Supporting your customers
All you need to know to help your customers with a later life mortgage
Lifetime Mortgages - At a glance
- Lifetime Mortgages eligibility criteria. A customer aged 55 (50 for our Payment Term Lifetime Mortgage) or over, nearing the end of their interest only mortgage term could benefit from a lifetime mortgage. They need to live in the property.
- Lifetime mortgage products. There are three types of products, Payment Term Lifetime Mortgage where they have to pay the interest each month over a payment term, Optional Payment Lifetime Mortgage where they can choose to pay the interest each month for as long as they want, and Interest Roll Up Lifetime Mortgage where they don’t pay anything. Any unpaid interest is added to the loan.
- The amount they can borrow. The older they are, the more they can borrow. For Payment Term Lifetime Mortgage, the older or the longer the payment term, the more they can borrow. Use the calculator below to see how much your customer can borrow.
- The customer must get advice. L&G can help customers understand if a L&G Lifetime Mortgage is the right option for them. If L&G don't have the right product for your customer, they also have access to the whole lifetime mortgage market.
- Costs involved. Through the partnership between Santander and L&G, the advice the customer receives is free and they will not have to pay for a valuation. Some of our products have a £599 fee and the customer must meet the cost of their own legal advice. All customers will receive a cashback of 0.3%. (On a £100k loan this is £300).
- Interest rates. The rates available change frequently and the adviser will be able to give more information on this. Between 1 September 2023 and 31 August 2024, Santander paid an average of 6.51%. The higher the LTV, the higher the rate that is charged.
- A lifetime mortgage is a loan that’s secured against the customer’s home which can be used to pay off their residential mortgage balance in full, including any Early Repayment Charges.
- It must be the first and only charge on the property, therefore please consider any second charges.
- For our Interest Roll Up and Optional Payment Lifetime Mortgages, there are no affordability checks, we underwrite the property, not the person. For our Payment Term Lifetime Mortgage we carry out affordability checks to make sure your customer can afford the monthly interest payments.
- If there’s any remaining money, customers can also borrow money to use for home improvements, holidays or to improve their quality of life.
- There is no end date to the loan. The balance is repaid when the last surviving borrower dies or goes into long term care.
- Lifetime mortgages can only be bought through a qualified financial adviser.
- They can be a really good option for interest-only mortgage shortfall customers who want to stay in their homes and ether keep paying interest, or want the burden of a regular monthly payment to go away.
- Minimum age: 55 (or 54 for whole of market referrals) and 50 for our Payment Term Lifetime Mortgage
- Maximum age: 90 and 74 for our Payment Term Lifetime Mortgage
- Property condition: Standard construction, in a good state of repair and free of any tenancy restrictions
- Minimum loan amount: £10,000
- Minimum property value: £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties.
- Location: England, Wales or mainland Scotland
- Stay in their home. The customer will still live in and own their property, subject to the Terms and Conditions being met. For our Payment Term Lifetime Mortgage as a last resort, their home may be repossessed if they don't keep up with payments.
- Option to make monthly payments. If the customer takes out the Interest Roll Up Lifetime Mortgage, they won’t have to make monthly payments. With the Optional Payment Lifetime Mortgage, they can choose to pay some, or all, of the monthly interest by Direct Debit, but they can also stop making monthly interest payments at any time. With our Payment Term Lifetime Mortgage they will pay the full interest amount each month for a chosen payment term.
- Portable loan. Customers can transfer their lifetime mortgage to a new property as long as it’s acceptable to us and meets our lending requirements at the time.
- No Negative Equity Guarantee. The customer or their beneficiaries will never payback more than the amount their property is sold for, even if the home goes down in value, subject to our Terms and Conditions being met. For our Payment Term Lifetime Mortgage, the No Negative Equity Guarantee will not apply to any missed monthly interest payments and the interest on them. If the sale of their property doesn’t cover these, we’ll ask their beneficiaries to settle the balance.
- Inheritance Protection. The customer can secure a percentage of the net sale proceeds of their home for their beneficiaries, though it will reduce the amount they can borrow. If the maximum loan amount is required to repay the residential mortgage, Inheritance Protection may not be available.
- Early repayment. The customer can pay part of the mortgage off early with no Early Repayment Charge using the Optional Partial Repayment (OPR) feature, subject to the Terms and Conditions. For our Optional Payment and Payment Term Lifetime Mortgages they can use OPR feature once their payment term has stopped.
- A lifetime mortgage secures a loan against a home.
- An Early Repayment Charge may need to be paid if a loan is repaid before a customer dies, or moves out of their home and into long-term care.
- Interest is charged on the loan plus any interest already added. The amount owed may increase quickly over time, reducing the equity left in the home and the value of any inheritance.
Equity release calculator
This calculator helps you see how much equity your customer could release with a lifetime mortgage, a loan secured against their home.
Before you start
Retirement Interest Only Mortgage - At a glance
- Use the money however they want. Your customer can spend it in all sorts of ways. If they give the money away, the recipient may need to pay inheritance tax in the future. There are few restrictions on how they spend the money. They can even pay off an existing mortgage.
- Interest is payable each month. The interest due is payable in full each month, so your customer always know how much they owe.
- There’s no fixed term. They don't have to repay the loan on a specific date. It’s repaid when the customer dies or when they move permanently into long-term care. At this point, the property is sold and the loan repaid. If they take out the loan with someone else, the property isn’t sold until both of them have either died or moved permanently into long-term care.
- The interest rate doesn’t vary. The interest rate is fixed throughout so there are no surprises. They pay the same amount every month.
- They can pay more to reduce how much they owe. If they want to pay off more than the interest due each month, they can make overpayments from time to time. So long as any overpayments don’t exceed our limits, there are no charges.
- They're portable. If your customer wants to move home in the future, they can port the loan to the new property.
- Our Retirement Interest Only Mortgage is available to people over 55. It’s a loan secured against the value of the customer's home. They pay the interest each month, which means the amount they owe doesn’t increase over time.
- They can use it for most purposes (including paying off an existing mortgage). What's more, they don't have to repay the loan until they, or the last remaining borrower, die or move permanently into long-term care.
- If they miss monthly interest payments L&G will always try and help. If we can’t resolve the situation, as a last resort their home may be repossessed.
- Our Retirement Interest Only Mortgage can only be taken out with a mortgage adviser.
- Minimum age: 55 (or 54 for whole of market referrals)
- Maximum age: 90 (the Retirement Interest Only mortgage must complete before their 91st birthday)
- Property condition: Standard construction, in a good state of repair and free of any tenancy restrictions
- Minimum loan amount: £10,000
- Minimum property value: £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties.
- Location: England, Wales or mainland Scotland
- Early Repayment Charges. If they repay their Retirement Interest Only Mortgage early, or pay more than the overpayment limits, there may be an Early Repayment Charge.
- Moving home. They can move home, and transfer the loan as long as the new property meets our lending requirements. If the new property is worth less than their current home, they may have to pay back part of your mortgage.
- Means tested benefits. If they take out a Retirement Interest Only Mortgage it could affect any means-tested benefits or pension credit they receive.
Compare our later life mortgages
Our Lifetime Mortgages and Retirement Interest Only Mortgage may appear similar, but it's important to understand the differences between each product. We've pulled out some of the key points below.
Our Lifetime Mortgages | Our Retirement Interest Only Mortgage | |
|---|---|---|
Age | 50+ for our Payment Term Lifetime Mortgage 55+ for our Interest Roll Up and Optional Payment Lifetime Mortgages | 55+ |
Minimum loan amount | £10,000 | £10,000 |
Maximum loan amount | Determined by your client's age and property value. For our Payment Term Lifetime Mortgage an affordability assessment is also required. | Up to 60% of the value of your client's home, subject to an affordability assessment |
Minimum property value considered | £70,000 or £100,000 for flats, maisonettes, ex council, ex housing association or ex Ministry of Defence properties. | £70,000 or £100,000 for flats, maisonettes, ex council, ex housing association or ex Ministry of Defence properties. |
Is there an affordability assessment? | Yes, for our Payment Term Lifetime Mortgage No, for our Interest Roll Up and Optional Payment Lifetime Mortgages | Yes |
Is the loan secured against my client's home? | Yes | Yes |
When do they have to repay the full amount of the loan? | The loan is usually repaid when they die or move out of their home into long-term care. | The loan is usually repaid when they die or move out of their home into long-term care. |
Do they have to pay interest every month? | No, for our Interest Roll Up and Optional Payment Lifetime Mortgages, the interest is charged on the loan amount plus any interest already added, so the amount owed will increase quickly over time. However, with our Optional Payment Lifetime Mortgage they can choose to pay off some or all of the monthly interest to prevent this. Yes, for our Payment Term Lifetime Mortgage, they have to pay the full interest monthly for their chosen payment term. As a last resort, their home may be repossessed if they fail to keep up repayments. | Yes - the interest due is payable in full by them each month. As a last resort, their home may be repossessed if they fail to keep up repayments. |
Is the interest rate fixed? | Yes. The interest rate is fixed for the life of the loan. | Yes. The interest rate is fixed for the life of the loan. |
A mortgage may affect means-tested benefits, your tax position and any future inheritance. | ||