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 – Terms and Conditions apply for this).
You’re charged interest on the amount you borrow as well as on the interest that’s already been added, so what you owe back rises quite quickly. Taking out a lifetime mortgage cuts down the value you have in your home and any inheritance you leave. Your tax position and any entitlement you have to welfare benefits could also be affected.
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