Lifetime mortgages

A lifetime mortgage is a loan secured on your main home that you keep living in, with no fixed end date. The loan and the interest are usually repaid from the sale of the home when the last borrower dies or moves into long-term care. You keep ownership throughout, which is the main difference from a home reversion plan.

Lifetime mortgages are the most common form of equity release in the UK, and they are regulated mortgage contracts (FCA Handbook, MCOB 8, accessed 20 Oct 2026). Advice is required before a plan is taken out, and the adviser must look at the alternatives as well as the plan itself.

People sometimes use 'lifetime mortgage' and 'equity release' as if they meant the same thing. Equity release is the wider term, covering lifetime mortgages and home reversion plans, while a lifetime mortgage is one specific product within it.

A lifetime mortgage lets you borrow against the value of your home, either as one lump sum or as a smaller first payment with a reserve to draw on later. Interest is charged on what you borrow, and on most plans it is added to the loan each month rather than paid, so the balance grows over time.

Because the interest compounds, the amount owed can grow quickly over a long period, and less of the home's value is left for your estate. Most plans now let you make voluntary payments to slow or stop that growth, and some are designed around regular interest payments from the start.

The loan ends when the home is sold after the last borrower dies or moves into long-term care, or if you repay it early. Early repayment can carry a charge, which is set out in the plan's terms and explained in the guide to the pros and cons of equity release.

Lifetime mortgages come in three broad forms: a lump sum plan that pays everything at the start, a drawdown plan that pays an initial amount and holds a reserve, and an interest-paying plan where you cover some or all of the interest. Each changes how quickly the balance grows and how much stays in the home.

Drawdown suits people who expect to need money in stages, because interest is only charged on what has been drawn. The reserve is not always guaranteed, so the terms on how and when it can be used are worth reading closely.

Enhanced lifetime mortgages take health and lifestyle into account and can release more for people with certain medical conditions. Interest-paying plans, sometimes called optional payment or payment term plans, suit people with income to spare who want to protect more of their home's value.

Most lifetime mortgages are open to homeowners aged 55 or over, based on the age of the youngest borrower, who live in the home as their main residence. The amount offered depends mainly on age and the property's value, with older borrowers usually able to release a larger share.

The age threshold of 55 for lifetime mortgages is set out in the Council's standards (Equity Release Council, Statement of Principles and product standards, accessed 20 Oct 2026). Lenders also look at the property itself. Leasehold homes need enough lease left to run, and non-standard construction, flats above shops or homes with agricultural ties can narrow the choice. Any existing mortgage must be repaid from the money released, or from other savings, when the plan completes.

Joint plans cover both borrowers, so the home does not have to be sold until the second person dies or moves into care. Anyone else living in the home, such as an adult child, usually has to sign a waiver.

Plans from Equity Release Council members carry product standards, including a no negative equity guarantee, the right to live in the home for life and the right to move to a suitable new home. The guarantee means the debt can never exceed the sale price.

These standards are published by the Council (Equity Release Council, Statement of Principles and product standards, accessed 20 Oct 2026). Fixed interest rates, or variable rates with a cap set for life, are a further Council standard. The interest is therefore known at the outset, even though the balance grows.

Independent legal advice is also required before completion, so a solicitor checks the terms with you separately from the adviser. Firms that arrange lifetime mortgages, and how their fees work, are listed on the equity release advisers page.

The cost of a lifetime mortgage is mainly the interest, which builds up over the life of the plan, plus advice, arrangement, valuation and legal fees at the start. Because the interest usually compounds, the rate and how long the plan runs matter far more than the fees, and small differences in rate add up over time.

Rates are fixed for life on most plans, so the cost is set at the start rather than moving with the market. Comparing the total owed after several decades, not just the headline rate, shows the true difference between two plans, and asking for illustrations at the same amount from more than one lender makes that comparison fair. The equity release calculator shows how a balance can grow from the amount, rate and period entered, which makes the effect of compounding easier to see before speaking to an adviser.