Later life mortgages

What is a later life mortgage?

Designed exclusively for customers aged 50 or over, a later life mortgage is a way of borrowing into retirement, securing a loan against your property based on its value while you continue to live there, allowing you to release tax-free cash.

You can borrow money from your home to:

• Pay off an existing mortgage and any early repayment charges
• Help a family member financially. (If you do decide to gift money away, the recipient may need to pay inheritance tax in the future. Find out more at gov.uk/inheritance-tax)
• Pay for things such as: holidays, home improvements, and much more.

A lifetime mortgage is a form of equity release with a fixed for life interest rate. Depending on the type of mortgage that’s right for you, no repayments may be required until you die or move out of your home and go into long-term care. However, if you have the financial means, you can choose to pay all, some, or none of the interest each month. If you do decide to make the full monthly interest payments, the amount you owe will not increase – similar to a regular interest only mortgage. However, if you don’t pay the full monthly interest payments, the amount you owe will increase and reduce any inheritance. It may also affect any means tested benefits.

With a Payment Term Lifetime Mortgage, you must pay the full monthly interest only each month for a chosen payment term which runs until retirement or the age of 75, whichever is sooner, after which you don’t have to make any payments and the amount you owe will increase. A different type of later life mortgage is a Retirement Interest-Only Mortgage, which requires you to pay the interest in full each month for the duration of the mortgage, similar to a regular interest only mortgage. As a last resort, your home may be repossessed if you do not keep up with payments.

With later life mortgages, the loan is usually repaid when the last surviving borrower dies or moves out of the home into long-term care.

Discussing your later life mortgage options

It’s important to receive financial advice to help you make the right decision. Legal & General has its own team of specialist later life mortgage advisers, ensuring it’s the right option for you. If you speak to one of their advisers, there’s no obligation to proceed further.

Alternatively, you can obtain independent financial advice at the MoneyHelper website.