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A lifetime mortgage is a form of equity release where a loan is secured against your property to provide you with a tax free cash lump sum or a regular income to spend as you wish, with no monthly repayments to meet.

Interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold, usually when you move into long term care, or when you and your partner die. You can typically release between 20-56% of the value of your home with a lifetime mortgage, depending on your age. The minimum age is 55.

Advantages of a lifetime mortgage

  • A lifetime mortgage gives you the choice of a cash lump sum or income with no monthly repayments to meet
  • You retain full ownership of your home
  • Lifetime mortgages are available to younger people (aged 55+)
  • No negative equity guarantee
  • Some lifetime mortgage plans let you guarantee an inheritance for your family
  • All equity release plans are regulated by the Financial Services Authority

Disadvantages of a lifetime mortgage

  • The amount you leave as an inheritance will be reduced
  • The interest applied can grow quickly as it is compounded.
  • You can’t usually raise as much money with a lifetime mortgage as you could with a reversion plan, especially at younger ages
  • If you repay the lifetime mortgage early, you may have to pay an early repayment charge.

Lifetime mortgages have become a highly popular form of equity release over the past few years, prompting many providers to offer a variation of a lifetime mortgage called a drawdown plan which allows you to release equity as and when you need it, rather than taking a lump sum or regular income.

At Lakeview Financial Services, we offer independent advice on a wide range of equity release plans including lifetime mortgages, to find the best equity release solution for you. Get specialist independent advice on equity release by speaking to one of our specialist advisers.