UK property has risen in value for years, typically at a rate of 3% to 5% per year. This long-term trend, coupled with low interest rates, makes property the most valuable asset for many homeowners aged 55 and over.

Increasing property wealth, and increasing life expectancy, are two factors that have driven the growing demand for equity release across the UK.

As a result, lifetime mortgages have quickly become the most popular way for older homeowners to unlock cash tied up in their homes.

What is a lifetime mortgage?

A lifetime mortgage allows homeowners to borrow tax-free cash secured against their home without having to sell or downsize. Lifetime mortgages are;

  • For homeowners aged 55+
  • With a property worth at least £70,000
  • They allow homeowners to retain 100% ownership of their property
  • And to continue living in their property for life

There are several types of lifetime mortgage products available to meet growing consumer needs.

Choosing a lifetime mortgage plan

A lump sum lifetime mortgage allows borrowers to access a tax-free cash lump sum to spend as they wish with no monthly repayments to make. Compound interest is added to the mortgage until the plan comes to an end. The loan plus interest is eventually paid back when the home is sold, usually when the borrower moves into long-term care, or when they pass away.

A drawdown lifetime mortgage is one of the most popular types of equity release plans. It allows borrowers to access cash in stages, as and when they need it, rather than all at once. With a drawdown plan interest is added only when cash is released and so the interest accumulates more slowly than it would with a lump sum plan.

A voluntary payment lifetime mortgage allows borrowers to make voluntary payments to pay off the interest of the loan each month. They have the flexibility to pay some of the interest, all of the interest, or more than the interest.

5 reasons to consider a voluntary payment lifetime mortgage

A voluntary payment lifetime mortgage is one of the most cost-effective methods of equity release. By paying the interest off during the life of a plan, the amount initially borrowed will stay the same and will not increase. So, unlike most lifetime mortgages, there is no compounded interest to pay on top of the initial loan.

  1. Borrowers retain 100% ownership of their home.
  2. Borrowers can repay interest monthly or annually and avoid compound interest.
  3. By avoiding rolled-up interest, borrowers can keep as much equity in their property as possible – maximising the inheritance they can leave to family and beneficiaries.
  4. To qualify, borrowers do not need to prove their income or affordability as eligibility is dependent on age and property value. Health and lifestyle may also be taken into account, which could help borrowers secure a more suitable plan for their requirements.
  5. Interest payments are considered ‘Voluntary Payments’ and so borrowers can stop making payments at any time, and instead, add the interest to their loan. They can then begin making payments again at a later date if they wish to.

To learn more about lifetime mortgages call Personal Retirement Planning on 07980210953 or email

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