Lifetime Mortgage Lump Sum
Designed to let you release a tax-free sum of money in the form of a loan from your property
What is a Lifetime Mortgage Lump Sum?
Lifetime Mortgage Lump Sum Explained
A lifetime mortgage lump sum is a type of equity release product.
A lifetime mortgage is a mortgage that is secured against your home, and you can receive the money either as a lump sum or release it gradually over time as a drawdown.
A lump sum will provide you with a cash lump sum at the start of the lifetime mortgage. The loan is then repaid once the last homeowner passes away or moves into long-term care.
A Lifetime Mortgage Lump Sum is ideal if you’re looking to release a single cash amount from your property, which can be used to pay for a specific expense such as home improvements or a holiday.
There is no requirement to make regular monthly repayments, the amount borrowed plus the interest, which is charged on the total amount borrowed and the interest already added, is repaid from the money made when the property is sold. This happens when you die, move into long-term care or permanently leave the property.
This is a lifetime mortgage. To understand the features and risks ask for a personalised illustration.
Please note that the information on this page should not be considered as financial advice to take out this product. If you are unsure what’s right for you, please make sure you speak to a financial adviser.
Make an enquiry
To find out if you’re eligible and how much equity you could release from your home, call one of our specialist advisers today.
0800 756 8059
Lines open: 9am to 5pm Monday to Friday
TextDirect: First dial 18001
We may record and/or monitor calls for training and audit purposes.
What does LV= offer for those looking for equity release products?
Though we do offer LV= lifetime mortgage products, we don’t just offer advice on our own products.
We offer impartial, FCA-regulated advice, looking at the whole of the market to find the best solution for your retirement.
How applying for a lifetime mortgage works
How it works
To apply for a lifetime mortgage, it’s best to go through a financial adviser, mainly because lifetime mortgages may not be the best option for you, and there may be alternative products that work better for your circumstances.
If a lifetime mortgage is right for you, here are the steps:
- First, you’ll need to go through regulatory checks with the lender, such as how much you can borrow and any restrictions in place.
- Then, you’ll need to instruct your own independent equity release solicitor and pay their associated fees.
- Your solicitor will explain the detailed terms and conditions of the lifetime mortgage to you.
- Once you’re happy with your terms and conditions, a property surveyor will visit the property to value it and check for any major concerns with the structure.
- Then, the survey will be sent to the lender for approval.
- If all is well with the survey, the lender will release the funds, and your solicitor arrange the transfer of money.
Why choose LV= for Lifetime Mortgage Lump Sum advice?
- We’re a member of the Equity Release Council as a provider. There are just 12 providers in the UK that have signed up to meet the Equity Release Council’s standards and we’re proud to be one of them.
- Our advice is focused on giving you honest advice and finding you a suitable equity release plan from the whole of the market, not just from a few select providers.
- We’re a mutual, so every single decision we make is made in the best interest of our customers, whether that’s for life insurance or equity release.
Advantages & disadvantages of a Lifetime Mortgage Lump Sum
It's a big decision to make, so it's important you make the right choices when thinking about releasing money from your property.
Advantages of a lump sum lifetime mortgage
- Products are available from the age of 55
- The cash you release is tax-free
- You continue to own your home, thereby benefiting from any future increase in its value
- There is no requirement to make monthly repayments although you can get some lifetime mortgages that allow you to make interest-only repayments
- All Equity Release Council-approved products come with a ‘no-negative-equity guarantee’, meaning that your estate will never owe more than what your property is sold for when your lifetime mortgage ends
- Some equity release products will offer an inheritance protection guarantee which can allow you to protect a percentage of your property value to provide a guaranteed inheritance
Potential disadvantages of a lump sum lifetime mortgage
- The size of the lifetime mortgage can build up quickly over time. This is because interest is added to the original loan amount and it continues to roll up as future interest is added on top of this in compound interest
- If you want to increase the amount of equity released beyond the original amount agreed, you will normally have to apply for a further advance, which would not be guaranteed
- The amount that you will leave as an inheritance will be reduced, or may be non-existent unless you have chosen a lifetime mortgage that offers an inheritance protection guarantee
- If you wish to pay off the equity release product early, you may have to pay an early repayment charge. These differ from product to product
- In some cases, the lump sum of money that you release could affect your entitlement to any means-tested benefits that you may receive now or in the future
- Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and may reduce the value of your estate and impact funding long-term care
Try our free equity release calculator
Our equity release calculator allows you to quickly find out how much tax-free cash you could unlock from your home.
Lifetime mortgage lump sum eligibility
Are you eligible?
A lifetime mortgage, and equity release in general, isn't right for everyone. As well as meeting eligibility requirements as a borrower, your home needs to meet certain eligibility requirements too.
You and other borrowers
- To be eligible for equity release, the youngest borrower needs to be at least 55. Some lenders may require you to be over 60.
- You’ll need to have your main residence in the UK, and the home you’re releasing equity from must be your main residence.
- Equity release may affect your means-tested benefits and income tax eligibility.
Your home
- Your home must be in good condition.
- It needs to be of standard construction, although some lenders may accept non-standard construction.
- It needs to be worth at least £100,000 for most lenders.
- Certain property types such as static homes may not be eligible for equity release.
Compounding interest and equity release
How interest works with equity release
Equity release interest doesn’t work like other types of interest, as it’s compounding. Here’s what this means for you:
Say you borrowed £10,000 with a 5% interest rate. At the end of the first year of borrowing, the interest accumulated would be £10,500. In the second year, the 5% would be calculated on the £10,500, so the interest accumulated would be £525. This means that the total amount owed would be £11,025. This repeats itself.
With equity release, the sum borrowed increases over the years you’ve borrowed exponentially.
Alternatives to a Lifetime Mortgage Lump Sum
Lifetime Mortgage Lump Sum Alternatives
Rather than just receiving a one-off lump sum, you have the option to release your cash over time, as and when you need it. As well as lump sum lifetime mortgages, you can also receive cash from a lifetime mortgage drawdown. Learn more about lifetime mortgage drawdowns below.
Financial Advice on equity release
Need help?
We’re here to help, have a commitment-free chat with one of our friendly advisers today.
Lines open: 9am to 5pm Monday to Friday
TextDirect: First dial 18001
We may record and / or monitor calls for training and audit purposes.
FAQs on Lifetime Mortgage Lump Sums
We know you’ve probably got plenty of questions, but here’s some of the most popular ones we get.
What is a lifetime mortgage?
A lifetime mortgage allows you to tap into the equity you've built up in your home over the years and access that money as a loan. Unlike a traditional mortgage where you make monthly payments to pay off the loan over time, with a lifetime mortgage, you don't have to make any monthly payments.
It's a way for older homeowners to get access to cash tied up in their home's value without having a monthly mortgage payment during retirement. The upfront cash can provide income for expenses, home renovations, travel, or anything else.
What happens if I move into long-term care?
If you need to move into long-term care, and don’t have a partner who’s still entitled to live in the property, it will be sold. The amount you borrowed plus interest will be paid back to your equity release provider from the funds raised from the sale of your home.
What fees are involved when taking out a lifetime mortgage?
Just like when you get a traditional mortgage to buy your home, taking out a lifetime mortgage also involves paying some upfront fees. The specific fees can vary quite a bit but could include:
- advice fees,
- solicitors fees,
- arrangement fee,
- valuation fees,
- interest rates,
- early repayment fees.
How will this affect my estate?
A lifetime mortgage lump sum, like all lifetime mortgages, will reduce the value of your estate, meaning your chosen beneficiaries will inherit less when you pass away. Not only that, but it can also affect your eligibility for means-tested benefits and may include early repayment charges.
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