Lifetime Mortgage

With a lifetime mortgage, you maintain ownership of your home and raise money in the form of a loan secured against it. Unlike a regular mortgage, there are no monthly repayments to be made as the interest charged by the provider is added to your loan. This means that your loan is increasing until the debt is repaid when your home is eventually sold. The proceeds of sale are used to repay the debt with any money left over being returned to you or your estate.

The interest charged by the provider is 'compounded' (rolled-up) meaning that once interest has been added to your debt, the next interest calculation will be worked out based on the new total debt figure. This makes it more expensive than a normal mortgage with monthly repayments, but the increased cost is to reward the provider for providing the funds without the need for monthly repayments.

It is possible that the increasing debt may eventually catch up with and overtake the value of your home. In this scenario, most lifetime mortgages provide a ‘no negative equity’ guarantee. This means that if the debt is more than the value of your home on death or when you move into long term care, the provider would only expect to receive the proceeds of sale.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.