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lifetime mortgage

Best Lifetime Mortgage Rates 2019

I’m sure you will agree that when it comes to better understanding how equity release works, and in particular a lifetime mortgage and what the the best lifetime mortgage rates are in 2019, it can get confusing.   This is why we are here to help you.

The key topics in this guide will help explain it all to you in a very straightforward way.  In this guide you will find:

– What a lifetime mortgage is and how it works

– The best lifetime mortgage rates and lifetime mortgage providers

– The pros and drawbacks of a lifetime mortgage  

– Where you can get lifetime mortgage advice

– Questions you should ask an advisor when you speak to them

Some background to a lifetime mortgage

Equity release schemes are rapidly growing in prevalence in the UK and overseas – and with good reason.

Here is a short video that explains what equity release is.

As more and more people are unfortunately finding they have left it too late to prepare for the cost of care, equity release is understandably becoming an increasingly popular option.  The two most popular options are lifetime mortgages or home reversion plans.

Equity release schemes provide instant access to funds that can be used to pay for care in the short or long term. But as the needs of customers continue to diversify, new products emerge on the market to meet them.

In this informative guide we explain the two broader categories most equity release schemes fall into, and share the benefits and drawbacks of each to help you to make the right decision depending on your individual situation and needs. For more information on how equity release works, please refer to our comprehensive guide here.

Here is a short video on how Lifetime Mortgages work.

Best lifetime mortgage interest rates 2019 – Lifetime mortgage reviews below

Equity Release ProviderRateKey Feature
Legal General 2.9%Cashback & free valuation
Pure Retirement2.99%10%pa Partial Repayment Option
More 2 Life3%Downsizing Repayment Charge Exemption
Legal & General 3%Cashback & free valuation
Aviva3.4%3-year No Early Repayment Charge

Below we have a high-level lifetime mortgage review of some of thee best rates and providers out there.

The interest rate that you will get will typically depend on the amount of loan to value (LTV) you are taking.

However, typically you would see rates starting around 3% going up to about 7%.  As you can see, the range of lifetime mortgage rates that you can get are very wide.  That is why we strongly recommend that you speak to a specialist to help you find the most competitive rate.

Here are the best lifetime mortgage interest rates available in 2019.  However, the rates can change daily so you should ring the number below for the most up to date information.

All the providers below are also regulated by the financial conduct authority

1 – The best lifetime mortgage rate

Provider – Legal & General 

Annual interest rate (AER) – 2.9% – A lower rate may be available 

Amount you can borrow – £20,000 to £500,000 as a cash payment.  

Offers available with this deal

  • Cashback
  • Free Valuation
  • Free Application
  • Legal Fees Contribution
  • Inheritance Protection Guarantee
  • 3-year No Early Repayment Charge

What to do next if you want to know more

Do it onlineClick here to use the equity release calculator to see how much this deal will cost you.

Speak to someone – Call 0800 4640 806 to speak to an equity release specialist and see if you are entitled to a lower equity release interest rate.

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2nd best lifetime mortgage rate

Provider – Pure Retirement

Annual interest rate (AER) – 2.99%

Amount you can borrow – £250,000 to £2,000,000 as a cash lump sum payment.  

Offers available with this deal

  • Free Valuation
  • Free Application
  • 10%pa Partial Repayment Option
  • Fixed Early Repayment Charges
  • Downsizing Repayment Charge Exemption

What to do next if you want to know more

Do it onlineClick here to use the equity release calculator to see how much this deal will cost you.

Speak to someone – Call 0800 4640 806 to speak to an equity release specialist and see if you are entitled to a lower equity release interest rate.

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3rd best lifetime mortgage rate

Provider – More 2 Life

Annual rate (AER) – 3%

Amount you can borrow – £250,000 to £2,000,000 as a cash payment.  

Offers available with this deal

  • Free Valuation
  • Free Application
  • 10%pa Partial Repayments Option
  • Fixed Early Repayment Charges
  • Downsizing Repayment Charge Exemption

What to do next if you want to know more

Do it onlineClick here to use the equity release calculator to see how much this deal will cost you.

Speak to someone – Call 0800 4640 806 to speak to an equity release specialist and see if you are entitled to a lower equity release interest rate.

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4th best lifetime mortgage rate

Provider – Legal & General

Annual interest rate (AER) – 3% – A lower rate may be available 

Amount you can borrow – £20,000 to £500,000 as a cash payment.  

Offers available with this deal

  • Cashback
  • Free Valuation
  • Free Application
  • Legal Fees Contribution
  • Inheritance Protection Guarantee
  • 3-year No Early Repayment Charge

What to do next if you want to know more

Do it onlineClick here to use the equity release calculator to see how much this deal will cost you.

Speak to someone – Call 0800 4640 806 to speak to an equity release specialist and see if you are entitled to a lower equity release interest rate.

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5th best lifetime mortgage rate

Provider – Aviva

Annual rate (AER) – 3.40% – A lower rate may be available.

Amount you can borrow – £10,000 to £750,000 as a cash payment.  

Offers available with this deal

  • Cashback
  • Free Valuation
  • Reduced Application Fee is available
  • Inheritance Guarantee
  • 10%pa Voluntary Partial Repayments
  • 3-year No Early Repayment Charge**
  • Bespoke Interest Rates available

What to do next if you want to know more

Do it onlineClick here to use the equity release calculator to see how much this deal will cost you.

Speak to someone – Call 0800 4640 806 to speak to an equity release specialist and see if you are entitled to a lower equity release interest rate.

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How much can you borrow from a Lifetime Mortgage?

You can click the calculator below to get an instant idea as to how much money you can get tax free from the value of your home.  Give it a go as it can often be more than you think!

Speak to an equity release specialist about lifetime mortgages

To help our site users you can have a free consultation with an equity release specialist to help you better understand how it works and what your options might be.

To do so you can book an appointment directly using the calendar below.  Just pick your preferred time and date and someone will call you to help.

 


How does a lifetime mortgage work?

Here is a useful video that explains how a lifetime mortgage works.

The most popular type of equity release scheme is known as a lifetime mortgage.

This is the most popular type of equity release scheme, as it’s the most flexible and versatile option.

It’s easiest to think of a lifetime mortgage as a kind of long-term loan, secured against the value of your property.

The difference with this compared with regular mortgages or loans is that although interest is added by the lifetime mortgage providers (usually on a yearly basis), no repayments are due until the termination of the contract – which usually occurs upon death or the sale of the property.

As with all investment options, there are benefits and drawbacks to consider if you are thinking about approaching lifetime mortgage providers. 

What are the advantages of a lifetime mortgage?

Retaining ownership of your property

In the event that you wish to keep it in the family, sell early should circumstances change, or plan on yourself or family members continuing to live there indefinitely.

Freedom to use your money

The money borrowed can be spent (or reinvested) however you choose, giving you freedom and flexibility.

Negative equity guarantee

Many lifetime mortgage providers offer a ‘negative equity guarantee’, ensuring that you won’t have to pay back more than you received when you eventually come to sell your property.

Inheritance planning

Some also allow you to portion and protect a percentage of the property’s value to gift as inheritance, or make partial repayments early should your circumstances change.

Partial repayments

some lifetime mortgages will allow you to repay some of the money that you have borrowed.  This will help increase the amount that may be available to your family when you pass on.

Here is a short video that explains what the advantages and disadvantages of Lifetime Mortgages are.

What are the disadvantages and cons of a lifetime mortgage?

Reduces your inheritance

Equity release schemes and lifetime mortgages in particular are likely to reduce the amount of inheritance you’re able to gift to family members and friends. However this is less of a concern if the cost of imminent care needs is likely to reduce the amount you can leave when you pass away.

Impact on benefits and tax position

A lifetime mortgage can affect your entitlement to certain state benefit payments as well as your tax position – so it’s worth obtaining a clear picture of how enrolling on a scheme could affect your income situation before making a decision.

Accruing interest

Lifetime mortgages accrue interest – both on the mortgage itself and the interest added each year.

This significantly increases the amount you’ll have to repay later down the line. (Interest only lifetime mortgages can be taken out to alleviate this – as detailed below.)

Repayment

You may need permission or be forced to make repayment early should you decide to rent out your property or sell it before the agreed period of time has lapsed.

This can become rather complicated if you do change your mind or find that your circumstances change.

What are the different types of lifetime mortgages?

Primarily, there are two different types of mortgages that you choose between:

– An interest roll-up mortgage

This is where you get a lump sum at the start or you are paid a regular amount over a period of time.  You are then charged interest on the amount that is borrowed and this amount is then added to the loan. The effect of this is that you don’t have to make any regular repayments back to the mortgage provider.

The amount that you initially borrowed plus the rolled-up interest is repaid at the end of your mortgage term when your home is sold.

– An interest-paying mortgage

This is where you get a lump sum and make either monthly or ad-hoc payments to cover the cost of the interest on the amount borrowed. This reduces, or stops, the impact of interest rolling-up. In addition, some mortgages also allow you to pay off the capital.

The amount you borrowed is repaid when your home is sold at the end of your mortgage term.

Lifetime Mortgage Providers

The market for lifetime mortgage providers is not as large as your typical mortgage market.  This is because there is much more demand for conventional mortgages which means that the number of providers for lifetime mortgages is much smaller.   However, the larger providers in the market are:

  • Legal & General
  • Aviva
  • Hodge lifetime
  • One Family
  • More 2 Life

Because the market for equity release mortgages is much smaller, we can not stress enough the importance of speaking to an advisor.  You can either leave your contact details below or ring 0800 4640 806 and speak to a specialist that can help you understand the best available options for you.

lifetime mortgage providers

Alternative to lifetime mortgage

A range of alternatives to lifetime mortgage products are available – further increasing the potential for complications and confusion as you make your decision.

Each has benefits and drawbacks of its own – but many have been developed to circumvent or alleviate problems that have been run into by traditional standalone policies.

One such example is the ‘interest only lifetime mortgage’ – which prevents the need for a huge repayment inclusive of interest on termination of the contract through low monthly repayments which cover interest accrued.

An interest only lifetime mortgage also helps homeowners to protect a greater portion of their property for inheritance purposes. Another type of equity release scheme, known as a ‘home reversion plan has additional benefits for those looking to remain living in their property long-term.

What does a lifetime mortgage cost?

Like with many financial products, there are often costs involved with setting up a mortgage product.  In addition, there may also be other insurances and products that you need to purchase as part of your agreement to get the mortgage.

In our experience, these additional costs typically add up to somewhere between £1,000 to £4,000.

However, the price often depends on the amount you are looking to borrow.

Typically, the following costs may apply:

  • Buildings Insurance.  You may want to also take this alongside your contents insurance.
  • Solicitor and legal costs
  • Home valuation fees
  • An arrangement fee to the lender for the product.  These can vary greatly and an advisor can tell you what these are.  You can call 0800 4640 806 to speak to a specialist and find out what the current arrangement fees typically are.
  • A completion fee.  You normally have two options with this.  You can either pay this as a lump sum when your mortgage is set up or you can add it to the amount that you have borrowed.

You should note, however, that if you do look to pay off your mortgage earlier then the terms you originally signed up for, then you may be liable to pay an ‘early repayment charge.

Why is a lifetime mortgage a popular choice?

When the opportunity to put aside money to pay for care in the future has passed, the range of options for investments that don’t affect quality of life and inheritance begin to narrow. Therefore equity release has become one of the most viable and attractive ways to fund care – and with good reason.

Equity release schemes enable you to retain ownership of your home and in most cases continue to live there.

Some people won’t be eligible for certain types of equity release schemes – or it may not be a suitable option at all.

For example, you may prefer to sell your property and move to sheltered accommodation, using the funds raised from downsizing to pay for additional care needs.

Your property may be held in trust.

If you are still paying the original mortgage on your home it will need to be paid off in full before you can apply for an equity release scheme. To discover more about equity release schemes and decide whether this may be a viable option for you, take a look at our handy guide here.

What is a ‘no-negative equity guarantee’?no-negative equity guarantee

The Equity Release Council are the industry body for the equity release industry in the UK.  Any equity release plans that they approve have a no-negative equity guarantee’.

In essence what this means is that you will never owe more than what the house is worth when you use a lifetime mortgage.

This is really important, because in the main, people don’t repay the loan until the property is sold, which happens when you either pass on or move in to a care home.

When this happens, the provider that you took the lifetime mortgage out with will calculate how much is owed from the point you took out the loan up until the point a repayment is due.   They do this by adding on all the interest owed in the intervening years.

What happens if I owe more than my home is worth?

If the calculation from the mortgage provider shows that you owe more than your home is worth when it’s sold on the open market, the mortgage provider isn’t able to try and get any more money from your estate.  This is where the ‘no-negative equity guarantee’ kicks in.

In this circumstance, when the property is sold, the entire proceeds of the sale will be paid across to the mortgage lender.   Clearly, this also means that you will have nothing left to pass on to your family.

If you’re worried about the interest on Equity Release Mortgages, and want to guarantee that you have something to pass on to your family, you always have the option to not ‘roll up’ the interest.

This means that you can look to structure your loan like an interest-only mortgage, and opt to make interest payments throughout the life of the loan.  This allows you to keep the outstanding balance fixed rather than seeing it escalate with the interest amount rolled up.

Lifetime mortgage advice – where can I get it?

It is essential that you use a specialist to secure an equity release scheme.   They will ensure that your interests are always protected and also ensure that you don’t waste thousands of pounds on a bad deal.

There are two options for you to consider when looking for lifetime mortgage advice.

Option 1 – Find an advisor in our directory of equity release specialists

We have created a directory of advisors that specialise in helping people find the right equity release provider.  The directory has advisors listed from all over the country.   You can access the equity release advisor directory here.

Option 2 – Let us, the UK Care Guide, find an advisor for you

If you do not feel confident in choosing an advisor, you can leave your details below, and we will find an advisor for you.   We do not charge for this service and it is absolutely free.

Here is a video from Martin Lewis on ‘This Morning’ explaining why you should speak to a specialist before taking on an equity release plan.

The benefits of speaking to an equity release specialist

As well as the video above where Martin Lewis talks about why you should speak to an advisor before taking out an equity release scheme, we recommend you watch this really useful video from the government’s Money Advice Service where individual’s talk about the benefits of taking independent financial advice.

Questions to ask your adviser when discussing a lifetime mortgage

Many people that are looking to take out a lifetime mortgage will be doing so for the first time.  This is why we have set out some questions you should ask when you do speak to someone.

  • What happens if you decide to move home?
  • What happens to the mortgage if you pass away soon after taking out the mortgage?
  • If you do take money out of your hose, what impact could that have on any benefits that you receive?
  • If you feel that you may want to repay some of your loan early, make this clear to your advisor and ask what rates each of the shortlisted provider will charge you to repay the loan early
  • If you intend to use some of the money to modify for your home, to make life easier, ask if you can also apply for any local or national grants to fund the cost?
  • Ask that there is a ‘no-negative equity guarantee.   This is where you end up owing more than your house is worth.  You can read more about this below.

Speak to an equity release specialist about lifetime mortgages

To help our site users you can have a free consultation with an equity release specialist to help you better understand how it works and what your options might be.

To do so you can book an appointment directly using the calendar below.  Just pick your preferred time and date and someone will call you to help.