A lifetime mortgage is a loan secured against your home. It’s a type of equity release product. A lifetime mortgage is usually repaid from the sale of your home after the last borrower dies, or moves out of your home and into long-term care. To ensure you understand all the features and benefits, you can only get a lifetime mortgage through a specialist adviser.
What is equity release?
Equity release is a product that lets homeowners take some of the money built up in their home, as tax-free cash. There are two types of equity release, lifetime mortgages and home reversion plans. Legal & General only offers lifetime mortgages to homeowners aged 55 (50 for our Payment Term Lifetime Mortgage) and over.
How do lifetime mortgages work?
A lifetime mortgage lets you borrow tax-free cash against the money that's tied up in your home (equity).The interest rate is fixed for the duration of the lifetime mortgage. And depending on which product you take out, you pay none, some or all of the interest, subject to our terms and conditions. Interest is charged on the loan, plus any interest already added, this means the amount you owe can increase quickly over time.
A lifetime mortgage is usually repaid from the sale of your home after the last borrower dies, or moves into long-term care.
Why is professional advice so important?
You can only get a later life mortgage through a specialist adviser. Later life mortgage advisers are experts who have passed detailed, professional exams, meaning they can look at your situation and work out if it's right for you.
They'll also help you compare different options, complete an application, and because you will need independent legal advice, help you find a solicitor too.
You must get advice Legal & General can help you understand if a Legal & General later life mortgage is the right option for you. If Legal & General don't have the right product for you, they also have access to the whole lifetime mortgage market.
You can use your own adviser, or if you don't have one you can find a qualified adviser in your area by visiting the Equity Release Council or Unbiased websites.
How long does it take to get the money?
It usually takes about eight weeks from the time your adviser completes your application to the time you’ll receive your money. Of course, this will vary from case to case, depending on the property, for example.
Will a lifetime mortgage affect any inheritance?
Yes. You can access your home’s equity now, but the value of any inheritance you leave will be reduced. We offer optional Inheritance Protection, which lets you protect a proportion of the net sales proceeds for your loved ones. If you choose to do this, it will reduce the amount you can borrow. Terms and conditions apply.
If your property is currently worth £200,000 and you want to protect 30% of the net sale proceeds from your home, then the maximum amount we would lend will be calculated on 70% of the property value: £140,000 instead of £200,000.
Of course, even if you don’t select Inheritance Protection, any money left over after repayment of your lifetime mortgage will be paid to you or your estate.
Inheritance Protection cannot be added to the lifetime mortgage and the amount cannot be increased after completion of your lifetime mortgage.
Can I get a lifetime mortgage if I already have a mortgage?
You may still qualify for a lifetime mortgage, but you'll need to pay off your existing mortgage and any other loan secured against your property using money from the loan. If you pay off your existing mortgage, you may have to pay an Early Repayment Charge to your existing lender.
You should think carefully before securing a new debt against your home.
Will my state benefits be affected?
Your entitlement to means-tested state benefits could be affected by a lifetime mortgage.
Everyone’s situation is different, which is why we encourage you to look at other options as well.
Your adviser can help you understand how any benefits you’re receiving may be affected.
Will a lifetime mortgage affect my tax position?
The money you receive will be paid free of tax. Depending on what you do with the money, tax may become payable. Please talk to your adviser to find out how it may affect your tax position.
If my partner and I separated or divorced and we had a joint lifetime mortgage, what would happen?
You would need to take legal advice from a qualified professional; the options would vary depending on your circumstances.
Options could include selling the house, repaying the loan, and dividing the remainder between you; you could decide who’ll be the owner and we could remove the other person from the title deeds; or, if a court is involved, any equity left after the property has been sold and our loan repaid, would be distributed as directed by the court.
How do you pay back a lifetime mortgage?
Our Lifetime Mortgage is designed to last for your lifetime and to be repaid when you (or, if borrowing jointly, both of you) die or move out of your home into long-term care. However, we understand your circumstances may change and you may wish to repay your lifetime mortgage early, in which case an Early Repayment Charge may be payable, which could be substantial.
With a Legal & General Lifetime Mortgage, will I still own my home?
Yes. With our Lifetime Mortgages, the property stays in your name and the loan is secured against your home. Unless you choose to repay it early, a lifetime mortgage is only repaid when your property is sold. This usually happens when the last surviving borrower dies, or moves out of the home and into long-term care.
If you decide you want to repay the loan early, outside the terms of our Optional Partial Repayment feature, you may need to pay an Early Repayment Charge, which could be substantial.
With our Payment Term Lifetime Mortgage you must make Monthly Interest Payments until the end of your chosen Payment Term. As a last resort, your home may be repossessed if you don’t keep up the payments.
What if I have money available and want to repay part of my lifetime mortgage?
Our Optional Partial Repayment feature allows you to reduce the amount you owe by making partial repayments without paying any Early Repayment Charge.
In any 12 month period starting on the completion of your lifetime mortgage and thereafter on each anniversary of the completion, you can repay up to 10% of the total amount(s) you have borrowed, which includes the cash lump sum, plus any additional borrowing you have received, for example a drawdown.
You can make up to 12 Optional Partial Repayments in any 12 month period starting on the completion of your lifetime mortgage and thereafter on each anniversary of the completion, subject to a minimum of £50 each. If you take up our Optional Payment or Payment Term Lifetime Mortgage, you can’t make Optional Partial Repayments while you're paying the monthly interest but can make them following the end of the payment term.
With a Legal & General Lifetime Mortgage, can I move home?
Yes, as long as the new property meets our lending criteria and there’s enough equity in the property after it’s sold. You must tell us in advance if you wish to move and we’ll need to give our consent.
Your new property will be valued by a valuer that we’ll choose — and you’ll have to pay the valuation fee, the property transfer fee, all legal fees and any moving expenses. Depending on the situation, you may have to repay part of the loan if it exceeds the amount we would agree to lend to a new customer in comparable circumstances. There would be no Early Repayment Charges on that amount.
With a Legal & General Lifetime Mortgage, in the future could you make me leave my home?
As the homeowner, you have the reasonability to ensure you adhere to the terms and conditions of your lifetime mortgage.
Failure to comply with these could result in the forced sale of your property and the loss of the right to Inheritance Protection, if this has been chosen.
What happens if the property market falls in value and I have a lifetime mortgage?
Our Flexible, Optional Payment and Payment Term Lifetime Mortgages come with a No Negative Equity Guarantee. It means that even if your home goes down in value, you or your beneficiaries will never have to pay back more than the amount your property is sold for, provided it is sold for the best price reasonably obtainable. Your adviser will explain the terms and conditions of this.
For our Payment Term Lifetime Mortgage the No Negative Equity Guarantee won’t apply to any monthly interest payments you fail to make in full and on time for the payment term. This includes any interest which has accrued on any monthly interest payments you fail to make
I have a Legal & General Lifetime Mortgage. How can I make a complaint?
We know that sometimes things can go wrong. Our number one priority is to provide you with the highest level of customer service. If there’s a problem, please let us know and we’ll try to provide a solution as quickly as possible.
If we can't resolve your complaints straightaway, we'll tell you who will be dealing with it and what the next steps are.
After looking into your complaint we will respond as quickly as possible and keep in touch with you until your complaint has been resolved. If you disagree with our decision, feel we have misunderstood anything or you have any extra information, please let us know.
You can contact us in the usual way, including by phone, letter or email. Relevant information (customer reference and/or account number) should be in letters and documents you’ve received.
Letter: Customer Outcomes Manager, Legal & General Financial Advice, PO Box 17225, Solihull B91 9US
Phone: 0121 221 2769. Monday to Friday 8.30am to 8pm, Saturday 9am to 1pm. Call charges will vary. We may record and monitor calls.
Please include your phone number, so we can call you about your email Monday to Friday between 9am and 5pm. When sending emails you should not include any personal, financial or banking details, as this method is not a secure way of supplying information.
The Financial Ombudsman Service If we haven’t issued our ‘final response’ within eight weeks from the date you first raised your complaint, or if you’re dissatisfied with our response, you can ask the Financial Ombudsman Service for an independent review. The Financial Ombudsman Service may only consider your complaint once you’ve tried to resolve it with us, so please take up your concerns with us first and we’ll do all we can to help.
Letter: The Financial Ombudsman Service, Exchange Tower, London E14 9SR
Phone: 0800 023 4567 or 0300 123 9123 or if calling from outside the UK +44 20 7964 0500
Who may a Payment Term Lifetime Mortgage be suitable for?
Our Payment Term Lifetime Mortgage is for customers who have a need to borrow in later life whilst still in some form of employment and/or are semi-retired and can pass affordability assessments but perhaps they're unable to pass them when they're fully retired.
It's suitable for customers aged 50 or over who are able to and want to make full monthly interest payments for an agreed payment term.
How does it work?
With our Payment Term Lifetime Mortgage, you must commit to monthly full interest payments until you either retire or reach the age of 75 whichever is sooner. As a last resort, your home may be repossessed if you do not keep up with payments.
Once you've reach the end of your payment term, the interest is charged on the loan, plus any interest already added, this means the amount you owe can increase quickly over time.
A lifetime mortgage is usually repaid from the sale of your home after the last borrower dies, or moves into long-term care.
Do I get to choose how long I would like the payment term to be?
Yes, when you apply, you must tell your adviser about your retirement plans and whether you would like to commit to full monthly interest payments until that date or sooner.
However, we'll assess whether the payment term requested is feasible as part of our underwriting checks.
Does Payment Term Lifetime Mortgage offer a drawdown facility?
No drawdown facility is available for this product, however you can request additional borrowing 12 months after completion.
Additional borrowing isn’t guaranteed and is subject to our lending criteria at the time you apply. You may also be subject to an affordability assessment.
Are Optional Partial Repayments allowed?
No Optional Partial Repayments are allowed during the payment term, however they are allowed once the payment term has come to an end.
For more information about Optional Partial Repayments see 'What if I have money available and want to repay part of my lifetime mortgage?' above.
Retirement Interest Only Mortgage
How is the interest calculated on a Retirement Interest Only Mortgage?
Our Retirement Interest Only Mortgage has a fixed interest rate for life, which means it will not change for the duration of your mortgage. Your adviser will provide a breakdown of the interest charged over time.
How does this compare to the Optional Payment Lifetime Mortgage?
A Retirement Interest Only Mortgage commits you to pay the interest each month. This means the amount you owe doesn’t increase over time but you have to pay it for the life of the mortgage. Our Optional Payment Lifetime Mortgage, you have the option to pay off some of the interest each month but you can decided to stop the payments at any time. Any unpaid interest is added to the loan, which can increase quickly over time.
How does this compare to the Payment Term Lifetime Mortgage?
A Retirement Interest Only Mortgage (RIO) commits you to pay the interest each month for the life of the mortgage.
Our Payment Term Lifetime Mortgage (PTLM) commits you to pay the interest each month for a pre-agreed payment term, which lasts your retirement or the age of 75 (whichever is sooner).
A RIO mortgage requires that you have enough income once you retire to keep making the monthly payments, whereas PTLM is based on your income before retirement.
Another main difference is that with a RIO mortgage, the amount you owe doesn't increase over time whereas for PTLM, the amount you owe only stays the same during the payment term but afterwards the interest is added to the loan and so the amount you owe can increase quickly over time.