Is a lifetime mortgage right for you?
A lifetime mortgage isn't right for everyone. Here are some pros and cons to consider.
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Pro.
Tax-free cash
You can take a lump sum in one go or as a series of smaller lump sums when it suits you
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Pro.
Spend it how you want
You can use it for home improvements, helping children buy their first property or increase your income in retirement. It's up to you
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Pro.
Flexibility over monthly payments
Unless you choose otherwise, there’s nothing to repay until you die or move permanently into long-term care. You can choose to pay off some or all of the monthly interest to help reduce the amount you’ll owe at the end
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Pro.
Flexible repayments
You can also pay part of the loan off early with no Early Repayment Charge, subject to our Terms and Conditions. This will reduce the amount of interest that will accumulate on your lifetime mortgage
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Pro.
Stay in your home
You don't need to downsize and can stay in your home until you die or move permanently into long-term care
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Pro.
You can still move house
So long as the new property is acceptable to us - we don't lend against properties with thatched roofs, for example - you can still move house
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Pro.
Inheritance protection
Part of the value of your home can be passed on if you choose our Inheritance Protection option
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Pro.
No negative equity guarantee
Whatever happens you'll never repay more than the value of your home when it is sold - even if that's less than the amount owing. Subject to terms and conditions
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Con.
Reduced inheritance
Even with our Inheritance Protection option, taking a lifetime mortgage is likely to reduce how much you can leave as an inheritance
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Con.
The interest can build up quickly
If you choose not to repay anything until you die or move permanently into long-term care, the interest can rapidly build up over time. There may be cheaper ways to borrow money
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Con.
Inheritance tax
If you gift the money, the recipient may need to pay inheritance tax in the future
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Con.
Early Repayment Charge
If you choose to repay all or a significant part of the loan early, there may be an Early Repayment Charge
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Con.
Means tested state benefits
If you're receiving certain means tested state benefits, taking a lifetime mortgage could impact your entitlement to these benefits
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Con.
Higher interest rates
Usually the interest rates for a lifetime mortgage are higher than the rates charged for a traditional mortgage
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Con.
Less freedom to move house
If you have no mortgage, you can move to any type of property. With a lifetime mortgage, the new home has to be acceptable to the lender
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Con.
Repaying an existing mortgage
You may have to pay an Early Repayment Charge to your existing lender if you remortgage
Is equity release a good idea?
What are the disadvantages/pitfalls of equity release?
Can’t make up your mind?
If we can provide more information to help you decide whether a lifetime mortgage could be right for you, give us a call.
Monday to Friday 9:00am - 6:00pm
Saturday 9:00am - 1:00pm
We may record and monitor calls.
