Saving enough money for your pension can be hard and after you stop working, it can be tough to find enough cash to enjoy a comfortable retirement.

However, although your pension pot may be smaller than you would like, if you own your own home you could be sitting on your biggest asset.

The question is how can you free up all of that cash without having to sell up and move?

We take a look at lifetime mortgages for pensioners and explain exactly how they work for the over 60s.

Lifetime mortgage basics

If you aren't too worried about leaving your house as an inheritance for your children, there is a way to free up the money you have tied up in the property without having to leave the home you love: lifetime mortgages for the over 60s.

The process works by effectively taking out a loan based on the value of your property. You can then draw on this fund as and when you need to, either taking a large lump sum or a regular income to help supplement your retirement fund.

You do not have to pay this money back and you can decide how you want to use it.

The drawbacks of lifetime mortgages

The idea of a 'free' loan may sound great in practice but it's important to take a close look at a lifetime mortgage calculator to see the ultimate cost.

When you die - or move into a residential facility - your property will be sold and the proceeds used to pay off what you owe.

However interest will accrue on your debt so it is possible for the outstanding balance to rapidly increase over time and unlike other types of mortgage, the amount you owe will increase, not fall.

Interest rates are therefore a key consideration when deciding whether the product is right for you. The majority of companies offering this only provide fixed rate deals but it is possible to find variable lifetime mortgage interest rates. These can be quite hard to find so the best way to track down the best lifetime mortgage rates is to do a bit of homework first.

Carrying out a lifetime mortgage comparison will help you look at the difference between the offers on the market and to find the company which is currently providing the most competitive deal.

Differences between lifetime mortgage deals

When you compare lifetime mortgages, it's easy to see that they are not universal and that providers have different rules and rates which apply.

Whilst the concept of interest only lifetime mortgages remains the same, the way in which companies operate varies quite significantly.

The amount of money you can withdraw from your property may depend on your age and in direct contrast to usual lending rules, the older you are the more you can have. If you are only in your 60s you may be limited to only being able to withdraw around 25% of your property's value.

Monthly payments may not sound as attractive as receiving a large lump sum, but the interest rates which apply can be lower so it may be an option worth considering and could also ensure less of the equity in your property is swallowed up by interest charges.

One final option that is available for some types of equity release interest only lifetime mortgage providers, is an enhanced package if you are in poor health. This isn't an option available from all companies but if you meet the criteria, some companies will allow you to withdraw more cash at an earlier age.

Think carefully before making a final decision

If you are considering lifetime interest only mortgages as an option you need to think carefully before signing on the dotted line. Although you won't have to move and will have access to a nice pot of cash, your family will not be able to keep the home once you are gone and costs can escalate quite substantially.

As always, if you are in any doubt about whether this product is right for you, seek independent financial advice before proceeding.

About our mortgage comparison


Who do we include in this comparison?


We include mortgages available through our independent broker, Responsible Equity Release. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.


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We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.