdown. This difference is simply about the method of taking the unlocked equity i.e. whether you want to take it as a lump sum at the start or take it at regular intervals (i.e. drawdown). The latter method may help to reduce the total interest costs as interest is only added when you take the funds.

In addition, there is the interest-only lifetime mortgage where you make monthly repayments of the interest incurred rather than rolling it up until the end of the mortgage. This will further reduce the final debt but will require you to have an income from which to make the monthly interest payments.

Each of these types of lifetime mortgage can be adapted to accommodate your particular requirements. So, you can tailor the mortgage to suit:

  • your state of health – if you’re sick you may be able to borrow more
  • your inheritance objectives – protect what your family/friends could receive from you
  • your desire to downsize your property at some point during retirement
  • your need to enhance your regular income during retirement

Is a Lifetime Mortgage right for me?

Whether a lifetime mortgage is right for you or not will depend on your goals and your personal circumstances. You should always take professional advice before making your decision.

Advantages

  • No monthly repayments (unless you choose to)
  • Cash is tax-free & used for any purpose
  • Plans are tailored to your needs
  • Lump-sum & drawdown options
  • Guarantee against negative equity
  • You still own your home

Disadvantges

  • Compound interest costs mount up
  • There may be cheaper alternatives
  • A very long term commitment
  • It will reduce your family’s inheritance
  • It may reduce your tax & welfare benefits
  • It could take 8 to 12 weeks to arrange

If you are relatively young and healthy then it may not be cost-effective to release equity using a lifetime mortgage. With the way interest is rolled-up and compounded interest charges grow sharply once the plan has been taken out. The longer you hold the mortgage the greater the proportion of your home’s value that will be eaten up. There are other options you can consider.

How do I obtain a Lifetime Mortgage?

You should always get proper financial advice about equity release products. This is because of the long-term nature of them, the degree to which they can be tailored, the implications years down the line, and the fact that better alternatives may exist for you. A lifetime mortgage may suit some people but not others.

We’ve partnered with a specialist in lifetime mortgages – Fluent Lifetime – who are FCA authorised and regulated, and permitted to give you the advice you need. Fluent Lifetime is also a member of the Equity Release Council (ERC) who set high standards for their members. They must abide by a strict code of conduct that ensures they act in your interest. If a lifetime mortgage is not an appropriate product for your circumstance they will tell you.

 

Why have we chosen Fluent Lifetime?

  • 100% impartial advice
  • You have your own equity release adviser from start to finish
  • Exclusive offers from each of the leading mortgage providers
  • Low fees guaranteed – they won’t be beaten on price

They’ve invested in the technology you need to ensure that you’re fully informed during the application process. You are also able to upload/download documents for your convenience.

Getting a Lifetime Mortgage step by step

It is only possible to obtain a lifetime mortgage by using a regulated broker such as Fluent Lifetime. You will receive the appropriate advice as well as being able to access the whole market.

Step 1: Speak to a specialist

Complete the enquiry form or call (free) 0800 XXX XXXX. A qualified equity release adviser from Fluent Lifetime will contact you to understand your needs and find out about your current circumstances. They will answer any questions you have and provide you with the information that you need.

You should discuss your plans with your family because the decision you make may have implications down the line.


Step 2: Search the market

With your agreement, your adviser will research the market and identify the lifetime mortgages that are right for you. Your adviser will be in touch by phone and in writing to present their recommendation and will answer any further questions you have. You will get a personalised report and be given plenty of time to consider the proposal. You do not have to proceed.


Step 3: Offer

If you want to proceed the mortgage provider will make you a formal offer in writing. An independent solicitor will be on hand to cover the legal aspects for you.


Step 4: Completion – cash released

The whole process should take eight to twelve weeks to complete. Then you will receive your cash to enable you to get on with your life the way you want to.

Alternatives to a Lifetime Mortgage

A lifetime mortgage will not suit everyone’s circumstances. And even if it did it’s possible that there may be another financial product that is a good alternative while also being cheaper.

There is another form of equity release called home reversion. This type of plan will suit an even smaller proportion of people as they have a significant weakness – you have to sell (a proportion of) your home to the lender at the start (see the video below).

Discover some alternatives to lifetime mortgages and other types of equity release.
 

Our Money & Credit Guides

If you’re uncertain which type of credit might suit you or you have a money problem then one of our guides may help you. We summarise each type of loan and their pros and cons, and address issues regarding debt and credit ratings.

Lifetime Mortgage FAQs

Lifetime Motgages: things to know before you enquire

Please note: this information is for guidance only. You should clarify the terms of any equity release product with the provider before entering into an agreement.

How much can I borrow?

It depends on your age, your state of health and the value of your property. In simple terms:

  • the more valuable your house the more you can borrow
  • the older you are the more you can borrow (as a % of your home’s value)
  • the poorer your health the more you can borrow (as a % of your home’s value)

The proportion of a home’s value that is lent is normally in the range 10% to 55%. On average the age of a borrower is 70 and they borrow £80,000.

Is it possible that the total debt could be worth more than my house?

Any lifetime mortgage provider who is part of the Equity Release Council will ensure that you can never owe more than the equity in your home.

What happens if I need to move into a residential care home?

These mortgages are designed to be repaid when you move into a long term care home or pass away.

How does a lifetime mortgage affect my inheritance?

In simple terms, you can’t have it both ways. If you want to enhance your retirement by using the value of your home then that value will not be there to be part of your inheritance. The more you borrow the less there will be for your family to inherit.

There are a number of things you can do to limit the impact on your estate:

  • You can tailor your lifetime mortgage to build-in protection for a portion of your home’s value so it will definitely form part of your estate.
  • You can opt to make interest and/or capital repayments during the mortgage period. Paying interest early ensures it is not rolled up into the debt.
  • You can opt for a drawdown rather than lump-sum mortgage to help reduce interest costs and the rolled-up amount.

Mortgages from providers who are part of the Equity Release Council (ERC) will never leave your estate owing the lender money.

Is there a chance I could be forced out of my house?

No. With a lifetime mortgage, you remain the owner of your property. So you remain in control. You can remain living in your home for as long as you like.

THIS IS A LIFETIME MORTGAGE WHICH MAY REDUCE THE VALUE OF YOUR ESTATE AND MAY AFFECT YOUR  ENTITLEMENT TO MEANS-TESTED BENEFITS. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION.

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Written/Reviewed by: Amanda Gillam