Lump-Sum Lifetime Mortgage

How to Unlock the Hidden Value in Your Home With a Lump-Sum Lifetime Mortgage

Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui

All You Need to Know About Lump-Sum Lifetime Mortgage for Pensioners. Here's How to Choose Best Equity Release Scheme for Your Personal Situation.

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What’s a Lump-Sum Lifetime Mortgage?

A Complete Guide to Lump Sum Lifetime Mortgages in Dec 2021

When you need cash in retirement there are very few available options.

If you require money to fund you for a lifetime, the lump sum lifetime mortgage plan may be your best option.

However, with unscrupulous lenders cropping up every day, you can get yourself cornered especially if you have no clue as to the workings of a lump sum lifetime mortgage.

Lucky for you, here’s an exhaustive guide that will help you understand the benefits, pitfalls, and workings of a lump sum equity release in Dec 2021.

If you don’t think this is your golden key to financial freedom though, be sure to check out the guide on ‘What’s Equity Release’ and figure out which best suits your needs.

What's a Lump Sum Lifetime Mortgage Plan

What’s a Lump Sum Lifetime Mortgage Plan?

A lump sum lifetime mortgage1  is one of the most popular types of equity release that allows homeowners over the age of 55 to unlock a large lump sum of cash against the value of their estate. It’s ideal for those wanting to purchase a big-ticket item or go on a dream vacation.

Not what you’re looking for? Discover: Types of Lifetime Mortgage Schemes

How Does a Lump Sum Lifetime Mortgage Scheme Work

How Does a Lump Sum Lifetime Mortgage Scheme Work?

A lump sum lifetime mortgage scheme works by the homeowner unlocking a tax-free lump sum, while still retaining ownership of their home and staying there for life. The loan, plus fixed compound interest, is then repaid from the sale of the home when the homeowner passes away or enters long-term care.

Interesting read: What’s a Lifetime Mortgage & How Does It Work?

The Benefits of Taking Out a Lump Sum Lifetime Mortgage Plan

What are the Benefits of Taking Out a Lump Sum Lifetime Mortgage Plan?

The main benefit of taking out a lump sum lifetime mortgage plan is that you can gain access to a large amount of tax-free cash.

Here’s more information:

  • If you don’t need a financial product with many add-ons or extra features, then this may be the best solution to your cash needs.
  • Most providers also provide you with lump sum schemes with competitively priced interest rates.5 
  • Since you don’t have to make any financial provisions for future drawdown reserve facilities or regard any month-to-month repayments, your pan provider can pass on these savings by providing you with more reliable equity release deals, including bigger lump sums.
  • These are also perfect if you are looking to control your balance. It serves as the ideal option since it allows beneficiaries to monitor how the parents use the money.
  • This gives you the financial liberty to use the capital as you please.
  • You still retain 100% of your house until the life of the plan ends.

Check out the best rates you can have for a lifetime mortgage!

The Pitfalls to Taking Out a Lump Sum Lifetime Mortgage

What are the Pitfalls to Taking Out a Lump Sum Lifetime Mortgage?

The main pitfall of taking out a lump sum lifetime mortgage is that the interest can quickly accumulate, leaving your heirs with less inheritance. Luckily, the ‘no negative equity guarantee ensure’s that your family will never pay more than the sale value of your estate.

Further pitfalls include:

  • If you need to release more equity, you might need to consider going through another application process
  • It can affect your entitlement to means-tested benefits
How Much Can You Borrow With a Lump Sum Equity Release Plan

How Much Can You Borrow With a Lump Sum Equity Release Plan?

The amount you can borrow with a lump sum mortgage is dependent on the seniority of the youngest homeowner and your estate’s market value. The older you are, the more substantial the amount of tax-free cash you can release.

Try our online lifetime mortgage calculator, and get a better perspective

In Conclusion

Equity release can be one of the most confusing financial products available in Dec 2021. It’s, therefore, essential to research and ensure you carefully understand the terms of the plans before going ahead to take one out.

That said, if you want to know more about lifetime mortgage plans, click below to see how much money you can borrow or talk with one of our experts absolutely free.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
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Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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