Lifetime Mortgage

Introduction

A lifetime mortgage is a popular equity release option that lets you unlock a tax-free cash lump sum or enjoy a regular income, secured against the value of your home. Whether you need funds for home improvements, retirement plans, or treating your loved ones, it’s a flexible way to access the wealth tied up in your property.

Here’s how it works:

• Stay in your home: You retain full ownership of your property.
• Interest builds over time: Interest is added to the loan at a fixed or variable rate, rolling up over the term of your lifetime mortgage.
• Repayment is deferred: The loan and accrued interest are only repaid when your property is sold, typically when you and your partner pass away or move into long-term care.

Depending on your age and circumstances, you could release between 18% and 50% of your home’s value.

Why Consider a Lifetime Mortgage?

Advantages

• Flexible payout options: Choose a one-off lump sum or regular income, with no monthly repayments required in most cases.
• Stay in control: You remain the owner of your home, benefiting from any future property value growth.
• No-negative-equity guarantee: You’ll never owe more than the value of your home.
• Inheritance protection: Some plans let you ring-fence a portion of your property’s value for your loved ones.
• Accessible from age 55: These plans are available to younger retirees too.

Consider the Drawbacks

• Impact on inheritance: The amount passed down to loved ones will be reduced.
• Higher interest rates: Lifetime mortgages often carry higher rates than traditional mortgages, reflecting the long-term nature of the loan.
• Compound interest: Interest is added to both the loan and previous interest, meaning the amount owed can grow quickly.
• Early repayment fees: Exiting the plan early may come with charges.
• State benefits and tax: Your eligibility for certain benefits or your tax position could be affected.
• Alternative options: Other schemes, like home reversion plans, may release a higher percentage of your property value.

Understanding Interest Options

Lifetime mortgages are most commonly offered with rolled-up interest, meaning all interest is added to the loan and repaid along with the original amount when your property is sold. For those who prefer, interest-only lifetime mortgages allow you to pay the interest monthly, helping to manage the amount owed.

Expert Advice for Peace of Mind

Every financial decision deserves careful thought, and our advisers are here to help. With a deep understanding of lifetime mortgages, we’ll ensure you have all the information you need to decide if this is the right option for your future.

Your home could hold the key to the retirement you’ve dreamed of—let’s explore how together.