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  • Writer's pictureDarren Pestell

Lifetime mortgages – is this form of Equity Release right for me?

Updated: Jul 10, 2023

Many people’s vision of retirement is changing, we are fortunate enough to enjoy longer life expectancies and our aspirations of how we spend this time is changing too. Given this, it’s little wonder that making use of property wealth to help fund retirement is becoming an increasingly popular option for many…

What is a lifetime mortgage?

A lifetime mortgage is a loan secured against your home and a form of equity release. The loan and interest do not have to be repaid until the either you pass away or move into long term care. No monthly payments are required, though options to make repayments are available, and the “no negative equity guarantee” means that your estate will never owe more than the value of the property. The interest rate is fixed for the lifetime of the loan and can’t be changed. A lifetime mortgage is a big decision, so to ensure you understand all the features and benefits, you won’t be able to secure a lifetime mortgage without both financial and legal advice.

Is a lifetime mortgage right for me?

There are many reasons why people are considering releasing equity from their homes with a lifetime mortgage. Perhaps the trip of a lifetime, some home improvements, some help for younger generations, financial comfort in retirement or maybe to repay outstanding debts.

Whatever plans you have for the money, it’s important to remember that a lifetime mortgage could impact your access to means-tested state benefits and will also reduce any inheritance you wish to leave, so it’s worth discussing this option with your family before you make a decision.

There may also be cheaper ways for you to borrow money and any existing savings and investments you have should also be taken into account when considering a lifetime mortgage.

Am I eligible for a lifetime mortgage?

To be considered for a lifetime mortgage you need to be:

  • Typically aged 55 +

  • Live in England, Wales or mainland Scotland

  • Own a property worth more than £70k

  • Own your home with either no mortgage or small mortgage

Most popular uses for equity released funds?

  • Home and/or Garden Improvements

  • Go on holiday

  • Pay debts (e.g. loans, credit cards)

  • Treat or help family / friends

  • Clear outstanding mortgage

  • Medical and care costs

  • Later life home adaptions

  • Help with regular bills

  • Reduce IHT Liability

How big is the market?

The latest data from the Equity Release Council shows that 2021 saw a year on year rise of 24% with total borrowing reaching £4.8 billion for the year, whilst a staggering sum the trend is upwards and given the approximate £5 trillion in property equity in the UK the trend is likely to continue.

If you’re interested in finding out more about lifetime mortgages and how they could be part of your financial strategy, please get in touch so we can build a plan together for your financial future.

Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets beyond our control. Investments and the income from them may go down as well as up and you may get back less than the amount invested. Past performance cannot be used as a reliable prediction of future performance.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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