A lifetime mortgage is a loan that is secured on your home. It does not need to be repaid until death or the entrance into long-term care. It is a way of unleashing the value stored in your property whilst retaining ownership. Fundamentally, it is a way of using what, for most people, is their largest asset – their property in a tax-free manner.

A lifetime mortgage is a form of equity release and is generally the type of product advised on by ourselves and the rest of the market. Equity release also incorporates home reversion* schemes, but overall, these plans account for less than 1% of new plans agreed. We cannot provide advice on Home Reversion Plans. 

A lifetime mortgage is a loan that is secured against your home. Interest can be rolled up and would be paid on death or on entering care. The house is still your property, and you can still live in it.

A lifetime mortgage requires advice from a qualified and regulated company to go ahead. Your recommendation will be relevant to your situation – there are many products from a series of specialist lenders who write lifetime mortgages.

A lender’s final rate and the amount you can receive depend on your property equity and the homeowner’s age. In the case of a joint application, the youngest homeowner’s age will be considered. Some lenders offer more considerable sums to those with medical conditions.

Although our lifetime mortgage calculator can give an estimate of amounts, to get an accurate calculation, correct rate and to assess eligibility, a full fact-find will need to be completed. This can be conducted at our office, at your home, over the phone, or even over video.

Unlike a standard mortgage, eligibility for a lifetime mortgage is not based upon income – it’s based on your home. This includes items like spray-foam insulation, type of roof, lease or freehold, non-standard construction and even the type of concrete used.

Detailed property information is one element that is needed to conduct a thorough fact-find. Gathering this information enables an adviser to select the correct plan to suit your needs and circumstances. Only then can the adviser select a product and use their knowledge to have the best chance of receiving the offer you require.

Should you wish to proceed with an application, an adviser will need to get all documents to apply on your behalf. This includes ID checks, anti-money laundering checks and more.

Once all the paperwork is ready, the adviser will apply to the lender and look to secure the original rate within the timeframe. Rates go up and down but have been relatively low in recent years. As such, there is a time limit on any offers made.

The lender will then process the application. The lender will then process the application. We can then instruct a specialist equity release solicitor we work closely with, or you can use your own should you wish.

An independent surveyor will value your home as part of this process.
Should everything go smoothly, then the lender will approve the offer – this means you are close to completion – and the money can soon be paid to you.

If you have opted for a drawdown or flexible plan, you’ll likely be able to request further advances until the maximum sum you were approved for – we can arrange this for you.

When the youngest homeowner dies or enters long-term care, the loan and interest are paid back when the property is sold.

Each plan will have an early repayment charge, but these vary by product and lender. Having a low early repayment charge as you wish to pay off the mortgage is likely to affect the interest rate negatively. Your adviser will discuss this in detail with you during the ‘fact find’ as each case is different in this regard.

In Q1 2020, the average amount taken from drawdown plans was £68,492, with a further £39,214 amount reserved for future use, while £102,443 was the average sum taken in lump sum plans.

The maximum amount you can receive depends on your property value and the age of the youngest homeowner. Usually, the minimum amount varies from £10,000-£20,000 by the provider. Use our equity release mortgage calculator to find out how much you can borrow.

It is possible to pay the interest on the loan with a lifetime mortgage. There are several types of lifetime mortgage products that have this choice.

If you are a homeowner aged over 55, you may be eligible for a lifetime mortgage. Fill in the form on this page, and we’ll be able to assess your situation and give you an estimate of what is possible for you.

There are plans available that allow for lifetime mortgages to be used for purchases.

It may be that a more accessible or easier to manage property is needed, but there are insufficient funds or equity to complete such a move. It may be possible to use a lifetime mortgage can be used on the shortfall.

It is also possible to use any equity you release to buy a second or holiday home. It is crucial to understand the financial implications of this and if there would be stamp duty, taxes and solicitor fees on top of the property price.

Yes, lifetime mortgages are a regulated product by the Financial Conduct Authority (FCA).

Drawdown lifetime mortgages are the most popular type of new later life mortgage plan agreed, with around 57% of plans approved being this type. A drawdown lifetime mortgage allows you to take a lower initial sum and have the flexibility to release further regular or occasional amounts to boost income. The amount borrowed is repaid when your home is sold upon death or entering long term care.

The amount borrowed is repaid when your home is sold upon death or entering long term care. With this type, interest is paid regularly. Some are flexible with payment options, but the idea is that it protects against roll-up interest, which will compound over time. Of course, there would need to be provable income from pensions or other areas to service the interest.

According to the Equity Release Council, the average lifetime mortgage interest rate in January 2022 was 4.16%.

The amount of interest you will pay depends on the length of your lifetime mortgage and your interest rate. Interest is rolled-up over the term length. To avoid compound interest, many make payments either in full or partially.

Products have become more flexible, with 85% of them having the option to make voluntary penalty-free partial repayments.

Get in touch with our team for a personalised illustration of options.

With an enhanced lifetime mortgage, it can be possible to get a preferential rate or increase the amount of money released. Those with a poor health record are usually eligible for these plans as the lender will consider this when underwriting the loan.

A lifetime tracker is a type of product for regular mortgages or retirement interest-only mortgages in which the rate is on a tracker for the entire term of the mortgage. For example, the term could be 20 years, or it could be 2% above the base rate for the life of the mortgage. Lifetime mortgages are different – they are usually fixed for the whole term but have no end date.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage.

If your property contains any of the following, it can affect a lender’s decision to offer you a lifetime mortgage due to the added risk.

• Septic tank
• Shared access
• Spray foam insulation
• Single skin walls
• Size of plot
• Proximity to commercial premises
• Flood zone
• Previous insurance claims
• Running a business from the property
• Age-restricted properties
• Short lease

A lifetime mortgage is not suitable for everyone, and whether it is a good idea will depend on your needs and circumstances. 

It is important to remember that a lifetime mortgage will: 

• Influence inheritance you leave to your kin. 
• With a roll-up lifetime mortgage, the compound interest means the amount owed will grow over time. It is essential to take time to understand that you understand the calculations and projections shown to you.  
• It can affect your tax position and any means-tested benefits you receive. At Unleash, we cannot advise you on tax issues – you will have to speak to an IFA who specialises in this area.  

Lenders will expect you to maintain your home in good condition, so you’ll need to ensure you have the funds to do so.