Want to borrow in later life? Consider a Lifetime Mortgage

You may pay more interest

With a roll-up set up, the interest on your Lifetime Mortgage is added to your mortgage loan each year. This means that each year, your annual interest bill gets more expensive because it's calculated on the original loan, plus the interest rolled over from all the previous years. This can result in the size of your debt eating into your equity and reducing the amount you can pass on to loved ones when you die.

If you repay your loan, you may be charged

Because Lifetime Mortgages are designed to be taken out for life, if you repay your loan before you die you'l be charged a penalty - although some deals allow you to make overpayments in certain circumstances.

Your interest rate may be higher

Lifetime Mortgages can have higher interest rates than Retirement Interest-Only mortgages, standard interest-only or repayment loans, resulting in you paying more interest overall. However, there are some products which allow you to fix your mortgage rate for life, which can be a good way to keep your rate consistent, even if market rates fluctuate.

Your home’s value needs to be sufficient

Providers can have minimum property value requirements to ensure that your home provides adequate security for the mortgage. If your home does not meet these requirements, you may not be able to get a Lifetime Mortgage.

The loan balance remains

Because you only pay back the interest each month, the full repayment of the loan is deferred until you move into long-term care or pass away. If you become concerned about repaying the full loan, get in touch with your lender. There are ways to reduce the loan size, such as paying off some of the debt using savings or investments.

Your estate will be less

As you are sacrificing some of your future estate, if you don't repay this yourself and it’s repaid when you die or move into long-term care, this will reduce any inheritance you can leave to your loved ones.