Lifetime mortgages explained

A lifetime mortgage is a loan secured against your home that lets you access some of the equity tied up in your property without having to sell or move out. It is designed for homeowners aged 55 and over, and the loan is repaid when you die, move into long-term care, or sell the property.

Unlike a standard residential mortgage, you do not make monthly repayments unless you choose to. Instead, the interest is "rolled up" and added to the loan balance each month. This means the amount you owe grows over time through compound interest. When the property is eventually sold, the loan plus accumulated interest is repaid from the proceeds, and any remaining equity goes to your beneficiaries.

Lifetime mortgages are the dominant form of equity release in the UK. According to the Equity Release Council, over 99% of new equity release plans taken out in recent years have been lifetime mortgages rather than home reversion plans. This popularity is driven by the fact that you retain full ownership of your home and benefit from any future increase in its value.

All plans sold by Equity Release Council members come with a no-negative-equity guarantee. This means that when your property is sold, you (or your estate) will never owe more than the sale price, even if the debt has grown larger than the property value. This protection is a key safeguard for borrowers and their families.

There are several variations of lifetime mortgage, each designed to suit different circumstances. The right type for you depends on how and when you want to access your money, and whether you want to manage the growth of your debt.

• Lump sum lifetime mortgage: You receive the full amount upfront as a single payment. This is the simplest option, but interest rolls up on the entire balance from day one. It suits homeowners who need a specific sum for a defined purpose, such as home improvements or paying off an existing mortgage.
• Drawdown lifetime mortgage: You agree a total borrowing facility but only take what you need initially, drawing down more later as required. You only pay interest on the amount actually withdrawn, which can significantly reduce the total cost over time. For a detailed comparison, see our guide to drawdown vs lump sum lifetime mortgages.
• Interest-only lifetime mortgage: You make monthly interest payments (either full or partial) to prevent or slow the growth of your debt. This keeps the balance more manageable and preserves more equity for your estate.
• Enhanced lifetime mortgage: If you have certain health conditions or lifestyle factors (such as smoking, diabetes, or heart disease), some providers offer higher borrowing limits or lower interest rates. These plans are individually underwritten based on your medical history.

The amount you can borrow with a lifetime mortgage depends primarily on your age and the value of your property. Providers use loan-to-value (LTV) tables to calculate the maximum percentage of your home's value you can release, and this percentage increases as you get older.

As a general guide, a homeowner aged 60 might release around 20% to 25% of their property value, while someone aged 75 could release 40% to 50%. For a property worth £300,000, that translates to between £60,000 and £75,000 at age 60, rising to between £120,000 and £150,000 at age 75. At age 85 and above, some providers allow up to 58% LTV.

Health and lifestyle factors can increase your borrowing limit further. If you have conditions such as high blood pressure, diabetes, or a history of smoking, providers offering enhanced plans may allow you to borrow more or offer a lower interest rate. This is because the provider expects the loan to be repaid sooner, reducing their risk.

Most providers set a minimum release amount of around £10,000 and require a minimum property value of £70,000 to £100,000. To get a personalised estimate based on your circumstances, try our equity release calculator.

The cost of a lifetime mortgage is made up of interest charges, setup fees, and ongoing costs. Understanding all of these is essential before you commit.

Interest rates: As of mid-2026, fixed interest rates on lifetime mortgages typically range from 5.5% to 7.5% MER (monthly equivalent rate). The rate you receive depends on your age, property value, loan-to-value ratio, and health. Because most borrowers do not make monthly repayments, interest compounds over time. On a loan of £80,000 at 6% MER, the balance would roughly double to around £160,000 after 12 years. For current rate data, see our guide to lifetime mortgage rates.

Setup costs typically include:

• Arrangement fee: £0 to £1,500 (some providers waive this)
• Property valuation: £300 to £600
• Solicitor fees: £700 to £1,200
• Advisor fee: £1,500 to £2,000 (can be deducted from the released funds)

If you repay your lifetime mortgage early (for example, if you sell your home to downsize), you may face early repayment charges (ERCs). These vary by provider and can be a fixed percentage of the outstanding balance or linked to gilt yields. Some plans offer ERC-free repayment after a set period or under certain conditions, such as moving into care. For a full breakdown, read our guide to equity release costs.

To qualify for a lifetime mortgage, you need to meet several criteria. While exact requirements vary between providers, the general eligibility rules are consistent across the market.

Age: You must be aged 55 or over to apply for most lifetime mortgages. Some providers set a higher minimum age of 60. If you are applying jointly with a partner, the age of the younger applicant is used to calculate the maximum borrowing amount. To understand how age affects your options, read our guide on equity release minimum age and equity release over 55.

Property: Your home must be your primary residence and located in the UK. Most providers require a minimum property value of £70,000 to £100,000. The property must be in reasonable condition, and certain construction types (such as concrete prefab or properties with flat roofs over a large area) may not be accepted. Leasehold properties are usually eligible if the remaining lease is long enough (typically 75 years or more).

Existing mortgage: You can take out a lifetime mortgage if you still have a residential mortgage, but the existing mortgage must be repaid from the equity release funds as a condition of the plan. Many people use lifetime mortgages specifically to pay off their existing mortgage and eliminate monthly repayments.

A lifetime mortgage and a home reversion plan are the two types of equity release, but they work in fundamentally different ways.

With a lifetime mortgage, you borrow money secured against your home and retain full ownership of the property. Interest accrues on the loan over time, and the total debt is repaid when the property is sold. You benefit from any increase in property value, and any equity remaining after the loan is repaid goes to your estate.

With a home reversion plan, you sell all or part of your home to a reversion company in exchange for a lump sum or regular payments. You receive a below-market-value price for the share you sell (typically 20% to 60% of the market value), but you have the right to live in the property rent-free for life. When the property is sold, the reversion company takes their percentage of the sale price.

Lifetime mortgages are far more popular because they allow you to keep full ownership of your home and benefit from rising property values. Home reversion plans may suit some people, particularly older homeowners who want a guaranteed lump sum without interest accruing. For a detailed comparison, see our guide to home reversion plans vs lifetime mortgages.