What is a Lifetime Mortgage?
A Lifetime Mortgage is a loan secured against your home. You retain full ownership of your property and the right to live there for life, provided you meet the terms of the agreement.
The loan, plus any interest added, is usually repaid when the last borrower dies or moves permanently into long-term care.
A Lifetime Mortgage is regulated by the Financial Conduct Authority (FCA).
How does it work?
- Your property is independently valued.
- You borrow a percentage of your home’s value.
- You receive the funds as a lump sum, drawdown facility, or both.
- Interest is charged on the amount borrowed.
- The loan is usually repaid when the last homeowner dies or moves permanently into long-term care, typically through the sale of the property.
You remain the legal owner of your home and are responsible for maintaining it and meeting the terms of the mortgage.
Who might it suit?
A Lifetime Mortgage may be considered by people who:
- Want to access money from their home while retaining full ownership.
- Do not wish to make regular monthly repayments (unless choosing a voluntary or mandatory payment option).
- Want the security of knowing they can remain in their home for life, provided terms are met.
It is not suitable for everyone, and advice is essential.
How interest can build over time
With most Lifetime Mortgages, interest is added to the loan each year. This means interest can be charged on both the original amount borrowed and on previously added interest. This is known as compound interest.
Understanding how this works can help you consider whether making voluntary payments might reduce the overall balance over time.
This calculator is for illustration only. An adviser will provide personalised figures based on your individual circumstances and product terms.
Lifetime Mortgages with required payments
Some Lifetime Mortgages require you to make regular interest payments. These are known as Mandatory Payment Lifetime Mortgages.
- Monthly interest payments are required
- Affordability checks apply
- Less interest builds up if payments are maintained
This option may suit people who have sufficient retirement income and wish to manage how interest accrues.
Things to consider
- Interest can build up over time
- It may reduce the value of your estate
- It could affect entitlement to means-tested benefits
- Early repayment charges may apply
Council Protections
If you choose a Lifetime Mortgage from a Council member, key safeguards include:
If an adviser recommends a product that does not meet these Standards, they must clearly explain why and outline the associated features.
As well as the below protections, all customers taking out a lifetime mortgage must receive independent legal advice.
Home for life
Customers must have the right to live in their property for the remainder of their life, or until they permanently move into care. For this right to apply the property must remain their main residence for the life of the mortgage with all terms and conditions being maintained.
No Negative Equity Guarantee
The product must have a NNEG so that, provided the secured property is sold for the best price reasonably obtainable and the terms and conditions of the loan have been met, the borrower or estate will never owe more than the property is worth, after deduction of reasonable sales costs.
Option to move home
Customers must be allowed the opportunity to move to a suitable alternative property and transfer their lifetime mortgage (subject to lending criteria at the time of move) as long as they abide by the terms and conditions of their contract.
Ability to make repayments
Customers must have the ability to make repayments without incurring any charges, subject to lending criteria of the provider.
Interest rates
Rates must be either fixed or, if variable, have a fixed cap. Both of which must be fixed for the life of the loan.
Long-term care
If a customer needs to move permanently into long-term care, whether in a care home or with relatives providing care, any early repayment charge will be waived by the Lender upon receipt of a medical practitioner’s certificate and if the terms and conditions of the loan have been met.
Speak to a qualified professional
Accessing housing wealth is a significant decision. A qualified adviser can help you understand your options and whether a Lifetime Mortgage is suitable for your circumstances.