What is a Lifetime Mortgage?
A lifetime mortgage is a way of releasing equity from your home and is available to UK homeowners aged 55 or over for any legal purpose other than investment.
If you have an existing interest-only mortgage coming to the end of its term but you do not have the means to repay it, or if you have a capital repayment mortgage but are concerned that, as you approach retirement, a reduced income might affect your ability to meet the contractual monthly repayments, a lifetime mortgage can provide you with the solution.
Alternatively, a lifetime mortgage could give you the opportunity to enhance your home or lifestyle by providing the finance for those home improvements or that special purchase, clear existing debt or make a gift to a beneficiary.
Unlike standard mortgages, you do not have to make contractual monthly repayments although many lenders will allow you to make payments to cover the interest and or make overpayments which can enable you to reduce the capital balance if your finances allow.
The amounts available are calculated as a percentage of the value of your property (the equity) based upon a sliding scale according to your age. The amount of equity used will determine the interest rates available. Typical interest rates vary from 3.5% per annum to 5.5% per annum.