The Best Lifetime Mortgage Providers – Overview & Best 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. Every month, over 7,000 people come to our website seeking advice on equity release options, including lifetime mortgages.

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!

An equity release scheme is a way for senior homeowners over the age of 55 to borrow money against their property and only repay the debt once they die or move into long-term care. It is usually chosen to help the senior homeowner improve the quality of later life and to fund their retirement with tax-free cash – but not exclusively. 

The loan is only repaid when the homeowner dies or moves out of their home and into long-term care. This is done by selling their property and using some or all of the money raised to pay off the debt in a single payment. The most common type of equity release plan in the UK is called a lifetime mortgage. 

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 standard lifetime mortgage – there are some variations! – works by providing a lump sum loan based on the value of your home. You may be able to get as much as 60% equivalent to the value of your home as a lump sum. 

The loan is subject to a fixed interest rate that gets charged monthly but does not have to be repaid each month – so there are absolutely no monthly repayments to make. The debt is only repaid after you die or move into care using the sale of your property to repay. 

Estate beneficiaries may be able to use cash to repay the debt and keep the family home, or they could even buy it themselves when it goes to market. Stamp Duty may be owed if they purchase it on the open market or pay cash into the estate to clear the debt. 

» TAKE ACTION NOW: Find out how much equity you could release

Can I buy a house with it?

You can use a lifetime mortgage to buy investment properties or to help family members get on the property ladder themselves. 

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?

Very few banks offer lifetime mortgages in the UK, and the banks that do offer equity release usually only advertise these products but redirect customers to one of the respected equity release companies (probably taking a commission from the company). There are some exceptions of course, such as Nationwide. 

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. 

Some of the best providers

Below are some lifetime mortgage providers at the time of writing. These are providers we’ve researched, but there are much more available. Always do your own up-to-date research.

#1: Pure Retirement 

Pure Retirement is renowned for their exceptional customer service, and they only deal with applications from independent financial advisers on behalf of clients. This is a sign that they act professionally. They offer some competitive rates. 

#2: More 2 Life

More 2 Life is known for the flexibility of its equity release plans. The fees to add or remove people to a plan are lower than standard, and they offer downsizing protection so moving to a smaller home will not be as expensive. 

#3: LV

LV have some of the lowest early repayment charges on the market. In fact, if you have a lifetime mortgage for ten years you will not be charged anything to get out of your equity release loan. 

#4: One Family

One Family offers in-house equity release advice for a fixed fee of £950 (inc VAT). Most advisers charge a percentage of your loan, so LV’s advice can be cost-effective if you want to access a larger loan amount. 

#5: Aviva

Aviva is a household brand and a respected company. When you choose them you can rest assured you are dealing with a legitimate lender with exceptional customer service. One drawback is that their early repayment charge currently stands at 25%. 

#6: Nationwide Bank

Nationwide offers free equity release advice and does not charge you early repayment fees if you need to pay off some of the loan to downsize in the future. They’re currently offering £1,000 cashback to successful applicants. 

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!