Lifetime mortgages, explained

The basic deal

You borrow a lump sum against your home. You stay in it, in your name, for life. No monthly payments are required. Interest is added to the loan each month and rolls up. When the last homeowner dies or moves permanently into care, the home is sold and the loan plus interest is repaid; anything left goes to your estate. If the sale does not cover the debt, the no negative equity guarantee means nobody has to make up the difference.

How much you can borrow

It depends mainly on the age of the youngest owner and the value of the home, and a little on your health. Typical maximums run from about 20% to 25% of the value at 55 to around 50% by 80. The full table is here and the calculator gives you a figure in seconds.

Lump sum or drawdown

A lump sum plan gives you all the money on day one and charges interest on all of it from day one. A drawdown plan agrees a total facility, gives you a smaller amount now and lets you take the rest as and when you need it, in chunks of £1,000 or £2,000 or more. Interest is only charged on what you have taken, so drawdown is nearly always cheaper if you do not need all the money at once. Drawdown vs lump sum works through an example.

Paying some, or none, of the interest

You can leave the interest to roll up and pay nothing. Or you can pay some or all of it each month, which stops the debt growing. Nearly all plans now let you make voluntary repayments of up to 10% of the original loan a year with no penalty, and you can stop and start as you like. Some lenders offer a lower rate if you commit to paying interest. This flexibility is the biggest change in the market in the last decade and worth asking about.

The rate

Fixed for life, which is a protection and a cost. Rates in 2026 are typically somewhere between 5.5% and 7%, depending on how much of the home's value you borrow (less is cheaper) and the lender. Quoted rates should be the MER (monthly equivalent rate) or AER; ask which, and ask for the illustration, which is the only document that shows the true cost.

Early repayment charges

If you repay the whole loan early, say because you sell up and do not want to move the plan, there may be an early repayment charge. Some are fixed (for example 10% in the first five years, 5% for the next five, then nothing); some are linked to gilt yields and can be hard to predict. There is no charge on death or moving into care, and usually none if you move house and take the plan with you, or if you repay within three years of your partner dying or going into care. More on early repayment charges.

The end of the plan

Your executors, or you if you are going into care, usually have twelve months to sell the home and repay. The family can also repay from other money and keep the house. What is left after the debt is the inheritance.

A lifetime mortgage can only be arranged through an adviser with a specialist equity release qualification, and you must use your own solicitor. Both are there to make sure you understand exactly this page, applied to your own numbers.

A note on the numbers. Rates, loan-to-value limits, fees and timescales are typical figures at the time of writing (2026) and vary between lenders and with your age, health and property. This is information, not advice. Equity release must be arranged through an FCA-authorised adviser, who will give you a personalised illustration before you commit to anything.