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How do lifetime mortgages work? Everything you need to know

Mortgage Advice Loughborough > Uncategorised > How do lifetime mortgages work? Everything you need to know

What is a lifetime mortgage?

A lifetime mortgage is a financial product designed for homeowners, typically aged 55 and older, allowing them to release equity from their property without the need to sell it. It is a type of equity release scheme, providing individuals with a way to access the value tied up in their homes.

How does a lifetime mortgage work?

One notable distinction between a regular mortgage and a lifetime mortgage is the fact that there is no requirement to make any monthly payments—though you are free to if you choose. There is an opportunity to pay back some or all of the loan balance and to make interest-only payments to lower the total amount owed. There are no consequences if you decide to cease making payments later, as they are optional.

If you decide not to pay, the entire balance plus interest will only need to be returned if the final homeowner passes away or needs long-term care. At this stage, the house sale will often pay off the mortgage.

Eligibility criteria

To qualify for a lifetime mortgage, you must be able to meet several specifications. Some of these include:

  • To be aged 55 or older. Some lenders may have slightly different age requirements.
  • The property must be the homeowner’s primary residence.
  • The amount that can be borrowed is often linked to the value of the property. The higher the property value, the more equity may be available for release.
  • The property usually needs to be located within the lender’s specified geographic area.
  • To own or plan to own a home in the UK worth at least £70,000.

How much can I borrow?

Your age and the property’s worth will determine how much you can borrow. You can better find this out by using a free online calculator.

Before going ahead, it is also worth noting that there could be several costs that need paying. This could include paying building insurance premiums, legal and validation costs, a product arrangement fee to the lender, and an adviser fee for guidance and assistance in setting up the loan.

Is it right for you?

As a long-term investment, property prices have held their value despite current negative pressure. April 2023 saw an increase in average house prices over the previous year, according to the most recent ONS house price index. The average price of a property in the UK as a result was £286,000.

For many homeowners over the age of 55, their property will be their most valuable asset. When you search for the best financial package, this may help to make a lifetime mortgage more appealing because the more your home is worth, the more you may be able to discharge.


As with any financial decision, understanding the nuances of lifetime mortgages is crucial before embarking on this path. Seeking independent financial advice is an integral step to ensure a clear comprehension of the risks involved.

Were you thinking of applying for a lifetime mortgage? Get in touch with us to find out more.

Lifetime mortgages and equity release loans will reduce the value of your estate and can affect your eligibility for means tested benefits.

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