How does a lifetime mortgage work?

A lifetime mortgage is a type of equity release that allows you to access some of the equity that’s tied up in your home. It’s a long-term loan that’s secured on your property.

Even though it’s a mortgage, you don’t have to make regular repayments. The loan and interest will be paid back in full, usually by selling your property when you (and your partner if it’s a joint lifetime mortgage) die or move into long-term care (remember – Subject to our terms and conditions).

When you borrow money, you are charged interest not only on the initial borrowed amount but also on any interest that has already accumulated. This means that the total amount you owe grows rapidly over time because interest is continuously being added to both the principal amount and the existing interest. Taking out a lifetime mortgage will reduce the amount of inheritance you are able to leave and may affect your tax position and eligibility for welfare benefits.