What is a lifetime mortgage?

Wondering what a lifetime mortgage is, and if it's suitable for you? This video explains what you need to consider when thinking about a lifetime mortgage.

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Transcript  for video Lifetime mortgages in a nutshell

Our equity release explained simply

You’ve probably seen the value of your home increase over time, and this could mean that you may be able to use some of this equity to release a cash sum. You may not look at your home as part of your financial planning, but if its value has gone up, you may have been saving for your future without realising it.  

If you’re over 55 and you own a home worth at least £75,000, you may be able to unlock some of your equity and turn it into tax-free cash with our equity release. The type we offer is called a lifetime mortgage, which is a way of borrowing money against your home.  

It’s not suitable for everyone, as it depends on your personal circumstances.  

There are costs and charges involved, and releasing equity may affect your tax position and any entitlement to welfare benefits.  

Also, you may have savings, and it could make sense to use these first.  

But if you’re eligible, it’s a way to access money tied up in your home without having to move.  

There are no monthly repayments, but it is a long-term commitment, as the loan and interest are repaid usually from the sale of the house when you die or need long-term care.  

You will need to speak to an equity release adviser to take out a lifetime mortgage, who will provide you with a personalised illustration and run through the benefits, costs and risks.  

Interest will be added to the loan and interest previously added each year.  

This quickly increases the amount you owe, although you do have the option to make repayments.  

Voluntary partial repayments are subject to restrictions. Each year you can repay up to 10% of the amount borrowed without needing to pay an early repayment charge. You can make payments as often as you like, but each repayment must be at least £50.  

Our equity release will reduce how much you can leave behind, but our inheritance protection guarantee lets you set aside a percentage of the value of your home to leave to your loved ones, although this will lower the amount you’re able to borrow.  

So, how could you use the money?  

Well, perhaps you need to make home improvements, or adaptations to your home as you get older, meaning you can stay put even if health and mobility becomes more of an issue.  

Maybe you could help your kids towards getting on the property ladder, help fund your grandchildren’s education, or use it for special treats, like a nice holiday or a new car.  

So you can hang on to all those good memories tied up in your home, and make some more for the future.  

You can find out everything you need to know by visiting www.aviva.co.uk/equity-release

Terms and conditions apply.  

Call us on 0800 141 3493.

Lifetime mortgages in a nutshell

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. 

What are the features of our lifetime mortgage?

  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, 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.
  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.

How much can I borrow with a lifetime mortgage?

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. 

How does our lifetime mortgage work?

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.

Protecting your most important people

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.

Make sure a lifetime mortgage is right for you

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.

Get specialist equity release advice

Take your first step by arranging a call with a UK-based equity release adviser. You don’t have to commit to anything, it’s just to see if it’s an option for you. And you won’t pay a separate advice fee. Instead, we'll make a commission payment to the adviser on completion of your loan. Here are two ways to get in touch.

  • Call us free

    Ring now and make an appointment with an equity release adviser.

    0800 141 3493

    • Monday to Friday: 9:00am - 6:00pm
    • Weekends and Bank Holidays: Closed
  • Ask us to call you

    Give us your name and number, and an adviser will call you. You can pick a chosen day and whether morning or afternoon is best.

    Request a call back

Your call will be answered by the Aviva Equity Release Advice team, who can provide information and advice on Aviva’s lifetime mortgages only. They're authorised and regulated by the Financial Conduct Authority. 

Calls to 0800 or 0808 numbers from UK landlines and mobiles are free. For our joint protection, calls may be recorded or monitored, and saved for a minimum of 5 years. Our opening hours may be different depending on which team you need to speak to.