Lifetime Mortgages

A lifetime mortgage is where you take out a loan secured against your property. This means you still get to keep your home and you can even put aside some of the value of your property as an inheritance for your family. 

Types of lifetime mortgages

An interest roll-up mortgage: You receive a lump sum payment or regular monthly payments and the interest is added to the loan. You pay the interest at the end of your mortgage term or when your house is sold. 

An interest-paying mortgage: You receive a lump sum payment and you pay the interest back monthly, or on an impromptu basis. The loan is repaid when you sell your home. 

How do I know if a lifetime mortgage is right for me? 

Figuring out whether or not a lifetime mortgage is for you involves asking yourself a few important questions:

  • How much do you want to leave as an inheritance?
  • Would you prefer a fixed rate lifetime mortgage or a variable rate mortgage? You need to consider the risks of each before choosing. It’s good to know that the Equity Release Council states that a variable rate mortgage has to have an upper limit cap. 
  • Does the lifetime mortgage of your choice come with a no-negative-equity-guarantee?
  • Do you currently claim any means-tested benefits? 
  • What is your current tax position?
  • Do you want to take out the lifetime mortgage as a lump sum or a continuous income? 
  • How old will you be at the age of your application? (Your age can depend on how much you can borrow) 

All of these factors, and more, can affect whether or not a lifetime mortgage is right for you. If you’re unsure, please get in touch with our equity release law specialists on 0800 614 722. 

How much does a lifetime mortgage cost?

A lifetime mortgage does come with a few fees. You may have to pay:

  • Lender arrangement fee for the lifetime mortgage
  • Legal fees
  • Valuation fees
  • Completion fee
  • Buildings Insurance
  • A fee to your equity release adviser

You can either arrange for the completion fee to be added to your mortgage or for it to be paid at completion. If you want to pay off your lifetime mortgage early then there’s the possibility that you may need to pay an ‘early repayment charge.’ You should always seek financial and legal advice before deciding to take out a lifetime mortgage.

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