A lifetime mortgage is a loan that is secured on your home. Lifetime Mortgages are usually available to homeowners over the age of 55. They can provide a tax free lump sum, a regular income or both. Lifetime Mortgages are usually repaid from the sale of your property, normally when the client dies or goes into long term care.

The main types of lifetime mortgage are -

Roll Up Interest Mortgage

With this option you receive a cash lump sum, a regular income or both. The mortgage interest rate is usually fixed at the beginning of the loan and the interest "rolls up" over the term of the loan. No monthly payments are payable and the interest is not payable until your home is sold. Some providers of roll up interest mortgages offer "drawdown" facilities. A drawdown facility is one where further monies can be released in the future. The amounts that lenders will advance on a roll up mortgage will depend on the age of the youngest applicant.

Many roll up interest mortgages come with a no negative equity guarantee and the home is still owned by the client.

Interest Only Mortgage

An interest only mortgage is where the client will receive a tax free lump sum which they can use for any purpose. Interest is paid each month on the loan and this can be either on a fixed rate or variable rate depending on the choice of mortgage product selected. The capital is repaid when the property is sold. With this type of mortgage it is important that the client can afford the monthly repayments and the amount the lender will advance will depend on the clients income/expenditure.

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Think carefully before securing other debts against your home. Your property may be repossessed if you do not keep up repayments on a mortgage.

Equity Release refers to Home reversion plans and Lifetime mortgages. To understand the features and risks ask for a personal illustration.