Lifetime mortgages

What is a lifetime mortgage?

A lifetime mortgage is a loan secured on your home and is a form of equity release.

L&G offer an award-winning lifetime mortgage range for people aged 50 or over, helping them to release tax-free cash from their home without moving out.

Depending on the type of mortgage that’s right for you, no repayments may be required until you die or move out of your home and go into long-term care. However, if you have the financial means, you can choose to pay all, some or none of the interest each month. If you do decide to make the full monthly interest payments, the amount you owe will not increase – similar to a regular interest only mortgage. However, if you don’t pay the full monthly interest payments, the amount you owe will increase and reduce any inheritance. It may also affect any means tested benefits.

With a Payment Term Lifetime Mortgage (PTLM), you must pay the full monthly interest each month for a chosen payment term which runs until retirement or the age of 75, whichever is sooner. After which you don’t have to make any payments and the amount you owe will increase. As a last resort, your home may be repossessed if you do not keep up with payments.

How much cash you can release is based on your age and the value of your home and, for PTLM, the length of your chosen payment term. Depending on the type of mortgage that’s right for you, you can claim it as one lump sum or a series of smaller sums.

How you could spend the money

How you use the money is up to you but some examples include:

• paying off an existing mortgage and any early repayment charges
• making home improvements
• going on a dream holiday
• helping children or other family members buy their own property
• paying off loans or boosting your income for a better quality of life.

If you gift the money, the recipient may have to pay inheritance tax in the future.

You should also think carefully before securing other debts against your home.

Am I eligible for a lifetime mortgage?

To be eligible for a lifetime mortgage you must meet certain criteria:

• you and anyone else on the mortgage are at least 55 years old (or at least 50 for a Payment Term Lifetime Mortgage)
• you and anyone else on the mortgage live in the UK
• you must own your home or be buying your own home
• your home is worth at least £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties

Co-op Insurance receives an introductory commission from L&G if you take out a product. The amount is a percentage of the loan’s final value.