Lifetime mortgage providers: how to compare options

Are you exploring the idea of getting a lifetime mortgage? This is a big step, and it's normal to feel a bit unsure.

In this guide, we’ll help you understand:

• The basics of a lifetime mortgage.
• How lifetime mortgages work.
• The good and not-so-good points of a lifetime mortgage.
• Places to get a lifetime mortgage from.
• What happens when a lifetime mortgage ends.

We know that topics like mortgages and retirement can be tricky, but there’s no need to worry. We’re here to give you advice that’s easy to understand. We understand your concerns, and we’re here to help. Let’s begin to learn about lifetime mortgages together.

Equity release – who, how and why!

Most standard lifetime mortgages start at age 55, but some payment-term lifetime mortgages are available from 50 and require interest payments for an agreed period. Home-reversion minimum ages and all other eligibility rules depend on the provider. Check the youngest applicant’s age and the actual product criteria. See related guidance.

A lifetime mortgage is a loan secured on your home; you retain ownership. Interest that is not paid is added to the balance. The loan is usually settled when the last borrower dies or moves permanently into care, subject to the contract. Required or optional repayments vary by product.

You should only take out a lifetime mortgage from lenders that are authorised and regulated by the Financial Conduct Authority. And you must get personalised equity release advice before proceeding. 

What is a standard variation?

The advance depends on age, property, product and lender criteria. There is no universal 60% maximum applying to all lifetime mortgages. See related guidance.

Many lifetime mortgages allow interest to roll up without regular payments, but some require interest payments for a set period. Optional repayments, limits and any early-repayment charges depend on the contract.

Personal representatives may settle the mortgage from other funds if available, potentially retaining the home. Tax depends on the legal transfer and consideration; obtain conveyancing and tax advice rather than assuming Stamp Duty is due merely because a beneficiary helps repay the loan.

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Equity release enquiry: Continue to the equity release enquiry

Advertisement. In partnership with Age Partnership, which advises on lifetime mortgages. MoneyNerd introduces enquiries and may receive a referral fee. Equity release can reduce your estate and affect means-tested benefits and future care funding. Fees may apply and interest added to a lifetime mortgage increases the amount owed. Specialist financial and independent legal advice are required before proceeding.

Can I buy a house with it?

Using proceeds to buy another property or help family may be allowed, subject to provider rules and advice on tax, benefits, costs and risk.

Many senior homeowners choose to help their sons and daughters buy property by releasing equity. Just be aware that giving some of your loan to other people, this money can be subject to inheritance tax if applicable and if done within seven years of your death. 

Who are the providers?

Homeowners will find lifetime mortgages advertised through specialist companies that only offer equity release plans and nothing else. However, there are some other companies that offer lifetime mortgages along with insurance and investment products. 

Remember to only consider options from companies that are authorised and regulated by the Financial Conduct Authority. 

Do banks offer it?

Banks may provide, refer or no longer accept applications for later-life lending. Check the actual current provider and adviser rather than assuming a historic bank product is still available.

Prioritise these companies

Along with ensuring that the lender is FCA regulated, it is highly recommended to only consider companies that are members of the Equity Release Council. 

The Equity Release Council has created a list of rules and guidelines and invites lenders to become members and abide by these rules. The rules are implemented to offer senior homeowners some additional reassurances and protection, which makes lenders that are members more attractive options. 

How to compare named providers

The companies below are names discussed in this guide, not a verified current ranking. Check current availability, terms and market coverage with an authorised adviser.

#1: Pure Retirement 

For Pure Retirement, check current product availability, adviser access, rates, fees and service evidence. Do not infer suitability solely from its distribution model.

#2: More 2 Life

For more 2 life, compare the specific product’s repayment allowances, charges, moving conditions and borrower-change requirements.

#3: LV

For LV, check the actual product’s charge schedule and current availability. Historical ten-year terms are not a universal current promise.

#4: One Family

For OneFamily, obtain a current written advice-fee quote and disclosure of market coverage and commissions. Fixed fees are not automatically cheaper for every client.

#5: Aviva

For Aviva, check the actual product terms and early-repayment schedule. A 25% charge is not a universal current rate for all plans.

#6: Nationwide Bank

Check Nationwide’s current later-life mortgage availability directly. This page does not verify a current cashback promotion, free advice offer or downsizing exemption.

There’s lots more to know!

There is so much more to know about lifetime mortgages, such as how to use an equity release calculator, variations of a standard lifetime mortgage such as a drawdown lifetime mortgage, and understanding how taking a lump sum can affect any means-tested benefits you receive. Learn more about all of these things and more for free at MoneyNerd!