Here is a simple summary of how a lifetime mortgage works:
A lifetime mortgage is a loan secured on your property and is available to UK homeowners aged 55 and over
You can access some of the equity tied up in your home tax-free, while continuing to live there
Choose to take a one-off lump sum, or a smaller amount upfront with the facility to borrow more in the future
The total you can borrow will depend on your age, your health and the value of your home
You don’t have to make monthly repayments because the interest is added to the loan amount each year
The loan plus interest is repaid when the property is sold — typically, when you die or leave your home permanently (e.g. you go into long-term care)
Not quite ready to apply?
Give our calculators a whirl
Open to UK homeowners aged 65 and over, a home reversion scheme lets you sell part or all of your home in return for a tax-free lump sum or a regular income. The price paid by the scheme provider is below market value because you also get the right to stay in your home rent-free until you die or move out permanently.
At this point, your home will be sold and you or your estate will receive the sale proceeds, less the percentage share you sold to the equity release provider originally.
Home reversion scheme considerations:
House price fluctuations
If the value of your home has risen by the time it is sold, you or your estate will only benefit from the increase in your share of the property.
If you only sell part of your home, you’ll know exactly what percentage of your home’s value will be left to your estate on your death.
If you die or move out permanently soon after taking out a home reversion plan, you may lose out because you have been paid below market value and not reaped the benefit of living rent-free for a significant period of time. However, some plans do provide some protection against this.
Many people are living far longer than previous generations and have more time to make the most of their later years.
But living longer can put a strain on your finances and your retirement pot may struggle to fund the way of life you’ve worked so hard for.
Releasing some of the equity in your home could make life a little easier every day and help finance your future plans. It could also provide a living inheritance for your family.
A more comfortable retirement
Clear outstanding debts
Adapt your home to your needs as you get older
Retire a little earlier than planned
Fund care at home
Top up your regular income
Pay funeral costs
Fund home improvements
Pay medical or legal bills
Help the family
Help children get on the property ladder or set up a business
Take regular holidays or the holiday of a lifetime
Pay education fees or living costs
Finance a new car or caravan
Finance a wedding or other family events
Fund leisure activities and hobbies
Reduce the inheritance tax burden
Treat yourself to something you’ve always wanted
Think carefully before borrowing against your home. You must always get professional advice from a specialist adviser, a lawyer or both
The interest added to a lifetime mortgage can build up quickly and increase the amount you owe
Releasing equity from your home will reduce the value of your estate and the amount you’re able to leave as an inheritance when you die
Equity release may affect your tax position and your entitlement to state benefits
The future market value of your home could be higher or lower than it is today
Have a read through our guides
Hello Mortgage Limited is registered in England and Wales. Registered Office: Suite 20, Cookson House, River Drive, South Shields, Tyne & Wear, NE33 1TL. Company Number: 10414170. DPA number ZA332902
Hello Mortgage Limited is an Appointed Representative of MyInfinity Finance Limited which is authorised and regulated by the Financial Conduct Authority 672182.