How Much Can I Borrow on a Lifetime Mortgage in 2024? (+ Free Calculator)
The maximum percentage of lending on a lifetime mortgage has changed significantly in 2024 due to the launch of a new interest only lifetime mortgage.
Request a free review with our experts at Later Life Finance.
Updated February 2024 -Author Paul Murphy
Later Life Finance Limited.
Table of Contents
How much can I borrow with a lifetime mortgage?
If you’re considering releasing some of the equity in your home, knowing how much money you can borrow with a lifetime mortgage broker is one important factor, but understanding the most cost effective way to arrange the plan is equally important.
For example, a drawdown lifetime mortgage can provide a much more economical method of accessing equity than a lump sum plan.
Arranging voluntary repayments based on your preferred budget can not only transform your finances, it can help preserve more equity for the future.
Arranging a lifetime mortgage is a big step, which takes careful research and planning to ensure the selected route is suitable both in the current the longer-term when calculating how much equity you can release from your home.
The old adage fail to plan, plan to fail is especially relevant when dealing with financial services, and lifetime mortgages.
Dealing with genuine experts will help avoid pitfalls later down the line.
Fully understanding the pros and cons of each option in order to make a balanced decision is one of the most important parts of the process when considering who the best equity release provider is for your requirements.
The old adage fail to plan, plan to fail is especially relevant when dealing with financial services, and lifetime mortgages.
Dealing with genuine experts will help avoid pitfalls later down the line.
What's the lifetime mortgage maximum percentage available?
The maximum percentage of lending on a lifetime mortgage has changed significantly in 2024 due to the launch of a new interest only lifetime mortgage.
From the minimum qualifying age 50, you could release around 55%, subject to your income.
For voluntary repayment lifetime mortgages (which make up the majority of the market), income is not taken into consideration.
From age 55 you could release around 22%, and this increases each year by 1% up to around 55% at age 90.
For example, a 60 year old could release around 37%, a 70 year old could release around 40%, and an 80 year old could release around 50%.
The best equity release mortgages for your needs depends on your current and longer term goals, such as early repayment if downsizing, for example.
Our later life finance calculator provides the key figures to get started with, and we also provide a free review of all your options to compare the whole equity release market.
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What are the typical percentages available with equity release?
Lifetime mortgage calculator: How much equity can you borrow on a lifetime mortgage?
How much you can borrow on a lifetime mortgage depends on various factors, such as property type and health.
Our lifetime mortgage calculator is free and provides instant results. As experts in Later Life Mortgages and equity release, later life finance are well positioned to answer this and all your other questions.
You may be wondering if lifetime mortgages are a good idea and if they are suitable for your needs.
To compare the top 10 equity release companies, we have reviewed and listed the best providers to help you compare your options, including lender features, such as downsizing protection, voluntary repayments and more.
How much equity can i release from my home, and what can you borrow the cash for?
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- Lifetime mortgages allow homeowners over 55 to borrow against your home with the option to make voluntary repayments to preserve more of your equity. (Payments are optional).
- No income or affordability checks to qualify, and takes around 8 weeks to arrange a lifetime mortgage. We have access to the best UK equity release companies to help the process run smoothly with expertise and service.
- The money is repaid at the end of your lifetime from the sale of your home.
- To check your eligibility and how much equity you can release, try our free equity release calculator
- Borrow between 20% and 50% of your home’s value, depending on age; enhanced mortgages available for those health problems.
- Negative equity guarantee for Equity Release Council members, which ensures you and your estate are fully protected. Martin Lewis mentions this when recommending how to safely choose a lifetime mortgage provider.
- Possible to move home and take the lifetime mortgage if moving to a suitable property
- Drawdown plans available to stage the borrowing over the coming years, providing more flexibility
- Get professional advice to understand if a lifetime mortgage is suitable.
What percentage can you borrow on equity release?
The percentage of your home’s value you can borrow using a lifetime mortgage is based on the youngest homeowner’s age and is usually between 20% and 55%.
For example, a single homeowner aged 55 could release up to 55%.
Mortgages for older borrowers include lifetime and retirement interest only schemes, and provide a greater range of solutions for older homeowners.
Later Life Finance provide advice on all equity release schemes to help you understand all your options when understanding how much equity you can release from your home.
If you’ve already arranged an equity release plan, you may be considering whether you can borrow more on a lifetime mortgage. Our lifetime mortgage calculator requires no personal details.
It’s possible to arrange additional funds via a drawdown facility or a further advance. If you have used your drawdown facility and need a further advance, contact us for help and we will explore this for you.
Lenders typically assess the value of your property through a professional surveyor appointed by them.
How does a lifetime mortgage work?
What is a lifetime mortgage and how does it work?
By allowing homeowners to borrow a portion of their property’s value, with interest accruing over time and repaid upon death or moving into long-term care.
If no voluntary repayments are made, the compounding interest can grow rapidly, so it’s essential to be aware of the total amount that will need to be repaid in the future.
Using an equity release compound interest calculator lets uk homeowners decide whether a lifetime mortgage is a suitable option to consider.
Later Life Finance provide detailed compound interest projections based on any repayments you plan to make.
Drawdown lifetime mortgages allow you to stage the borrowing over a longer timeframe which reduces the amount of interest charged on the money borrowed.
How long does a lifetime mortgage take to arrange?
The most popular reasons for using lifetime mortgages in 2023
How do you calculate a lifetime mortgage?
How to calculate a lifetime mortgage, and what is the maximum loan to value of cash available?
There are a few factors that affect how much equity you could release from your home with a lifetime mortgage.
It’s important to remember each lender has different criteria.
As a guide, the following information is used to calculate how much money you could release.
The factors used to calculate this are:
- Your age (or the age of the youngest person if you own the property jointly)
- The type of home you own (house/flat)
- Your home’s valuation (lenders carry out a valuation)
- Your health and lifestyle
- Whether you have a leasehold on the property
- How you arrange your lifetime mortgage (as one cash lump sum, or a lump sum with a cash reserve facility)
- Choosing a lenders inheritance guarantee to leave a set percentage of your home’s value behind
Get your free lifetime mortgage calculation...
Do you pay monthly for a lifetime mortgage?
You don’t have to make any regular payments with a lifetime mortgage.
You are entitled to make regular voluntary repayments to maintain control of the interest.
For example, if you want to avoid compound interest accruing, you could pay the interest back each month.
If you choose to do this, there will be no compound interest applied, so long as you continue to make these payments.
Can you be refused a lifetime mortgage?
What are the different types of lifetime mortgages?
When must the lifetime mortgage be repaid?
Who offers the best lifetime mortgage?
- LV=
- Legal and General
- LiveMore
- More2Life
- OneFamily
- Pure Retirement
- Scottish Widows
- Standard Life.
- Royal London
- Canada Life
- Aviva
- Just
Is there a credit check for a lifetime mortgage?
As part of the application process for a lifetime mortgage, the lender may check your credit report.
Since lifetime mortgages do not have mandatory repayments, any missed payments on credit are not necessarily an issue for lending.
If you have any defaults or CCJ’s on your credit agreements, the lender may require these to be settled.
Any secured lending must be settled as part of the agreement as a lifetime mortgage is the first legal charge on the property.
Book a free, no obligation discovery call with our expert advisers
Can I get a lifetime mortgage?
How do you qualify for a lifetime mortgage? Lets look at the criteria:
Age: A common question is what is a lifetime mortgage for the over 60s. Most lifetime mortgage providers require borrowers to be aged 55 as a minimum.
Property Ownership: You must own a property, which will serve as the security for the lifetime mortgage company
Property Value: The value of your property and the age of the younger homeowner will be a key factor in determining how much you can borrow.
Property Type: Different lenders have varying criteria regarding the types of properties they accept, standard construction residential houses or flats are acceptable.
Outstanding Mortgage: If you have an existing mortgage on the property, you need to repay it. You can use the funds from the lifetime mortgage to clear the existing mortgage on completion.
Health and Lifestyle: Some lenders offer enhanced lifetime mortgages for individuals with certain health conditions or lifestyle factors that may impact life expectancy.
Independent Financial Advice: It is essential to seek advice from an independent financial advisor who specialises in equity release and lifetime mortgages. Later Life Finance assess your specific circumstances and guide you on whether a lifetime mortgage is a suitable option for your needs.
What are the pitfalls of a lifetime mortgage?
What are the pitfalls of a lifetime mortgage to consider?
- A lifetime mortgage (unlike a regular mortgage) charges compound interest. This means If you don’t choose to repay the interest at regular intervals, the sum will compound and grow. This means at around 5 per cent interest, the amount you owe would double every 15 years due to the compound interest
- Means tested benefits- It’s crucial to check entitlement to any means tested benefits as these can be affected by having cash raised from a lifetime mortgage
- Inheritance-The amount you leave your beneficiaries will be reduced. This depends on whether you make voluntary repayments or not, and whether you take the cash as a large lump sum or drawdown payments.
What factors impact how much I can release?
Not only age and property value are taken into consideration with lifetime mortgage borrowing percentages, other options, such as medically enhanced plans are also available.
These factors include
Your health
if you have any underlying medical conditions and are a smoker, you may qualify for a higher loan to value with medically enhanced equity release plans.
This means you may qualify for a higher percentage due to the reduced life expectancy criteria if you release equity. The more serious the medical condition is, the higher the level of borrowing available to you.
Lifetime mortgage lenders offering medically enhanced plans may offer someone with serious health issues an additional percentage of lending based on their health conditions.
The location of your home
Some lifetime mortgage lenders may offer a higher loan to value on freehold houses rather than leasehold flats, and the property must be of standard construction.
We arrange equity release plans throughout the United Kingdom.
Homeowners in England and Wales have access to all equity release plans available.
If you live in Scotland, there may be a reduction in the range of plans available to you.
There are currently only two lenders who lend on properties in Northern Ireland.
The construction of your home
Your home provides the lifetime mortgage lender with the security for the equity release mortgage to be loaned against it.
The sale proceeds of the property will be the vehicle used to repay the loan in the future, therefore the lender is concerned with the property being safe security for the lending,
The valuation at application stage is carried out to verify the construction type and whether there are any underlying issues such as structural movement.
The construction of your property must be ‘standard construction’ such as brick or poured concrete with a tiled, pitched roof.
Period timber frame properties are considered, along with thatched roof properties and grade 2 listed properties. If you are unsure and need advice, please get in touch for further assistance.
The condition of your home
This is important to the lender as they want to be certain your property will sell to repay the equity plus interest when the plan is repaid at the end of your lifetime.
The lender instructs a valuation at the outset, and part of the surveyors checks are to ensure the property is in good condition and repair.
Joint or single application
Some lenders may offer slightly less for joint applications however if you do have a spouse or partner living at the property, a joint scheme would be logical for long term security in your home, as the equity is only due repayable when the last owner has passed away or gone into long term care.
Lender fees
Most lenders provide a free survey meaning you will not be required to pay a valuation fee in most cases with a lifetime mortgage, unless you are applying for a further advance (which is when you are borrowing on an existing mortgage).
With some equity release lifetime mortgage plans an arrangement fee may apply with the lender. This may be applied with the option to secure a more competitive interest rate.
You are not required to pay the arrangement fee up-front. Most lenders allow you to either deduct the arrangement fee from the loan amount or add it, however if you add this you will be charged interest, therefore it is sensible to deduct the fee to avoid additional interest costs.
Equity Release plans with cash back
Some equity release plans may offer a cash-back. The cash does not attract any interest as it is not added to the mortgage.
Certain lenders offer you a fixed sum regardless of your release amount, and some lenders provide you with a percentage of the amount released. For example, 2% or even 5% extra.
Our calculator provides an estimated lender percentage. Complete for a guide and we will discuss your individual circumstances, priorities and longer term objectives to understand your requirements.
Joint or single applications
The maximum equity release available is based on the age of the youngest applicant. Some lenders offer lower percentages for joint applications compared to single applications.
However a married couple would in most circumstances be better to apply on a joint basis. This is because the plan is only due repayable on last death, or going into long term care.
Circumstances where a single basis lifetime mortgages may be required for a married couple:
Where the spouse’s primary residence is a different property;
Where the youngest applicant is below the age of 55 (the minimum age for equity release plans);
When one spouse is older, and you wish to apply in one name to obtain more money or a lower interest rate, however for the purposes of long term security this option is not preferable. (On sole application basis anyone else residing in the property would need to vacate it in order for the equity release to be repaid when it is due for settlement).
Lifetime mortgage schemes and options
The range of options has diversified over the recent years with lenders offering more flexible plans.
Downsizing Protection
Your future plans may change, any plan features need to match your requirements for flexibility.
For a homeowner couple, for example, one of you may wish to downsize if one of you passed away, or whilst you are both still able to do so.
Certain lenders provide ‘downsizing protection’ for this level of flexibility, which avoids an early repayment charge being applied.
Lodgers
All equity release lenders allow other people living with you.
If you have a tenancy agreement in place this may limit the number of plans available to you.
Some lenders insist on a waiver of occupancy form being signed to waive any legal rights and protect your interests, and theirs.
Making Voluntary Payments
If you choose to make repayments, this will help reduce the effect of the interest on the equity borrowed. Most plans allow interest payments to be made to help reduce the interest accruing.
There are various plan features to explore which can be discussed to help you decide which solution is your ‘best fit’. The benefit of having such a wide range of plans available provides you with flexibility for the future.
The type of property. House, flat or bungalow?
Summary
Our free equity release calculator provides instant results. In order to provide you with an accurate calculation your age and estimated property value are required.
Any personal details provided are confidential and not shared with third parties.
Our expert equity release advisers will provide detailed interest projections and illustrations for your consideration.
Your adviser will check if an equity release product is suitable and explain how much equity you are eligible for and compare the market to ensure you secure the best solution.
They will also explain how the lifetime mortgage interest may affect the remaining equity in your home and they should recommend you discuss your plans with any family members, if appropriate.
To find out how much equity you can borrow with a lifetime mortgage, request a call back for a detailed illustration.