Have you settled on a Lifetime Mortgage but have no idea which provider to opt for? You don’t want to regret this lifelong decision!
With so many different mortgage lenders on the market, it is not easy to know who’s the best in the business. Luckily, we’re here to be your guide.
Through this article, we’ll help you discover:
- A brief introduction to lifetime mortgages.
- The main lifetime mortgage companies in the UK.
- The best lifetime mortgage lenders in 2022
Our team regularly reviews all regulated lifetime mortgage plans to discover who’s offering the best products. Hence, we’re bringing you the most up-to-date information.
Are you wonder who stands out in 2022?
Find out now!
What Is a Lifetime Mortgage?
A lifetime mortgage is when you borrow cash secured against the value of your house, if it’s your primary residence, while still maintaining ownership.
The property is sold when the last borrower passes away or goes into long-term care, and the money from the sale is used to pay off the loan.
There are various plan types available, including:
- Roll-up lifetime mortgages
- Drawdown lifetime mortgages
- Flexible lifetime mortgages
- Enhanced lifetime mortgages
Who Are the Main Lifetime Mortgage Companies in the UK?
The main lifetime mortgage companies in the UK are members of the Equity Release Council,2 with 12 of them being lifetime mortgage lenders.
Furthermore, the Financial Conduct Authority3 has authorised and regulated these lifetime mortgage companies.
What Is the Interest Rate for a Lifetime Mortgage?
Most lifetime mortgage interest rates are fixed for life. The exact rate you achieve will depend on your lender, the amount you borrow, the type of product you select, your age, your property value, and the condition of your health.
The best rates range from 3.1% to 4% AER, although it is not unusual for a plan to be priced at 4-6.8% AER.
Can You Buy a Property With a Flexible Lifetime Mortgage?
Yes, you can purchase a property with a flexible lifetime mortgage. If you sell your current home before moving, you may obtain a flexible lifetime mortgage against the property you are moving to.
This means that the cash that you earn through equity release may be used to supplement your savings and the sale proceeds.
12 Best Lifetime Mortgage Providers
You must be wondering who are the best lifetime mortgage lenders in the UK in Jun 2022. Here’s a comprehensive list!
- Aviva equity release is the country’s leading insurer. Both flexible withdrawal and partial payment plans are accessible.
- You also have the option of Inheritance Protection, which allows you to safeguard a percentage of your estate for your heirs.
- Aviva offers lifetime mortgages that come with Downsizing Protection if you downsize to a property that does not meet the lending criteria.
- When you apply for a lifetime mortgage with Canada Life, you may include a cash reserve facility.
- They have fixed early repayment charges for the first 8 years.
- Canada Life also has the option of an Inheritance Guarantee attached to all their plans.
- Interest Select mortgages let you pay a percentage of the interest for 5 years and the overall mortgage period, with terms ranging from 50% to 100% of the interest each month. After 5 years, Downsizing Protection is available and an ERC Waiver during the first 3 years.
- You get a free valuation with Canada Life’s equity release mortgages.
- Hodge plans come with Downsizing Protection, so you won’t have to pay the penalty if you repay your loan early if you sell your home and relocate.
- All Hodge lifetime mortgages come with a Flexible Repayment Option. Without incurring ERCs, up to 10% of the original loan can be repaid each year.
- Interest rates for drawdown and flexible lump sum plans are between 4% and 4.5%. There is a minimum cash drawdown of £1000 for each withdrawal on flexible lifetime mortgage loans.
- The standard loan-to-value (LTV)4 that you can expect is between 15% and 48%.
- A lifetime mortgage with Just allows you to borrow up to 90% of the property value, with a drawdown cash facility.
- You have the option of paying a minimum of £25 in monthly interest repayments. The maximum is the full monthly interest amount. This will stop or slow down the interest from compounding.
- You can borrow a minimum of £10,000 in equity or £30,000 if you opt for monthly repayments.
Legal & General
- Legal & General offers 2 main types of lifetime mortgage schemes: These are Flexible Lifetime Mortgages and Optional Payment Lifetime Mortgages.
- Both of these plans include the option to borrow more in the future if you do not take the maximum amount at first. However, later withdrawals may have varied interest rates.
- Cashback and Inheritance Protection are both offered as a part of plans by Legal & General.
- Income lifetime mortgages are also available. This is where you receive a lump sum and tax-free monthly income for a specific length of time, usually 10, 15, 20, or 25 years.
- With LV=, you can unlock a minimum of £10,000 in equity.
- With LV=’s Lump Sum Lifetime Mortgages, there’s no guarantee that you can borrow for a second time.
- A maximum of 3x the initial or maximum LTV ( whichever is lower ) is permitted. You can use this cash reserve for 15 years. Each withdrawal must be £2,000 or more.
- You can get 2 free revaluations with the Flexible plan, allowing you to unlock more equity release if your property grows in value.
- More2Life offers the most plan options out of all these lenders. They have 5 categories, namely Prime, Maximum, Tailored, Capital, and Flexi.
- The LTV that you can get will range from 5% to 56%.
- The feathers you have access to will depend on the plan that you select. These can include Downsizing Protection, Repayment Charge Exemption, Inheritance Protection, Partial Repayments, and even cashback.
Nationwide Building Society
- Nationwide’s equity release mortgages come with no product or valuation charges.
- You will receive £1000 cashback when you complete the application process, which can help you pay for advice fees.
- You can repay up to 10% of the loan annually, without incurring early repayment penalties.
- OneFamily’s lifetime mortgages come with the option of fixed or variable interest rates.
- Their products also come with Standard LTV and Super LTV fixed-rate services. Super LTV products are for persons aged 70 and above. They enable you to borrow more money (45-58% loan-to-value) but at a costlier interest rate.
- You’ll have Downsizing Protection after 5 years of your loan.
- Pure Retirement has 2 types of lifetime mortgages called Pure Max Drawdown and Pure Sovereign.
- The Pure Max Drawdown versions have greater LTVs and cash advantages. The maximum LTV of Pure Sovereign plans is lower, as well as the interest rates.
- Pure Retirement sometimes covers your arrangement and legal fees upon completing the application. However, this isn’t always the case.
- Responsible Lending gives you the option of a drawdown or lump sum lifetime mortgage.
- Interest rates are fixed for live and there’s no interest repayments.
- Scottish Widows gives you the option of a drawdown facility that’s available for the first 7 years of your plan.
- There’s downsizing and inheritance protection in place.
- There’s the option of voluntary repayments without being concerned about early repayment charges.
Interest-only lifetime mortgage providers
Not all equity release providers offer interest-only lifetime mortgages. However, the following do:
- Legal & General – Their interest-only lifetime mortgage plans come with a free valuation, zero application fees, and a cashback feature.
- LV= – They also offer a free valuation and no application fees on their plans.
- One Family – Your plan will come with variable interest rates and a free valuation.
- Canada Life – Once again, you can get a plan with a free valuation, no application fee, and cashback.
- Just. – Your plan will come with a 3-year no early repayment charge guarantee.
- Pure Retirement – You can get an interest-only lifetime mortgage with a downsizing repayment charge exemption.
- More2Life – Their Prime Max plan comes with a guaranteed inheritance feature.
A financial adviser will help you select the best lifetime mortgage lender to suit your circumstances.
Furthermore, the adviser will chat with you about the impacts of a lifetime mortgage on your tax position, means-tested benefits, and pension.