Lifetime Mortgage

What is a Lifetime Mortgage?

A lifetime mortgage is a secured loan against your property which, unlike a standard mortgage, does not need to be repaid until you either move into long term residential care, or die.

You are still the legal owner of the property and will continue to live in the property as long as you want, but it enables you to free up some of the wealth tied up in your home to use as and when you need.

A lifetime mortgage is available from selected lifetime mortgage providers who offer different products. Using a good adviser will find you the best lifetime mortgage suitable for your needs and your specific situation.

Advantages

• You retain ownership of the property
• The cash released can be used however you want
• Many of the current market products require no payments to be made
• You are guaranteed lifetime occupancy
• Depending on how much equity is left in the property when the borrower moves, dies, or goes into residential care, the leftover equity will be given to the beneficiaries.

Disadvantages

• The amount of equity raised will be a low proportion compared to the property’s value.
• The debt rolled-up may quickly diminish the equity 
• The younger the borrower, the higher the amount of potential rolled-up interest (also a reason why the amount of equity raised will be a low percentage of the value, to leave room for interest)
• You have no control over the rolled-up interest
• Moving home will be subject to the lenders criteria and approval.
• Increases in capital or income from Lifetime Mortgages may impact any means tested benefits.

Fixed Lifetime Mortgage

Lifetime fixed rate mortgages are available to those aged 55 and over who own a property and want to release the equity in their home.  The lifetime mortgage interest rate is set at the outset of the loan and the loan does not need to be repaid until the second homeowner has passed away or moved into a permanent residential care home.

You have the option to take one tax-free cash lump sum or use a drawdown facility which is called a Drawdown Lifetime Mortgage which can provide you with a regular income.

Drawdown Lifetime Mortgage

When you take out a Lifetime Mortgage you have the option to take a lump sum and leave the remainder of the pre-agreed reserve in a drawdown facility which you can drawdown as you need the money.

The advantage is you will not be charged interest on the pre-agreed total lump sum until you draw down the funds held in reserve.

Over 60 Lifetime Mortgage

The minimum age you can take out a Lifetime mortgage is 55 but the older you are when you take out a Lifetime Mortgage, the cheaper the overall cost. Ideally, we recommend that you are over 60.  Rather than make regular monthly repayments such as with a standard mortgage, you opt not to make any payments and allow the interest to build up with a Lifetime Mortgage.