Equity Release: What is a Lifetime Mortgage?

Reader's Digest Editors

If you own a property then certain words and phrases will grab your attention such as interest rates, house price growth and stamp duty. One term you may have heard but not realised is applicable to you is a Lifetime Mortgage, especially when it sounds like something you may already have as a homeowner, a mortgage.

So what is a Lifetime Mortgage?

UK homeowners will be aware that recently house prices have been doing very well and are forecast continued growth for years to come. This means the equity in your home - which is the difference between your home’s value and any secured debts such as a mortgage - will be growing too making your property a strong asset.

A Lifetime Mortgage is a financial tool that enables homeowners aged 55 and over to release this equity from their homes, tax-free, to spend as needed.

It’s a valuable tool on a homeowner’s belt as accessing your equity could provide the financial supplement or cash boost you need in later life, whilst maintaining full ownership of your property and without having to move or make monthly payments.

What can a Lifetime Mortgage be used for?

As the cost of living increases it is widely considered that our homes will become a major factor in our financial planning for later life. Reasons to release equity include for home renovations, to take a holiday or to gift as an early inheritance to loved ones. Other reasons include to:

  • Clear an existing mortgage
  • Enhance your lifestyle
  • Mitigate inheritance tax
  • Realise your ambitious travel plans
  • Help family plan for a wedding or a new family member
  • Help loved ones onto the property ladder
  • Or boost your business with some capital

As a flexible financial tool a Lifetime Mortgage can lend itself to fulfil many needs with new reasons to release equity found regularly.

How does a Lifetime Mortgage Work?

Reader’s Digest’s equity release specialists can expertly guide you through the process in detail but briefly the first step is to find out if you are eligible to release equity with a free phone call (0808 231 1968) or through using our specially designed equity release calculator below.

An advice process follows in which all alternatives are explored and any risks are researched such as any effects on state benefits. You are also informed that in using funds from your property now you are reducing the value of your estate later, however, this can be balanced with the option to guarantee an inheritance.

Should you decide to proceed, the money you unlock can be received either as a cash lump sum or placed in a reserve account to withdraw from when needed, or you can choose both. A Lifetime Mortgage requires no monthly repayments unless you choose to so your monthly income can be freed up for other things, especially if you release equity to repay an existing mortgage.

The interest on the plan rolls up if not paid monthly and is repayable upon the passing of the last remaining home owner, or when the homeowners go into full time care, hence the name Lifetime Mortgage.

Whether you're curious as to how much you can release, or you want to take the initial steps towards releasing equity, our handy calculator will give you the information you require.

You can also contact us on 0800 029 1233 to discuss your needs with a view to arranging a no obligation face-to-face home visit with one of our financial advisers.

The Flexible Lifetime Mortgage is by leading insurer Aviva and is only available through qualified financial advisers such as those working with the Reader’s Digest Equity Release Service.

*(Equity Release Council Lending Figures Q3 2010 – Q3 2015)

Reader's Digest Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fsa.gov.uk/register/home.do) under reference 610205. In using this website I give express consent to Responsible Life Limited to contact me on the details provided from time to time. Calls may be recorded for training and quality purposes. This is a Lifetime mortgage which may reduce the value of your estate and may affect your entitlement to state benefits. To understand the features and risks ask for a personalised illustration. Any information contained herein is a personal opinion of the author and should not be considered to be advice of any kind. Inheritance Tax planning is not regulated by the FCA. Think carefully before securing other debts against your home. By consolidating your debts into a mortgage you may be required to pay more over the entire term than you would with your existing debt. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,295. Our adviser will talk through the setting up costs of a lifetime mortgage before you make any decision to proceed.