One lump sum
Everything is paid out at once. It's straightforward and fits a single, bigger need, like paying off a mortgage or funding building work. Interest is charged on the full amount from day one.
What a lifetime mortgage actually is
It's a loan that is secured against your home. The property remains yours and you carry on living in it just as you do now.
Lifetime mortgages are the most widespread form of equity release. I also advise on retirement interest-only (RIO) mortgages, where the interest is paid monthly. If you're 55 or over and own your home, a lifetime mortgage can release some of its value without you having to move. The whole process is set out on the page about how equity release works.
Choice 1
How you can receive the money
Drawdown
You start with a smaller sum and keep a reserve to draw from later on. You only pay interest on what you've actually taken, so if you don't need it all straight away it can work out cheaper.
Choice 2
How the interest can be handled
Roll-up interest
There are no monthly payments to make. The interest is added to the loan, which means the debt grows fastest under this choice, but you have nothing to pay each month.
Paying some or all of the interest
On some plans you can pay part or all of the interest every month, which slows down or stops the growth of the loan. On many plans these payments are optional, so check the terms. You can also make capital and interest payments if you wish.
Features you may be able to choose
- Inheritance protection: set aside a share of your home's value for your family. It reduces how much you can borrow.
- Enhanced terms: some lenders offer more if you have certain health or lifestyle conditions.
- Fixed or capped rates: Equity Release Council standards require your rate to be fixed or capped for life.
Points to bear in mind
- The loan can grow quickly if interest isn't paid.
- It can reduce the value of your estate.
- It may affect your entitlement to means-tested benefits.
- Council members offer a no negative equity guarantee, so you'll never owe more than your home is worth.
Is it the right move for you? That depends on your age, your health, your home and what you'd like to leave behind. At times it isn't the right choice, and if that's the case I'll tell you. This page is general information, not advice. I can talk through your options and explain what may suit you, alongside the alternatives to consider.
Still not sure?
That's what the first conversation is there for. It's free and you're under no obligation.