Lifetime Mortgages
Release cash from your property—keep ownership, no monthly payments
What are Lifetime Mortgages?
Lifetime mortgages are the most common form of equity release (accounting for 95% of the equity release market), allowing homeowners aged 55 and over to borrow money secured against their property while retaining full ownership. You can release typically 20-55% of your property's value depending on your age—the older you are, the more you can borrow. Interest is charged on the loan and 'rolls up' (compounds) monthly, with no monthly repayments required. The loan plus accumulated interest is repaid when you die or move into permanent long-term care, from the sale proceeds of your property.
All FCA-regulated lifetime mortgages include a 'no negative equity guarantee'—you will never owe more than your property's sale value when it's eventually sold. If the debt (through compound interest growth) exceeds the property value, the shortfall is written off by the lender and your estate owes nothing extra. Interest rates are typically 5-8% annually (fixed for life), higher than standard mortgages because there are no monthly payments and it represents higher risk to lenders. You can take the money as a lump sum, regular income, or use a 'drawdown' facility where you secure a maximum amount but only draw what you need when needed, paying interest only on amounts actually drawn.
Modern lifetime mortgages offer significant flexibility: most allow voluntary repayments (typically 10-40% of the initial loan annually without penalty) to reduce debt and protect inheritance, inheritance protection guarantees ensuring a percentage of property value remains for family, portability allowing you to move to a suitable new property without repaying the loan, and enhanced rates for health conditions offering better terms or larger borrowing. However, compound interest significantly reduces inheritance—for example, £50,000 borrowed at 6% grows to £159,000 after 20 years. Professional independent financial advice is essential to understand long-term implications, compare with alternatives like downsizing, and ensure lifetime mortgages suit your needs and family circumstances.
Lifetime Mortgages are arranged by introduction only.
Key Benefits of Lifetime Mortgages
Keep 100% ownership of your property and benefit from any house price increases
Never owe more than your property's value—shortfalls are written off by the lender
Interest rolls up—no monthly payments required, preserving your retirement income
Take lump sum, regular income, or drawdown facility—borrow only what you need, when needed
Expert Tips & Insights
Amount depends primarily on your age and property value. Typical maximums: age 55-60 = 20-25% of value, age 65 = 30-35%, age 70 = 35-40%, age 75 = 40-45%, age 80+ = 45-55%. Example: £250k property, age 70 = release £87k-100k. Joint applications use younger person's age. Enhanced or impaired life products offer 10-20% more for health conditions (diabetes, high blood pressure, smoker, cancer history). Minimum property value usually £70k-£100k. Maximum loans typically £500k-£1m depending on lender.
Lifetime mortgage rates: 5-8% annually (fixed for life), higher than standard mortgages (3-6%) because no monthly payments and higher risk. Interest compounds annually—£50k at 6% becomes £67k after 5 years, £89k after 10 years, £119k after 15 years, £159k after 20 years. This doubling every 12 years (at 6%) significantly reduces inheritance. Some products offer capped or fixed rates protecting from rate increases. Smaller releases and older ages typically secure lower rates (0.5-1% better).
Lump sum: receive all money upfront, pay interest on full amount from day one. Suits one-off needs (debt clearance, home improvements). Drawdown/Reserve facility: secure maximum amount but only draw what you need when needed. You only pay interest on money actually drawn. Example: secure £100k facility, draw £40k initially, £20k in 3 years, £15k in 5 years. Save thousands in interest vs taking £75k upfront. Small annual reserve fees (£50-100) apply but savings far outweigh costs. More flexible for ongoing needs.
Many products offer 'inheritance protection' guaranteeing a percentage of property value (typically 25-50%) remains for beneficiaries regardless of debt growth. Example: £300k property with 50% protection means minimum £150k goes to family even if debt exceeds £150k. This reduces amount you can release—protecting 50% might mean you can only borrow 20-25% of value instead of 35-40%. Discuss with family whether inheritance protection or larger release suits your priorities. Some choose no protection, maximising available cash.
Modern lifetime mortgages allow voluntary payments to reduce debt and protect inheritance. Typical allowances: 10-40% of initial loan annually without penalty (varies by lender). Example: borrow £60k, can repay £6k-£24k per year penalty-free. Some products allow unlimited overpayments. Making regular payments prevents compound interest growth—£60k at 6%, paying £300/month interest means debt stays at £60k vs growing to £96k after 10 years with no payments. Flexible for those with pension income or rental income.
Costs: arrangement fees (£1,500-3,000), property valuation (£300-500), legal fees (£500-1,500), financial advice (£1,000-3,000 or % of loan). Total: £3,500-8,000. Mandatory protections: no negative equity guarantee (never owe more than property value), fixed/capped interest rate for life, right to remain in property for life, portability (move to suitable new property), and FCA regulation with detailed disclosures. Look for Equity Release Council membership ensuring extra safeguards. Products must offer 14-day cooling-off period after completion.
Frequently Asked Questions
Important Lifetime Mortgage Warning:
A lifetime mortgage will reduce the value of your estate and may affect your entitlement to means-tested benefits. This is a lifetime commitment secured against your home. The interest that rolls up could significantly reduce what you can leave to your family. We recommend you discuss this with your family and seek independent legal advice before proceeding.
Your home may be repossessed if you do not keep up repayments on a lifetime mortgage that requires them.
Explore Lifetime Mortgage Options
Our FCA-regulated lifetime mortgage specialists will help you understand how much you can release, the long-term costs, and whether it's the right solution for your retirement needs and family circumstances.