Lifetime Mortgage Calculator In April 2024
What is a Lifetime Mortgage?
A lifetime mortgage is a form of home equity release that pays out the value of your home in monthly instalments over a period of time.
You’ll usually be able to make the payments up until you die, give your home to a beneficiary or move into long-term care.
A lifetime mortgage lets you release capital tied up in your home without the need to move house. Instead of selling your home and putting down a deposit on another one, you can stay put and raise money that will pay for care should you need it.
Lifetime mortgages are suitable for homeowners aged 50 or over but may vary depending on individual circumstances.
Topics that you will find covered on this page
You can listen to an audio recording of this page below.
Lifetime mortgage calculator
A lifetime mortgage calculator is a useful tool when you’re considering a lifetime mortgage. It’ll give you an idea of the interest charges and how much your monthly payments will be if you borrow £50,000 or more for your care needs.
The benefits of using a lifetime mortgage calculator, or any equity release calculator, are to see how much it costs to release home equity as well as what the interest charges would be.
Whichever type of lifetime mortgage you go for, it’s important to look at:
- the initial rate and its term in years
- how much money will be leftover in your estate when the loan has been repaid
- when repayments start – usually from age 60 / 65 but lenders may let them begin earlier or later depending on your age and health conditions
- how often repayments are made – monthly, quarterly, half-yearly or annually
- what happens if you die during the term of the loan – who gets
A video explaining all you need to know about Lifetime Mortgages
How Does a Lifetime Mortgage Calculator Work?
You can use an equity release calculator to find out how much you would payback.
- Enter your age or age range (50-80 for example).
- Enter the value of your home (usually £100,000).
- Choose between monthly, half-yearly and annual repayments.
Click “calculate”. The figures should show how much you’d pay back during the term of the loan as well as any remaining equity that will pass on to beneficiaries when died.
Please note that a calculation is only an estimate based on today’s figures so it won’t be exact but it should give you a rough idea of the costs involved in taking out a lifetime mortgage.
This indicative lifetime mortgage tool will give you a good idea as to what you can borrow. Remember you don’t need to take the full amount offered, as you can take smaller amounts.
All the deals that you can eventually get will be from equity release providers who are regulated by the Financial Conduct Authority. They will also be members of the Equity Release Council.
Types of Lifetime Mortgages
Standard lifetime mortgage
This is the most common type. You can borrow up to 100% of your home’s value, subject to any equity in it you might have built up already. Interest is charged at a fixed rate throughout the term of the loan and paid monthly into your bank account.
Interest-only lifetime mortgage
Here, you can borrow 50% or more of your property’s value, even if you only need £50,000 to buy care for yourself or someone else.
The lender will take back their share when you die or give it away when you no longer need long-term care yourself. Loans are usually interest-only for life but some lenders may allow repayment of capital over a shorter period without penalty. This means that those
With an interest-only lifetime mortgage, repayments are only made on the amount borrowed – not on the interest that accumulates over time. Interest-only mortgages usually have a fixed period that lasts for up to 25 years. After this, any outstanding balance can be rolled onto another deal or you may choose to revert back to a repayment loan.
With a capital and interest lifetime mortgage, monthly repayments cover both the loan itself as well as the accrued interest. This allows you to pay off some of your debt early without having to pay administration fees if you want to repay more than is required each month.
Drawdown lifetime mortgage
You can also look at using a drawdown lifetime mortgage, which is increasingly a common type of product used.
If however, you think that a lifetime mortgage is not for you, then you should look at a home reversion plan.
"You'll usually be able to make the payments up until you die, give your home to a beneficiary or move into long-term care."
Why use our equity release lifetime mortgage calculator?
By using our online equity release calculator, you’ll be able to quickly and easily work out how much a loan will cost. Not only that but it could give you a better idea of the net amount after costs have been deducted.
If you want to find out more about your options when it comes to taking out a lifetime mortgage, speak to an independent financial adviser or retirement planner.
They can answer any questions you might have about which type of loan would best suit your needs as well as exploring other types of equity release plans such as shared ownership loans and reverse mortgages.
Lump sum or income?
A lump sum is usually paid up front or in a few instalments. The money can go towards home improvements, medical bills or anything else you want – or need. You may also be able to choose between regular monthly income payments instead of the lump sum but it’s important to note that ongoing costs will vary.
The annual management fee typically varies depending on the type of arrangement you opt for so it’s worth taking the time to find out what your options are and how much ongoing fees could cost until you die. It’s also worthwhile finding out if there are any exit fees involved that might apply if you pay back your equity release loan before death.
What is the difference between Pay Monthly and Interest Roll Up options?
With a Pay Monthly loan, you’ll be able to choose a period of between 1 and 20 years in which the interest rate on your lifetime mortgage will build up. However, once payment is made in full it ends there unless you decide to re-mortgage again.
Some pay monthly loans also have an Interest Roll Up option so that rather than paying off the interest each month, all interest will add up over time. This means that when the final payment is made at the end of years 20, 21 or however many years long the term is set for, the total sum owed could be higher than if an Interest Roll Up option wasn’t chosen.
What happens towards the end?
The majority of equity release schemes come with “non-forfeiture” rules which means that if you decide to sell your home and move elsewhere during the lifetime of your loan, you’d still be able to do so. However, it’s worth bearing in mind that if you want to leave your money to someone other than a spouse or civil partner when you pass away, it will count as part of your estate.
Bear this in mind before deciding to take out an equity release mortgage and discuss any options with family members beforehand just in case they want a share of the money when you die.
Another thing to consider is how much you’ll spend on care costs after moving into a home for older people. If these payments are set to rise substantially in future years, it could boost the chances of your estate running out of money – leaving your family with an inheritance shortfall.
If you want to find out more about an equity release scheme, speak to an independent financial adviser or retirement planner. They can help you weigh up which type of loan would be best for you as well as explaining how interest rates and monthly repayments might affect future plans.
Equity release advice
If you are looking at releasing equity, then we always recommend that you speak to an equity release adviser, as they can help you with making this important decision.
Frequently Asked Questions
What is a Lifetime Mortgage?
A lifetime mortgage is a form of home equity release that pays out the value of your home in monthly instalments over a period of time.
Why use our equity release lifetime mortgage calculator?
By using our online equity release calculator, you’ll be able to quickly and easily work out how much a loan will cost. Not only that but it could give you a better idea of the net amount after costs have been deducted.
What happens towards the end?
The majority of equity release schemes come with “non-forfeiture” rules which means that if you decide to sell your home and move elsewhere during the lifetime of your loan, you’d still be able to do so. However, it’s worth bearing in mind that if you want to leave your money to someone other than a spouse or civil partner when you pass away, it will count as part of your estate.
What is the difference between Pay Monthly and Interest Roll Up options?
With a Pay Monthly loan, you’ll be able to choose a period of between 1 and 20 years in which the interest rate on your lifetime mortgage will build up. However, once payment is made in full it ends there unless you decide to re-mortgage again.
