Lump sum
The whole amount is paid out at the beginning. It's straightforward and suits one large need, like paying off a mortgage or funding building work. Interest runs on the full sum from the start.
How does a lifetime mortgage work?
It's a loan secured against your home. The home stays yours, and you carry on living in it as you do now.
This is the most common type of equity release. If you're 55 or over and own your home, it may let you release some of its value without moving. I advise on retirement interest-only (RIO) mortgages as well, where you pay the interest each month. The whole process is set out on our page about how equity release works.
Decision 1
Lump sum or drawdown?
Drawdown
You take a smaller amount at the outset and keep a reserve to draw on later. Interest is only charged on what you've taken, so it can work out cheaper over time if you don't need everything straight away.
Decision 2
Pay the interest, or let it roll up?
Roll-up interest
No monthly payments to make. The interest is added to the loan, which means the amount owed grows fastest with this option, but you have nothing to pay each month.
Paying some or all of the interest
Some plans let you pay part or all of the interest every month, which slows or stops the loan growing. Many make these payments optional, so check the terms. Capital and interest payments are also possible if you wish.
Features that may be available
- Inheritance protection: reserve a share of your home's value for your family. It reduces how much you can borrow.
- Enhanced terms: some lenders offer more if you have certain health or lifestyle conditions.
- Fixed or capped rates: Equity Release Council standards require your rate to be fixed or capped for life.
Points to bear in mind
- The loan can grow quickly if interest isn't paid.
- It can reduce the value of your estate.
- It may affect your entitlement to means-tested benefits.
- Council members offer a no negative equity guarantee, so you'll never owe more than your home is worth.
Is it the right choice? It depends on your age, health, home and what you'd like to leave behind. Sometimes it isn't the right choice, and if it's not right I'll tell you. This page is general information, not advice. I can talk through your options and explain what may suit you, alongside the alternatives to consider.
Not sure yet?
That's what the first conversation is for. It's free, with no obligation.