Compare Best Lifetime Mortgage Rates

You could get a lump sum with a lifetime mortgage, by releasing equity from your home and paying it back with interest when you sell the property.

Find the right equity release plan for you

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This comparison includes lifetime mortgages. To understand the features and risks, ask for a personalised illustration from a lifetime mortgage company. Check that this type of mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice. Your home may be repossessed if you do not keep up repayments on your mortgage.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

What is a lifetime mortgage?

A lifetime mortgage is a way of borrowing money secured against a property which is usually only repaid when the borrower moves into long-term care or dies.

Lifetime mortgages allow homeowners to free up some of the equity in their property, providing them with a tax-free cash sum that they can spend however they want while still living in their home.

Who are lifetime mortgages for?

To be eligible for a lifetime mortgage, you need to:

  • Be over 55 years old

  • Have little or no outstanding mortgage to pay

  • Own a property in good condition - this must also be your main residence

A lifetime mortgage could be an option worth considering if you are retired and need some extra money to supplement your pension in later life.

You can compare lifetime mortgage rates using our comparison table.

How does a lifetime mortgage work?

Lifetime mortgages work by securing a loan against your home. The loan amount and any interest charged are usually repaid when your home is sold. Depending on the type of lifetime mortgage you choose, there are often no monthly repayments to make. Interest rates are usually fixed, though they can also be variable.

The percentage of the property you can borrow against depends on your age and the value of your home, but it will typically be between 25% and 60%. Usually, the older you are, the more you'll be able to borrow.

If you take out a lifetime mortgage, you will still own your home and be responsible for maintaining it.

Here is how equity release works

What are the different types of lifetime mortgages?

There are several different types of lifetime mortgage, including:

  • Interest roll-up lifetime mortgage: Here, you receive a cash sum with no monthly payments required. The interest is 'rolled up' over the loan term, and both the total amount of interest and the cash sum are repaid when your home is sold.

  • Interest only lifetime mortgage: With this type of lifetime mortgage, you receive a lump sum, but rather than the interest rolling up, you pay off some of the interest each month. The amount originally borrowed is then repaid when your home is sold.

  • Drawdown lifetime mortgage: This type of later-life mortgage lets you release some money over time instead of receiving it as a lump sum. This means that you can access cash when needed and only pay interest on the amount taken. The overall cost can be considerably lower as a result.

  • Enhanced lifetime mortgage: Some providers offer enhanced lifetime mortgages to those with lower-than-average life expectancies - for example if you have a certain medical condition. These let you unlock more cash from your home, and often at better rates too.

  • Flexible lifetime mortgage: Here, you can choose to make voluntary payments to lower your equity-release-mortgage loan amount.

What are the costs of a lifetime mortgage?

As with standard mortgages, lifetime mortgages come with a number of costs and fees you need to pay. These could include:

  • An arrangement or application fee

  • Solicitors’ fees

  • A valuation fee

  • A completion fee

  • Adviser fees

Total costs can add up to a few thousand pounds, so make sure you budget for them. Remember that interest rates can also be higher than on a conventional mortgage.

What are the risks of a lifetime mortgage?

If you take out a lifetime mortgage, the loan is repaid when you die or move into care. This means that your family or other beneficiaries will inherit less, even if you opt to ring-fence a portion of your home’s value.

Applying for a lifetime mortgage can also result in you losing means-tested benefits, including pension credit, council tax support and the Cold Weather Payment.

You can find out more about the risks and benefits of equity release here.

Before applying for a lifetime mortgage, it’s also worth checking that your chosen lender is approved by the Equity Release Council (ERC). This will ensure that your lifetime mortgage has a no-negative equity guarantee, which means that you will never owe more than your home’s value.

Choosing a lender approved by the ERC will also ensure you have the right to live in your property for life and the freedom to move to another property without paying a penalty.

Is a lifetime mortgage right for me?

That will depend on your financial circumstances, your age and how much equity you have in your home. Before deciding, it’s vital that you weigh the pros and cons of a lifetime mortgage and make sure you are comfortable with the risks if you wish to proceed.

It’s also well worth talking to a financial adviser to be sure you’re making the right decision. 

What are the alternatives to a lifetime mortgage?

If you want to release equity from your home, you could also consider a home reversion scheme. These allow you to sell all or part of your home for a lump sum or regular income. You can find out more about how home reversion schemes work here.

Alternatively, if you'd prefer not to use equity release, you could generate extra retirement income by:

  • Downsizing your home

  • Taking out a secured loan against your property

  • Taking out a personal loan (if you only need to borrow a smaller sum)

Here is how to work out whether you should borrow money against your home.

Lifetime mortgages FAQs

About our mortgage comparison

Last updated: 11 December, 2021

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