Want to top up your pension fund?
Consider how a lifetime mortgage could boost your pension.

Lifetime mortgages

If you’re looking for some extra money to top up your pension, then a lifetime mortgage could offer you those extra funds without dipping into your savings. A lifetime mortgage allows you to release a portion of the equity that has built up in your property, without having to sell your home or downsize.

As with all financial decisions, it’s important you are aware of all your options before releasing equity on your home. Our guide will run you through what a lifetime mortgage is, whether you are eligible for one, and the benefits and risks of equity release.

In This Guide:

What is a lifetime mortgage?

A lifetime mortgage is a form of equity release. This means you take out a loan secured on your home. It frees up some of the wealth you have tied up in your property, but you can still continue to live there.

A lifetime mortgage is not usually repaid until you die or go into long-term care, however you should be aware that interest will be charged on what you have borrowed. You may choose to repay the interest. If you choose an interest-paying mortgage you will repay the interest of what you’ve borrowed monthly, but the amount you borrowed will not be paid until you die or go into long-term care.

A second option is an interest roll-up mortgage. If you choose this option, the amount you borrow will include the rolled-up interest. This leaves you with more money for retirement, but can lead to large sums when it comes to repayment. A  can help ensure you are making the best choice for you. You can try using our mortgage comparison tool, choosing the filters you want and compare the best, most suitable deals on the market.

Can I get a lifetime mortgage?

If you are over the age of 55 and own your property outright, then you may be eligible for a lifetime mortgage. In most cases, the older you are then the more money you can borrow.

You may be able to borrow as much as 50% of your home’s worth. Be aware that there are likely to be minimum loan amounts. These can range from as little as £10,000 to as much as £45,000.

What are the risks of equity release?

The main risk of taking out a lifetime mortgage is that it will lower the amount of inheritance you have to leave for your family, as your loan has to be repaid when you die or move into long-term care.

One risk of an interest roll-up mortgage is negative equity. The total amount you owe can grow quickly with this type of lifetime mortgage and you could risk owing more than your property is worth. Luckily, most lifetime mortgages come with a no-negative-equity guarantee which prevents this from happening. Make sure your mortgage deal comes with this guarantee before accepting it!

What are the benefits of equity release?

Lifetime mortgages can be very beneficial. They allow you take out money against your property whilst maintaining ownership of it. Choosing an interest roll-up mortgage will mean you can borrow this money without having to keep up with monthly payments. A no-negative-equity guarantee also means you will never owe more than the value of your home.

A lifetime mortgage can also be very flexible. You can choose whether to borrow a lump sum when you take out your mortgage, or to accept a drawdown facility. Taking the drawdown facility will mean you can take out regular or occasional smaller amounts to top up your income. The drawdown facility also has the added bonus of meaning you will only pay interest on the money you actually need, so can lower the cost of your lifetime mortgage overall.

 to see if a lifetime mortgage might be suitable for you using our online comparison tool and ensure you can keep your repayments low and affordable.