You have more control over the cost of a lifetime mortgage than most people realise. The total you eventually repay isn’t fixed at the start — it’s shaped by choices you make at the outset and along the way. Here are five practical ways to keep that cost down, each explained plainly.
In short: you can reduce the cost of a lifetime mortgage by making optional repayments, using drawdown instead of a single lump sum, borrowing only what you need, comparing across the whole market, and taking your time over the decision.
1. Make optional repayments
Optional repayments are the simplest way to slow the cost of a lifetime mortgage. Many modern plans let you repay some interest or capital each year without penalty — monthly, or as and when it suits you. Even modest repayments slow the roll-up significantly, and repaying the full interest stops the balance growing at all. There’s no obligation, and you can stop any time your circumstances change. Some products go further: if you commit to paying a set amount towards the interest each month, the lender may offer a reduced interest rate in return — which lowers your overall cost both through the repayments themselves and through the lower rate applied to the outstanding balance.
2. Use drawdown rather than a single lump sum
A drawdown plan keeps interest off money you haven’t spent yet. You agree an overall facility but only take what you need, when you need it, and interest is charged only on the money actually drawn. So £20,000 drawn today costs far less over twenty years than £60,000 drawn today with £40,000 sitting unused in a bank account.
The cheapest pound is the one you haven’t drawn yet.
3. Borrow what you need, not what you’re offered
The maximum available is not a target. Every pound released compounds, so the most reliable way to keep the final balance down is simply to release less. Good advice starts with what the money is for, not with what the property could support.
4. Compare across the whole market
Rate differences that look small compound into large differences over a long plan. Comparing a comprehensive range of suitable plans matters because the gap between a competitive rate and an uncompetitive one can run to tens of thousands of pounds over the life of the loan.
5. Take your time
There is no deadline and no rush. Rates, products and your own circumstances all move, and a decision made calmly — with your family in the picture and a personalised illustration on the table — is the decision people don’t regret.
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Common questions
Can you reduce the cost of a lifetime mortgage?
Yes. The amount you eventually repay isn’t fixed at the outset. Optional repayments, taking money through drawdown rather than all at once, borrowing only what you need, comparing the whole market and not rushing the decision all reduce how much interest builds up over the life of the plan.
Is drawdown cheaper than taking a lump sum?
For many people, yes. With drawdown, interest is charged only on the money you have actually taken, not on funds reserved for later. Money left undrawn in your facility costs nothing until you draw it, so spreading withdrawals over time can significantly reduce the total interest compared with taking everything at once. It is important to note, however, that drawdown facilities are not guaranteed: the lender reserves the right to review or withdraw the undrawn portion in certain circumstances. The interest rate on future drawdowns is also set at the time of each withdrawal, based on rates available then, not locked at the rate agreed at outset — so later draws may be at a higher or lower rate than your initial borrowing.
Can you make repayments on a lifetime mortgage?
Many modern lifetime mortgages allow voluntary repayments of interest or capital, often up to an annual limit, with no penalty. Making repayments slows the roll-up of interest; repaying the interest in full each year stops the balance growing at all. Availability and limits vary by plan, so check what a specific product allows.
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Last reviewed: June 2026. Written by the Retirement Solutions advice team.
Important things to know. Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. A lifetime mortgage is a loan secured against your home and is subject to compound interest, meaning the amount owed can grow quickly. Equity release isn’t right for everyone, and you should always take regulated advice. To understand the features and risks, ask for a personalised illustration.
Retirement Solutions (UK) Limited is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 483817). Registered office: Metropolitan House, Station Road, Cheadle Hulme, Cheshire, SK8 7AZ.
