Voluntary Repayment Lifetime Mortgage: The Ultimate Guide in 2025
Contributors:
Expert VerifiedSovereignBoss adheres to a stringent code of editorial guidelines, but some articles may feature partner references. Here is an explanation for how we make money.
Key Takeaways...
- A voluntary repayment lifetime mortgage is a type of equity release scheme allowing homeowners aged 55 and over to borrow against their property's value and make voluntary repayments to reduce the total amount owed.
- You borrow a lump sum against your home's value and can make ad-hoc repayments, reducing the interest accumulation and the overall debt.
- The benefits include flexible repayments, less overall debt accumulation, and the ability to remain in your home while accessing it's equity.
- Possible disadvantages include the potential reduction in your estate's value, the impact on your entitlement to means-tested benefits, and the accrued interest may be higher than the growth rate of your property's value.
- To apply, you will need to approach a provider directly or go through a specialist equity release adviser to discuss your needs and navigate the application process.
What if we told you that voluntary repayment lifetime mortgages are an equity release plan that could help you avoid ending up with a significant amount to repay at the end of your equity release plan?
Yes! It is possible!
In This Article, You Will Discover:
After careful consideration, unbiased professional advice, and by checking out this lifetime mortgage manual, you will understand the pros and cons of choosing voluntary repayment mortgages in 2025.
Therefore...
What is a Voluntary Repayment Lifetime Mortgage?
A voluntary repayment lifetime mortgage is a type of equity release scheme that allows you to reduce what is owed at the end of the loan by paying back some of the interest and loan when you have the means to do so.
How Does an Optional Partial Repayment Plan Work?
With a voluntary repayment lifetime mortgage, you have the option to reduce the final loan amount and accrued interest.
You can do this by repaying amounts when you have the means to do so.
It is available for homeowners over 55, with a property value that is at least £70,000.
As with all types of lifetime mortgages, the loan and interest balance is repaid when you pass away or enter long-term care.
What Are the Benefits of a Voluntary Repayment Lifetime Mortgage?
The main benefit of a voluntary repayment lifetime mortgage is that you reduce the amount of equity that is owed from the sale of your home when you pass away or enter long-term care.
By paying interest, you also prevent the amount from compounding.
Repayment Strategies: All the Options
With regular changes occurring in the equity release market and alterations made in how you can manage your future equity release balance, most brokers1 are initiating several repayment strategies.
These include:
#1. Making Interest-Only Repayments
With an interest-only plan, you can effectively maintain a level balance of your loan, thus safeguarding the equity value in your estate and any inheritance you wish to pass on to your beneficiaries.
#2. Utilising the Maximum Repayment Allowance
This allows you to repay not only the interest, but also the capital portion too. If your lender allows, you can choose a 15% voluntary repayment strategy, and get to repay the whole balance within under ten years!*
*This is for indicative purposes only.
#3. Making Irregular Repayments
The fantastic thing about these optional partial repayment schemes is that you are not obliged to make any monthly repayments, and they can be efficiently switched ‘on or off’ as you wish.
If you think this plan is for you and you want to see how much you can release, be sure to use our voluntary repayment estimator to obtain an idea of how ad-hoc repayments could work for you.
How Much Can You Borrow?
The amount you can borrow with a voluntary repayment lifetime mortgage will depend on your age, your property value, and sometimes the condition of the home.
Further criteria may include the annual interest rate and the yearly repayment plan you choose, depending on your lender.
Breaking News
As of 31 March 2022, the Equity Release Council announced that all new lifetime mortgage plans will come with the option of guaranteed repayments.2
Common Questions
What Is a Voluntary Repayment Lifetime Mortgage?
How Does a Voluntary Repayment Lifetime Mortgage Work?
What Are the Benefits of a Voluntary Repayment Lifetime Mortgage?
Are There Disadvantages to a Voluntary Repayment Lifetime Mortgage?
How Can I Apply for a Voluntary Repayment Lifetime Mortgage?
In Conclusion
The voluntary repayment plan can come in handy when you are looking to achieve your financial goals while continuing to live in your home.
If you need more information on lifetime mortgage plans and voluntary repayment lifetime mortgages, it is best to seek financial and legal counsel.