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Is a Lifetime Mortgage The Same as Equity Release?

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Is a lifetime mortgage the same as equity release? 

Yes, a lifetime mortgage is the most popular form of equity release, and it can be used to purchase a new home, repay a current mortgage, or release tax-free cash from your property. With a lifetime mortgage you retain full ownership of your property, and monthly payments are optional.

Most of the time, in 99% of cases, a lifetime mortgage is the equity release product that is recommended when customers are unable to meet the lending criteria of traditional or retirement interest only mortgage products.

The other least popular form of equity release is called a home reversion plan, these are where you sell your property in exchange for a tax-free lump sum but keep the right to live there until you die or enter long term care.

There is a full range of mortgages over 50s solutions available and as independent brokers, we will explore each option to recommend the most cost-effective way forward for you. 

Lifetime Mortgages to Purchase a new Home 

Many people over the age of 55 do not realise they are able to purchase a new home with a lifetime mortgage so are pleasantly surprised when they learn that with enough deposit they can.

Lifetime mortgages can help both first time buyers and home movers afford a more expensive property compared with buying with cash alone.

Monthly payments are optional with lifetime mortgages, however, if you can afford to pay towards the interest per month this saves you a lot of money and retains your equity over the long-term. 

Lifetime Mortgage to Repay a Current Mortgage

Lifetime mortgages are a great solution for our more mature customers if there is an existing interest-only mortgage that is coming to the end of its term and needs repaying. Interest only mortgages were popular in the 1980s and 1990s and many these are coming to the end of their term.

A lifetime mortgage, a form of equity release, can be used to remortgage your property and repay your current loan. The amount you can borrow on a lifetime mortgage, a form of equity release, will depend on your age, the older you are the bigger the loan-to-value available.

If it is affordable to you, you can continue to keep paying monthly payments with a view to keep the lifetime mortgage balance the same throughout the term. If monthly payments are stopped then the interest will roll up and erode your capital.  

Lifetime Mortgage to Release a Lump sum or Supplement Income 

Modern day lifetime mortgages offer a great deal of flexibility with regards to monthly payments and portability should you decide to move home in the future providing peace of mind.

You can choose to release equity either as a lump sum or in smaller chunks as and when required with a view to supplement your income into retirement.

The money can be used as you wish, popular uses are for a big purchase such as a motor home or car etc., repay debts, divorce settlements, or more complicated situations.  

The Importance of Lifetime Mortgage Advice 

Whilst a lifetime mortgage is a great solution for the right applicants, there are lots of alternatives available. Our age later life mortgage specialists will listen your personal requirements to recommend the best product for you.

There are many traditional mortgages for over 50s available along with a comprehensive range of retirement mortgages which will be considered ahead of a lifetime mortgage product as they will be more cost-effective. 


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Author Image of Dan Osman - Head of Later Life at UK Moneyman Ltd.

About the Author

Dan Osman

Head of Later Life at UK Moneyman Ltd.

Dan joined the Financial Services sector back in 2002, but actually left the industry in 2008 before returning some years later. During the in-between years, he took a degree to become a Social Worker specialising in working with vulnerable adults.

Upon his return, Dan combined his experiences in the two sectors to become an Equity Release Specialist and he now heads up UK Moneyman’s Later Life Lending proposition. He genuinely believes in a holistic approach and always ensures his clients receive a proper consideration of all the options available, including non-lending alternatives to Equity Release.

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Registered Address: 10 Consort Court, Hull, HU9 1PU.

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