This page was last updated on 1 December 2020.
Lifetime Mortgage Providers
If you are feeling short on money in retirement, you may be looking for the right lifetime mortgage scheme to supplement your pension income.
This article is a guide to lifetime mortgages providers. It gives you advice on how to find the right scheme for your situation and answers some of the most frequently asked questions about this kind of equity release.
Topics that you will find covered on this page
What is a lifetime mortgage?
Lifetime mortgage schemes are a type of equity release which is secured against your home. This loan allows you to unlock money which is currently tied up in your property.
This money may take the form of a tax-free cash sum, or a series of smaller withdrawals. There are different types of plan available, such as roll-up, drawdown, flexible and enhanced lifetime mortgages.
Releasing equity may impact your entitlement to receive state benefits and pension credit and it may change your council tax position. It will also leave less for your family to inherit.
Speak to a financial advisor to determine which option is best for your financial situation.
Here is a short video explaining what a lifetime mortgage is.
Who are the main lifetime mortgage companies in the UK?
The Equity Release Council trade body has 14 members.
These lifetime mortgage providers are authorised and regulated by the Financial Conduct Authority. They all abide by the ERC’s no negative equity guarantee, meaning that you will never owe more than the value of your home.
12 of the members offer lifetime mortgages. The other two members, Retirement Bridge Group and Retirement Plus, specialise in home reversion plans.
You will find more information about the features of the different lifetime mortgage lenders below.
Whilst most providers have a minimum age most will offer a lifetime mortgage to pensioners.
- Aviva is the UK’s largest insurer. Both flexible withdrawal and voluntary partial repayment options are available.
- You can also opt in to Inheritance Protection, meaning you will be able to safeguard a percentage of the value of your home to leave to your estate.
- Downsizing Protection is included in Aviva’s lifetime mortgages in case you want to downsize to a property that doesn’t meet the lending criteria.
- Valuation is free for Canada Life’s equity release mortgages.
- You can add a cash reserve facility to your lifetime mortgage when you apply.
- Their Early Repayment Charges (ERCs) are fixed for the first 8 years.
- Canada Life also offer an Inheritance Guarantee, so you can protect a proportion of the value of your property as inheritance for your family.
- Their Interest Select mortgages let you pay 50-100% of the interest each month for between 5 years and the total mortgage term. These products also have Downsizing Protection after the 5th year, and an ERC Waiver during the first three.
- Hodge offers Downsizing Protection, so you will not incur fees if you repay your loan early after selling your home and moving to a different property
- All Hodge’s types of lifetime mortgages include a Flexible Repayment Option. Up to 10% of the initial loan can be repaid every year without incurring ERCs.
- Both lump sum and flexible drawdown options are available with interest rates between 4% and 4.5%. For flexible lifetime mortgages, there is a minimum cash drawdown of £1000 per withdrawal.
- Their standard loan-to-value (LTV) is between 15% and 48%.
- Just’s equity release with a mortgage grants you an initial lump sum with a drawdown cash facility.
- You can opt into monthly payments to pay some or all the interest by direct debit. The minimum amount of money to be repaid each month is £25, up to a maximum of the total monthly interest.
- These monthly payments will reduce the roll-up in accordance with the percentage of interest being paid each month.
- The minimum loan amount is £10,000, or £30,000 if you will be making payments each month.
Try our free equity release calculator and see how much you could borrow in 30 seconds
Legal & General
- Legal & General have two main types of mortgage schemes: Flexible Lifetime Mortgages and Optional Payment Lifetime Mortgages.
- Both of these schemes come with the ability to borrow more in the future if you don’t take the maximum amount at the beginning of the mortgage. However, later withdrawals may have different interest rates.
- Cashback and Inheritance Protection are offered.
- Income Lifetime Mortgages are also on offer. This is where you receive an initial lump sum and then a tax-free income every month over a fixed term of 10, 15, 20, or 25 years.
- The minimum initial advance or lump sum is £10,000.
- With LV=’s Lump Sum Lifetime Mortgage, you may be able to borrow more in the future, but there is no guarantee of this.
- Their Flexible Mortgages have a maximum loan of either three times the initial amount, or the maximum LTV (whichever is less). You can draw down from this cash reserve over the next 15 years. Each withdrawal must be £2,000 or more.
- Two free revaluations are included in the Flexible plan so that you can increase your maximum loan amount if the value of your home has increased.
More 2 life
- More 2 Life have the widest variety of lifetime mortgage services. Their different categories are: Prime, Maximum, Tailored, Capital, and Flexi.
- Their LTVs range from 5% to 56%.
- Different plans have different features, including Inheritance Protection, Downsizing Protection, Repayment Charge Exemption, Partial Repayments, and cashback.
Nationwide Building Society
- There are no valuation or product fees for Nationwide’s equity release mortgage.
- £1000 cashback upon completion of the application. This can help cover the costs for the independent advice that you must seek before taking out a lifetime mortgage.
- You can pay back up to 10% of the loan each year without incurring any charges.
- OneFamily’s lifetime mortgages have both fixed and variable interest options.
- They also offer both Standard LTV and Super LTV fixed rate services. Super LTV products are for those aged 70-100. They allow you to borrow more money (45-58% loan-to-value), but at a higher rate.
- Downsizing Protection is included after the 5th year.
- This lender offers two ranges of lifetime mortgages: Pure Max Drawdown, and Pure Sovereign.
- The Pure Max Drawdown products have higher LTVs and a cash facility. Pure Sovereign schemes have a lower maximum LTV and lower interest rates.
- Pure Retirement may cover the costs of the arrangement and legal fees for you upon completion of the application, but they do not guarantee this.
- Responsible Lending has both lump sum and drawdown later life mortgages available.
- All of their lifetime mortgage rates are fixed and you will not pay interest month by month. The interest simply compounds on the initial amount of money loaned over the full length of the mortgage.
- You can use a drawdown facility for the first seven years of your mortgage
- The mortgage is portable, so you can transfer your loan to another house if you want to move. Downsizing and Inheritance Protection are also in place.
- You can make voluntary interest repayments without being charged an ERC.
No matter which later life mortgage provider you choose, you need to speak to a specialist financial adviser to make sure you properly understand all the details.
They will be able to answer any questions you may have about the different mortgage options and help you find the right product. The adviser will also be able to talk you through the impact that a lifetime mortgage can have on your tax position, means-tested benefits, and pension credit.
What is the interest rate for a lifetime mortgage?
The majority of lifetime mortgages have a fixed rate for the entire term. The exact rate depends on the lender, the amount you are borrowing, and the type of product that you select.
The cheapest services start between 2.5% and 3% AER, but it is not unusual for a plan to be fixed at 4-6% AER.
The interest will continue to roll-up until you die or move into long-term care. At this point, they will sell your house and your debt will be repaid with the proceeds of the sale.
This means that debt can compound quickly on your initial loan, leaving less money for your family to inherit once you die. However, the Equity Release Council’s no negative equity guarantee means that you will never owe more than the value of your home.
Can you buy a property with a lifetime mortgage?
It is becoming increasingly popular for customers to buy a new property with a lifetime mortgage.
When you sell the home you are currently living in, you can secure a lifetime mortgage against the property you are moving to. This means you can supplement your savings and the proceeds of the sale with the money you get paid through equity release.
For example, imagine you sell a property valued at £200,000 and want to move into a house worth £250,000. You can use lifetime mortgage services to release £50,000 from the new property so that you can afford the purchase.
You should call a professional money expert to get financial advice on what is best for your situation.
We can help explain who the main lifetime mortgage providers are, and who could be right for your circumstances
First, check how much money you could receive from a lifetime mortgage, then speak to someone, if you have more questions.
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All calls regarding equity release are undertaken by Key Equity Release, the UK’s leading specialist in this area.
Other articles that you may find useful
Lifetime Mortgage Providers
The Equity Release Council trade body has 14 members. These lifetime mortgage providers are authorised and regulated by the Financial Conduct Authority. They all abide by the ERC’s no negative equity guarantee.
Home Reversion Calculator
A home reversion equity release calculator is a tool that helps you find out how much money you could receive with home reversion plans. These are different from lifetime mortgage calculators that you often see.
Drawdown Lifetime Mortgage
A drawdown lifetime mortgage is a type of life mortgage where you can release equity from your home in a series of small withdrawals. This is instead of simply withdrawing one large cash lump sum at the start of the mortgage term.
Lifetime Mortgage Rates
The majority of lifetime mortgages have a fixed interest rate for life. Therefore, they are sometimes called a ‘lifetime fixed rate mortgage’. The rate will range between providers and can change quite often..
Mortgages For Pensioners
If you are a pensioner in later life, you may be considering a lifetime mortgage as a way of supplementing your pension income, paying off debts, supporting family, or paying for home improvements in retirement.