Lifetime mortgages are one of the two main types of equity release. The other is a home reversion plan.
A lifetime mortgage is a long-term loan where you borrow money secured against the value of your home to give you a lump sum and / or a regular income. The loan is repaid to the lender when the property is sold, on death, or when you move into long term care. If there is any money left after the loan is paid off, it will go to your beneficiaries. You retain ownership of your home.
There are two main types of Lifetime Mortgages. These are:
- Interest only mortgages
- Interest roll-up mortgages
With both of the above types of Lifetime Mortgages, some lenders allow you to take a regular income rather than a lump sum. This can mean that you accrue less interest as interest is only charged on the amount you actually receive – i.e. interest is only charged on the monthly payments you receive.
Some lenders also offer a flexible lifetime mortgage, where you can take a smaller lump sum at the beginning, then draw down further borrowings as and when required.
