What is a lifetime mortgage?

A lifetime mortgage is a long-term loan secured against your property, that allows you to access some of the money tied up in your home. It’s available to homeowners aged 55 and over.

Unlike a standard residential mortgage, you don’t make monthly repayments; instead, interest builds up on your loan each year. Interest is charged on the total borrowing and any interest previously added, which quickly increases the amount you owe. The loan plus interest is repaid through the sale of your property, once you (and your partner, for joint lifetime mortgages) have passed away or entered long-term care, subject to terms and conditions. 

A lifetime mortgage will reduce the amount of inheritance you are able to leave, so it’s a good idea to have a chat with your family first. Your tax position and any entitlement to welfare benefits may also be affected – therefore you’ll need to talk through your full financial situation with an equity release adviser. 

1.  You continue to own your own home.
2. You receive a cash lump sum at a fixed rate of interest throughout the term of the lifetime mortgage.
3. The option to setup a cash reserve facility which allows you to draw money from in the future. No interest will build up on the money in the cash reserve until you withdraw it. We’ll set a new interest rate for each amount you take out, so any later withdrawals will have its’ own interest rate.
4. Our voluntary partial repayment features allow you to make partial repayments, with no early repayment charges to pay. The maximum you can repay is 10% of the total amount borrowed each policy year, excluding any accrued interest, and the minimum you can repay at each instalment is £50.
5. A lifetime mortgage will reduce the amount of inheritance you can leave in your estate. However, when you apply for your lifetime mortgage you can leave a percentage of the value of your home by adding an inheritance guarantee. The guarantee will be a percentage of the sale price of your home (when you pass away or go into long-term care), rather than a specific sum. You can only select this feature when you apply and it may affect the interest rate you’re charged. The amount of inheritance you will be able to leave will still be reduced.  
6. Our lifetime mortgage has a no negative equity guarantee. This means that you or your estate will never have to pay back more than your property is sold for, as long as it’s sold for the best price reasonably obtainable.
7. You can apply to transfer your lifetime mortgage to a new home, subject to your new home meeting our lending criteria at the time of application. If it doesn’t and you’d still like to move home, then your lifetime mortgage will need to be repaid in full and an early repayment charge might apply. However, if you’ve held your lifetime mortgage for 3 years or more, you might be eligible for Downsizing Protection. This means you’ll be able to move home and repay your lifetime mortgage without paying an early repayment charge. Subject to terms and conditions.

Interest rates and how much you can borrow are based on your individual circumstances such as your age, property value, health and lifestyle details. When you speak to an equity release adviser, they’ll arrange to give you a personalised illustration which will show you your loan amount and interest rate. 

If you're 55 or over and own your own home in the UK (not including the Isle of Man or the Channel Islands), you could borrow a one-off cash sum, starting from £15,000. Or you could borrow an initial lump sum, starting from £10,000, and set up a cash reserve of at least £5,000  to draw from when you like. And as it’s a loan, any money you release is tax-free. The amount of cash you can get will depend on factors such as your age, health and property value. Before you take out equity release, you'll need to speak to an equity release adviser. They'll provide you with a personalised illustration and talk you through the benefits, costs and risks.

We offer a fixed interest rate unique to your personal situation, and that rate will never change. If you choose to take a smaller initial lump sum and set up a cash reserve, we’ll offer you an interest rate for the lump sum. Then each time you dip into your cash reserve, you’ll get the interest rate that applies at the time. You'll only be charged interest on the money you borrow, and you won’t have to make any monthly repayments.

When you take out a lifetime mortgage, some costs and charges will apply. Your equity release adviser will explain these so you can make an informed decision. It’s also important to understand that interest builds up throughout the lifetime of the loan. This is charged on the total amount borrowed and the interest already added to your lifetime mortgage, so the amount you owe goes up quickly.

Your loan and interest are usually repaid from the sale of your house when you (and your partner, for joint lifetime mortgages) pass away or need long term care, subject to our terms and conditions.

Our lifetime mortgage could make sense if you’re keen to stay in your home, whether for the years of memories it holds, because you’re settled in the area, or you don’t want the stress of moving. And you’ll still own every square centimetre of it.

Lots of people worry that taking out equity release means they won’t be able to leave anything behind for those they care about. But, with us, you can safeguard a percentage of your property as an inheritance, so you know there’ll be something to pass on. If you choose this option it’ll reduce the total amount you can borrow, so take care to check you’ll still be able to meet the minimum loan amount of £15,000.

You – and your family – can also sleep easy knowing that you’ll never have to pay back more than the money received from the sale of your property, if it’s sold for the best price reasonably obtainable. This is our no negative equity guarantee.

Taking out a lifetime mortgage is a big decision, one that you should consider carefully, and speak to your family about too. As the name suggests, it’s intended to be a lifelong commitment. So if you change your mind and want to pay off your lifetime mortgage early, you could face a large early repayment charge.

It’ll also reduce the amount of inheritance you can leave and may affect your tax position and your eligibility for welfare benefits. Because of this, a lifetime mortgage isn't suitable for everybody, it all depends on your personal circumstances.