Lifetime mortgages are a type of equity release scheme that can help homeowners create an income for their retirement.

The income will be received by the borrower as either a lump sum payment, a drawdown facility, or a regular income stream.

Lifetime Mortgages are secured against the equity in the borrower’s home and the amount that can be borrowed will depend on the age of the applicant and the value of their property.

Interest is charged on lifetime mortgages, but instead of being paid by the borrower on a monthly basis, it is “rolled up” for the entire duration of the loan and repaid when the property is eventually sold or vacated.

Taking out a lifetime mortgage is a serious commitment and costly charges may apply if the Mortgage is redeemed early.

Equity release schemes can also affect the amount of state benefits the customer may be entitled to receive and can also have Inheritance Tax (IHT) implications.

Because of this, it is recommended that potential applicants seek professional advice from an IFA before applying entering into an equity release scheme.