What is a Lifetime Mortgage?

There are two main types of equity release available to UK homeowners. Here, we provide a little more detail on each:

Lifetime Mortgage

When it comes to making informed decisions about your property, understanding your options is paramount.

One of the most frequently asked questions is, “What is a lifetime mortgage?” Allow us to clarify.

A lifetime mortgage is a type of equity release—a loan secured against your home that permits you to release tax-free funds without the requirement to move out.

As with any loan there is however interest to pay which can be paid via two options – it’s either added to the loan throughout your lifetime, or you can pay back some or all every month. The loan is paid back when you move into long-term care, or when you die.

If you choose to pay off some of the interest each month it will reduce the amount of interest added over the time of the mortgage and therefore reduce the amount of money of money owed when the time comes. This could be something to think about when thinking of inheritance to your loved ones.

Here’s an example of how a lifetime mortgage would work

Picture this: you’re a homeowner aged 60, and while you love your home, you wish to renovate it or even help your grandchild with their university fees – the choice is yours as there are many uses for equity release.

By opting for a lifetime mortgage, you can tap into the value of your home and achieve these goals, and the best part? There’s nothing to repay until you either pass away or move into long-term care.

However, remember, like every financial decision, there are both advantages and disadvantages to consider.

Request our Equity Release brochure

Request our Equity Release brochure

How much equity could I access?

How much equity could I access?


Advantages of a lifetime mortgage:

  • Tax-free Cash: After securing a lifetime mortgage, you can take a lump sum all at once or as a series of smaller amounts, giving you flexibility.
  • Versatile Spending: Whether it’s for home modifications, aiding family members with property purchases, or supplementing retirement income, the choice of spending is entirely yours.
  • No Mandatory Repayments: Unless opted, repayments are not required until the end of the loan term.
  • Stay in Your Home: You can reside in your home for the rest of your life or until you shift to long-term care.
  • Inheritance Protection: By selecting the Inheritance Protection option, you can ensure a part of your home’s value is preserved for your heirs.
  • No Negative Equity: You will never repay more than the worth of your home upon its sale, even if the amount is less than the loan due.

Disadvantages of a lifetime mortgage:

  • Rising Interest: If interest isn’t paid regularly, it can compound and grow rapidly.
  • Reduced Inheritance: Despite protective options, a lifetime mortgage can decrease your inheritance value.
  • Potential Impact on Benefits: Releasing equity could affect certain means-tested state benefits.
  • Higher Interest Rates: Lifetime mortgages often have rates higher than standard mortgages.

Is a Lifetime Mortgage Right for You?

You must meet specific requirements to be allowed to take out a lifetime mortgage. Eligibility typically requires you to be aged 55 or over, own your home (or be in the process of purchasing) with a minimal outstanding mortgage, and have a property worth a minimum of £70,000 or £100,000, depending on its type.

But while these are the tangible requisites, the bigger question revolves around suitability. Here’s where tools like the equity release calculator come in handy, offering a rough estimate of how much you can borrow.

If you’re looking for further information or want to know if you’re eligible then contact us today. Not only can we provide independent advice, but if we believe a lifetime mortgage isn’t the right decision for you, then we’ll talk through the options and propose alternatives.

These might include downsizing, home reversion plans, or seeking other traditional borrowing methods.

When discussing providers, it’s essential to know that Premier Equity Release partners with various providers, each potentially offering slightly varied terms. but we’ll always ensure you’re informed about these differences and the pros and cons of each. We make sure all of our providers conduct themselves in accordance with the Equity ReleaseCouncil’s Product Standards.

Lastly, the costs of a lifetime mortgage are tied to the interest rates. Over time, the interest compounds, so it’s crucial to understand how this might affect the total amount repayable.

The potential costs of equity release might be higher than anticipated if interest rates are steep and the loan lasts many years.

In conclusion, a lifetime mortgage offers a versatile solution for many and is the most popular choice of equity release, but understanding it in-depth, along with the associated costs, is vital. Always seek expert advice before making any decisions.

Request Our Equity Release Brochure

Request Our Equity Release Brochure

How much equity could I access?

How much equity could I access?

Overall, our experience with Premier Equity Release has been first class, and we can confidently recommend them to anyone needing sound unbiased advice on Equity Release lending.

Mr & Mrs Baxter, Northamptonshire

Whatever your plans and ambitions, we can help.

If you have ideas about how you could put the equity tied up in your home to good use, give us a call today and speak to a helpful, professional adviser.

What else would you like to know?

What can Equity Release be used for?


What should my family know?


What costs are involved with Equity Release?


How can I get the best interest rate?


Who do we work with?

There are a few key providers in the Equity Release market that also work within the Equity Release Council’s guidelines. As trusted providers, we’re happy to work with all of them: