What is a lifetime mortgage?

A lifetime mortgage is a long-term loan for homeowners in later life that want to access some of the equity tied up in their home. The money is secured against your property, so it doesn’t have to be repaid until the house is sold in later life or when you die.

The headlines

  • A lifetime mortgage is a type of equity release for homeowners aged 55 and over.
  • It gives you tax-free money, which could help with things like your retirement income or home improvements. 
  • Monthly payments are optional with this mortgage, as the loan is usually repaid when your home is sold. 

In this guide

How does a lifetime mortgage work?

Benefits of a lifetime mortgage

Things to consider

Frequently asked questions

How does a lifetime mortgage work?

Benefits of a lifetime mortgage

Access your home equity tax-free

A lifetime mortgage allows you to access some of the value built up in your property as tax‑free cash. This might be useful if you’re looking to top up your retirement income or make some essential home improvements.

You still own your home

One of the biggest benefits of a lifetime mortgage is that you remain the legal owner of your home. You can continue living there for the rest of your life, provided it remains your main residence and is kept in a reasonable condition.

Optional monthly payments

You get to choose whether you want to make monthly payments or not. For example, you might want to pay off your monthly interest so it doesn’t build up. Some lenders might also let you pay off some of the loan amount too for even more flexibility.

Mortgage is repaid when you die or your home is sold

There’s no pressure to pay back the loan while you’re living there. Instead, the loan is secured against your property and repaid when you die or when your home is sold. Your family might even be able to pay off the loan if they don’t want to sell the home after you’ve passed. 

Some lifetime mortgages also come with a no-negative-equity guarantee, so you won’t have to pay back more than the value of your home. 

Things to consider

Less inheritance to pass on

A lifetime mortgage reduces the amount of inheritance you can leave behind when you pass away. Your property sale will be used to pay off the final balance, which might reduce the remaining value of your estate.

Interest still applies

You’ll still be charged compound interest on a lifetime mortgage. This means interest builds on both the original loan and your interest. Over time, this could cause the amount owed to grow quickly, especially if no repayments are made throughout the term. 

Initial income might impact your pension credit

If you take money from a lifetime mortgage as a lump sum, it could affect other post-retirement benefits such as pension credit. Holding extra savings may push you above the financial threshold, so it’s important to check how releasing equity could influence your post-retirement benefits.

Extra fees and charges

You’ll usually pay a product fee to take out a lifetime mortgage. There might also be other costs to consider, such as legal fees, valuation fees and any early repayment charges if you choose to repay the mortgage early.

Let's look at the details

  • It depends on your personal circumstances, financial needs and long-term plans. For some, it could offer a way to access tax-free cash, boost retirement income or fund later-life expenses, without needing to move home. But it’s important to consider the impact on your inheritance and retirement income carefully.

  • Yes, it’s usually possible to pay off a lifetime mortgage early, but early repayment charges might apply. These charges can be significant, particularly in the early years of the loan. 

    Some lenders and products might allow partial repayments each year without penalties, which could help you manage interest and reduce the total amount owed.

  • Your lifetime mortgage term will end when all homeowners listed on the mortgage die. For example, if you have a lifetime mortgage with a partner, then it’s only when the last person dies that you’ll need to repay the balance. 

    This is usually done by selling the property. If there’s any money remaining from the sale, this is then split between your beneficiaries. In some cases, your family might choose to repay the debt using other money or a new mortgage so they can keep the home.

  • Lloyds does not offer lifetime mortgages or other equity release products. If you’re interested in a lifetime mortgage, you’ll need to explore specialist providers and compare different options to find a product that suits your personal circumstances.

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Important legal information

New Lloyds mortgages are provided by Bank of Scotland plc. Lloyds Bank plc and Bank of Scotland plc are both part of Lloyds Banking Group.