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Lifetime mortgage

Lifetime Mortgage

What is a lifetime mortgage?

Lifetime mortgages are the most popular type of equity release plan. They work by giving homeowners access to some of the value, or ‘equity’, tied up in their property.

Unlike a conventional mortgage, which runs for a fixed term, a lifetime mortgage is designed to run for the rest of your life. During this period, the property remains 100 per cent in your name, and you are free to live there until you die or move into long-term care.

This could be a great alternative if you need some extra money, but don’t want to downsize to a cheaper property.

How does a lifetime mortgage work?

As the name suggests, an equity release lifetime mortgage works by being in place for the remainder of a homeowner’s life. For joint applicants, should one partner die or move into long term care, the plan would then continue in the sole survivor’s name.

Traditionally, a lump sum of tax-free cash is withdrawn and no repayments are made on lifetime mortgage.

Interest typically compounds or ‘rolls up’ and, thus, increases over time. Any proceeds left after repaying the lender are then passed onto your estate and distributed to your beneficiaries.

Having said that, many plans now offer the option of making monthly interest payments, or voluntary repayments to control or reduce the interest accruing.

Payments from an equity release lifetime mortgage are flexible, too. You can decide whether to take the cash as a single lump sum or in several smaller chunks known as ‘drawdown.’ In both instances, the money released is tax-free and you are only ever charged interest on the amount you withdraw.

How much can I borrow with a lifetime mortgage?

Lifetime mortgage providers will have their own rules on how much their lifetime equity release mortgage plan will release.

    The maximum equity release lifetime mortgage facility is based upon the following criteria:
  • Age of the youngest homeowner (minimum age is 55)
  • Valuation of the property (minimum value is £70,000)
  • Health and lifestyle of the homeowner(s). If you have a qualifying medical condition (or conditions) you can potentially borrow more or get a lower interest rate.

To find out how much equity you could release, try our equity release lifetime mortgage calculator, below. Remember, this is purely a guide to the maximum release available. To find out the actual release of equity to meet your needs, you should speak to your local Equity Release adviser, or use our unique smartER personalised research tool

Lifetime mortgage explained - What are the different types?

The popularity of lifetime mortgages has increased substantially due to the flexible add-on features these plans can have built into them.

The ‘core’ lifetime mortgage product is a basic roll-up plan, where a lump sum of tax-free cash is taken and typically no repayments are made. The resulting balance effectively grows (compounds) over time, but can be offset somewhat by the potentially increasing value of your property.

There are several types of equity release plans, all of which offer a range of features that can be tailored to meet your individual needs.

Enhanced lifetime mortgages

These are based on health and lifestyle factors and if you qualify, allow you to borrow more money, or get a lower interest rate. In both instances, life expectancy and medical underwriting are used to calculate the maximum release of equity, or what the lower interest rate will be. Read more

Drawdown lifetime mortgages

Drawdown plans provide an initial cash lump sum and a cash reserve facility from which the homeowner can take future cash withdrawals as and when required. Read more

Interest-only lifetime mortgages

This equity release plan works in much the same way as an interest-only residential mortgage in that they allow the borrower to repay the interest accruing monthly and maintain a level balance. Read more

Voluntary repayment plans

This is a recent innovation which enables ad-hoc repayments. These types of plans allow payments of between 10-40 percent of the original amount borrowed each year with no penalty. Read more

Lifetime mortgage frequently asked questions

There isn’t a difference between them, because a lifetime mortgage is a type of equity release plan.

Equity release is a generic term used to describe a way of releasing equity from a property e.g. house. In the later life market, there are various equity release schemes available – a lifetime mortgage (the most popular), a a home reversion plan and Retirement interest only mortgage (RIO). If unsure you can speak to our equity release advisers here.

There isn’t a simple answer to this question as it depends on many factors such as the amount you want to borrow against the value of your home (the loan-to-value or LTV) and your age. The higher the LTV, usually the higher the interest rate. Plus, the number of available features you choose to include are also a consideration.

Some lenders also factor in health and also your property location to calculate rate. To understand the latest rates and deals available, simply use our exclusive compare deals tool.

Yes, you can, as all the equity release schemes we advise on follow the Equity Release Council standards. One of these standards is that you can repay the equity release lifetime mortgage at any time. However, they are not designed for short-term borrowing as they all come with early repayment charges, which in the early years of the plan can be high.

Many lenders now offer plans with fixed term early repayment charges (ERCs), but the terms can vary considerably by provider. Once the ERC period has ended, you are able to fully repay your plan, penalty free.

There are also features included in certain plans to look out for that will allow you to repay the plan with no penalty under certain events. For example, a downsize protection feature can allow you to repay the loan with no penalty when you move house & take your loan with you. Or with some joint plans, a 3-year no ERC window exists should one person die, or move into care. Upon such an event the survivor can repay the loan, penalty free.

Find out more here.

Yes, you can move your plan to another provider, but we would only recommend this if it’s going to be financially beneficial for you. The two main factors to consider are the interest rate you are currently paying, and any early repayment charges that will be payable.

Your equity release adviser will undertake a full switch analysis of your financial situation before making any recommendation to you. Alternatively, our switch plan calculator will also give you some idea if this is feasible.

If you are a homeowner, you can take out a equity release lifetime mortgage from age 55. With regards to a maximum age, lenders have different criteria. Certain lenders will have a fixed upper age limit such as age 90, but others don’t – such as Aviva.

It typically takes just 4-6 weeks from submitting your application to the lender to your money being in your bank account. Though we have known cases complete in as little as 18 days. You can read more about the process here. Moreover, you can speak to our equity release advisers here.

Yes, you can. Our customers tend to do this when the purchase price of the new property is higher than the sale price of their current home and there is a shortfall. To enable the purchase, a equity release lifetime mortgage is taken out on the new property, to make up the shortfall. This works in exactly the same way as using a residential mortgage to assist with a purchase. Find out more here.

They are both different types of equity release plan.

Home reversion plans were the forerunners of today’s lifetime mortgages and are now very seldom used. With home reversion plans, you sell a percentage of your home to a lender, you no longer own your home, but you are given a lifetime tenancy. Upon your death or move into long term care, your home is sold, and your beneficiaries receive the percentage of the proceeds you initially agreed. The lender keeps the rest. Read more here.

With a lifetime mortgage, you are borrowing a percentage of the value of your home at an interest rate that is fixed for life. You still retain 100% ownership of your home and have many options to make repayments if you want to. The loan is repaid when you die or move into long term care, usually through the sale of your home. The final amount owed to paid to the lender and the balance from the sale of the property is passed to your beneficiaries.

Yes, you can. All the plans we advise on come with the guarantee that you can sell your home, move and ‘port’ or transfer your current plan to your new home. Lenders take different approaches to this and so the new property must fit their lending criteria. If the new property is more expensive, you’ll also have to consider how you’ll fund the shortfall – which could be by borrowing again through your equity release plan if your circumstances allow.

Advantages and disadvantages of lifetime mortgages


  • Plans available from age 55, with no maximum age on some plans
  • You continue to own 100% of your home
  • Your estate will benefit from any future house price inflation
  • Fixed interest rates for the lifetime of the plan
  • A 'no negative equity' guarantee ensures you can never pass debt onto your estate
  • Lifetime mortgages providers are all members of the Equity Release Council
  • All plans are regulated by the Financial Conduct Authority


  • Any existing mortgage will need to be repaid prior to commencement
  • The size of the mortgage will increase as interest compounds over time
  • Eligibility for means-tested benefits may be affected
  • Repaying a lifetime mortgage early, may incur early repayment charges
  • Your inheritance will be reduced by releasing equity
  • There is stricter property underwriting criteria than mortgages