Planning for later life often means thinking carefully about how best to use the value tied up in your home. For many people in the UK, a lifetime mortgage offers a way to unlock funds while continuing to live in the property they love. But what is a lifetime mortgage, and how does it work in practice?
This guide explains the essentials, highlights the benefits and considerations, and answers common questions people ask when exploring their options.
How Does A Lifetime Mortgage Work?
A lifetime mortgage is a form of equity release. It allows homeowners, typically aged 55 and over, to borrow against the value of their property while continuing to live there. The loan is repaid when the homeowner passes away or moves into long-term care, usually through the sale of the property.
Unlike a traditional mortgage, you don’t have to make repayments unless you choose to. Instead, the interest can either be rolled up and added to the loan balance or paid regularly to reduce the overall cost. Lifetime mortgages aren’t based on income or affordability in the same way as standard mortgages, which is why they can be more accessible for people in retirement. Many lenders also include a no negative equity guarantee, which ensures you or your estate will never owe more than the property is worth when it’s sold.
Our award-winning mortgage brokers are here to guide you every step of the way, from lifetime mortgage to broader mortgage services. Fill in our contact form today to get in touch.
What Is A Lifetime Mortgage Equity Release?
The term “equity release” simply means freeing up some of the value in your home without having to sell it. A lifetime mortgage is the most common type of equity release, and it gives you flexibility in how you access the money.
You might choose a simple lump sum, a series of smaller repayments or a mix of both. Some people use it to cover home improvements, support family members with deposits, or boost their retirement income. Because your home remains in your name, you can stay in familiar surroundings while benefiting from additional funds, and our advisors can explain exactly how this might affect your plans.
Different Types Of Lifetime Mortgages
There are several ways lenders structure lifetime mortgages, but two of the most common are:
Roll-Up Lifetime Mortgages:
You receive the money as a lump sum or in instalments, and interest is added to the balance each year. Nothing needs to be repaid until your home is sold.
Interest-Paying Lifetime Mortgages:
You make regular interest payments, which stops the balance from increasing over time. The original loan is then repaid when the property is sold.
The right option depends on your circumstances and long-term plans, which is why it’s important to seek advice from a qualified broker.
For expert advice regarding the type of mortgage suited to your circumstances, call our mortgage brokers in Preston, Southport and Garstang on 01772 620000.
How Much Can I Borrow On A Lifetime Mortgage?
The amount you can borrow depends on your age, property value, and the lender’s criteria. Generally, the older you are, the more you can release. Some lenders may also consider your health and lifestyle when deciding how much to offer.
Because these products aren’t assessed on income or affordability, the focus is on your property’s value and your age rather than your monthly earnings.
Personalised advice will always give you the clearest picture. We also provide mortgage guides and video tips to give you a clearer understanding of mortgages and their counterparts.
Can You Pay Off A Lifetime Mortgage Early?
Most lenders will allow you to repay your loan early, but it’s important to check whether there are early repayment charges. These can vary depending on how long you’ve had the mortgage and the terms you agreed on.
If flexibility is a priority, some plans allow you to make partial repayments each year without penalty. This can reduce the amount of interest built up and protect more of your property’s value for your loved ones.
What Are The Pitfalls Of A Lifetime Mortgage?
Lifetime mortgages can be a valuable financial tool, but there are points to consider before making a decision:
- The interest can grow quickly if you don’t make repayments
- Your entitlement to benefits could be affected
- Taking equity out of your home reduces the inheritance you can leave behind
- You may need to maintain your property to a certain standard as part of the loan conditions
This is why professional advice is key. Our specialist brokers can explain the details, compare plans, and ensure the product suits your needs, email us at enquires@keymortgageadvice.co.uk.
Is A Lifetime Mortgage The Same As Equity Release?
While people often use the terms interchangeably, equity release is the broader category. A lifetime mortgage is one type of equity release, while a home reversion plan is another. With a home reversion plan, you sell part or all of your property to a provider in return for a cash lump sum or regular payments.
Most people prefer lifetime mortgages as they keep full ownership of their home while accessing the money they need.
Lifetime Mortgages For Over 60s
Lifetime mortgages are most commonly taken out by those in their 60s or older, but they’re usually available to anyone aged 55 or above. Lenders may offer more competitive terms or higher release amounts as you get older, which is why many people choose to wait until later retirement before applying.
Other Mortgage Services
While lifetime mortgages are one of our key areas of expertise, our team of mortgage brokers in Southport, Preston, and Garstang also advises on a wide range of products. Whether you’re taking your first step with a first time buyer mortgage, considering a remortgage, or exploring options such as a commercial or buy to let mortgage.
If you’re based locally, our experienced mortgage brokers in Southport, Preston and Garstang are always on hand to help.
FAQs
Who Can Apply For A Lifetime Mortgage?
A lifetime mortgage is generally available to homeowners aged 55 or over who want to release equity from their property while continuing to live in it. The exact criteria will depend on the lender and your personal circumstances. Speaking with our expert mortgage advisors ensures you get customised advice on whether you meet the requirements and which products may be suitable for you.
Will I Still Own My Home With A Lifetime Mortgage?
Yes. Your name remains on the deeds, and you continue to own and live in your home for as long as you wish.
Do I Need To Get Legal Advice Before Taking A Lifetime Mortgage?
Yes, lenders require you to receive independent legal advice. This ensures you fully understand the agreement before proceeding.
Can I Move House If I Have A Lifetime Mortgage?
Many plans are portable, meaning you can transfer the mortgage to a new home if the lender approves the property. Always check this before committing.
Speak To A Lifetime Mortgage Specialist
A lifetime mortgage can provide valuable flexibility in retirement, but it’s not the right choice for everyone. Taking professional advice ensures you fully understand your options and choose a product that supports your long term plans.
