An introduction to lifetime mortgages
What's a lifetime mortgage?
It’s a type of equity release, which secures a loan against your home. In simple terms, it allows you to release money (equity) tied up in your home. And the good news is it’s tax-free and you won’t have to move.
Any unpaid interest is added to the loan each month. Interest is charged on the loan plus any interest already added. This means the amount you owe can grow quickly over time.
Depending on which product you take, you can choose to release the total amount available, or you can release smaller amounts as and when you need to. If you do decide to take smaller amounts, a different interest rate may apply to each amount you take (depending on the interest rates available at the time).
A lifetime mortgage will reduce an inheritance. It may affect your entitlement to means-tested benefits. You may have cheaper ways to borrow money.
How do lifetime mortgages work?
Transcript: What are they and how do they work?
Running time: 1 mins 40 secs
Lifetime mortgages: What are they and how do they work?
You and your home have been on quite a journey
But it’s not over yet. So how can your home help you now?
Well, with a lifetime mortgage that’s secured against your home, you could unlock some of the cash tied up in your property, as either
A larger single amount, or several smaller amounts, that you can apply to take when you need them.
Interest is only owed when you take the money. You won’t make any monthly repayments.
Instead, interest is charged on both the loan and any interest already owed, and added to the total amount that’s secured against your home.
That means the total you owe can grow quickly, reducing the equity in your home and the value of any inheritance you may leave.
The loan and the interest are only repaid when you die or enter long term care.
The money you release could be the savings you never knew you had, helping you in your retirement.
It’s a big decision, and there are many factors to consider. That’s why you can only get a lifetime mortgage through a qualified adviser.
They’ll ensure that you’re eligible for the product, and can check if it’s the best solution for you.
What can I use a lifetime mortgage for?
Give family members their inheritance early. Please be aware, whoever you give it to, may have to pay inheritance tax in the future.
Go on the holiday of a lifetime - you could invite the whole family.
Repay the outstanding balance of an interest-only mortgage. This could be an ideal option if you're nearing the end of your mortgage payments. Although you may need to pay an Early Repayment Charge to your existing lender.
Supplement you retirement income and live life the way you want.
Pay off any outstanding debts. You should consider if there are cheaper ways to pay off any debts you have.
Make those long-awaited home and garden improvements.
What is a lifetime mortgage?
A lifetime mortgage is a type of equity release - it's a loan secured against your home which lets you release money as a cash sum or a regular income over a fixed term.
If you take smaller amounts later, a different interest rate may apply to each amount you take, depending on the interest rates available at the time.
Our Lifetime Mortgages are usually repaid from the sale of your home when the last surviving borrower dies, or moves out of their home and into long-term care.
Are there any risks with a lifetime mortgage?
Yes, there are. It's very important to understand the risks as well as the potential benefits of taking out a lifetime mortgage.
- With all of our Lifetime Mortgages, any unpaid interest is added each month to the amount you owe and will increase quickly over time. Interest is charged on the loan plus any interest already added. However there are repayment options, which could help you manage the interest you owe. There may be cheaper ways to borrow money.
- A lifetime mortgage will reduce an inheritance and reduce the equity left in your home.
- It may affect your entitlements to state benefits.
- A lifetime mortgage is a loan secured against your home. Repaying a loan early could mean substantial early repayment charges.
- If property values fall, then that may affect the equity available to you or your estate.
A lifetime mortgage adviser can explain the features and risks in detail and make a personal recommendation to you.
Why do I need to get professional advice to apply for a lifetime mortgage?
You can only get a lifetime mortgage through an adviser. It's a big decision and they can help you review all of your options. An adviser will explain the features and risks of the product in detail and make a personal recommendation to you.
You can talk to your own adviser or we can put you in touch with The Retirement Lending Advisers, a separate company who only advise on our Lifetime Mortgages and are not part of Legal and General. If you use them, they won't charge you an advice fee.
Find out more about what to expect from an adviser in our animation.
How can I take out a lifetime mortgage?
If you’re interested in taking out a Legal & General Lifetime Mortgage, you can find out more from a lifetime mortgage adviser.
Talk to your own adviser or call The Retirement Lending Advisers (TRLA) on 0800 915 4735.
TRLA aren’t part of Legal & General, they’re a separate company that only advises on our Lifetime Mortgages. Calls are free.
Lines are open Monday to Friday, 9.00am to 5.30pm. TRLA may record and monitor calls.
Six simple steps
Read our six simple steps to taking out a Lifetime Mortgage.
Read our news articles on lifetime mortgages.