All lifetime mortgages that we recommend meet the Equity Release Council Standards and afford you extra protection.
How do you calculate how much you can borrow with lifetime mortgages?
To calculate the maximum loan available on a lifetime mortgage, you require the age of the youngest homeowner and the property value. Lifetime mortgages start from age 55 when you can release a maximum of 23.5% of your property's value. On average, on each birthday, you can release an extra 1%, up to a maximum of 55%.
In this guide, you will learn:
You will typically be able to release between 23.5% and 55% of the market value of your home.
The age of the youngest homeowner significantly impacts the maximum percentage you can borrow with a lifetime mortgage. The age provides us with a Loan To Value (LTV), which is the maximum percentage the lifetime mortgage lender could lend on a property.
This is very different to residential mortgages, with the maximum available dependant on your income. With a lifetime mortgage the lender does not consider your income or affordability with the lifetime mortgage as there are no mandatory payments to make.
What is the maximum percentage you can achieve with a lifetime mortgage by age:
| Age of youngest homeowner |
Maximum percentage of property value which can be released (LTV) with a lifetime mortgage |
| Standard terms |
Medically enhanced |
| 55 |
23.5% |
27.3% |
| 56 |
24.5% |
28.2% |
| 57 |
25.5% |
29.3% |
| 58 |
26.5% |
30.2% |
| 59 |
27.5% |
31.3% |
| 60 |
29.7% |
34.1% |
| 61 |
31.3% |
35.7% |
| 62 |
32.2% |
36.6% |
| 63 |
33.2% |
37.3% |
| 64 |
34.2% |
38.1% |
| 65 |
35.2% |
39.3% |
| 66 |
36.2% |
40.6% |
| 67 |
36.7% |
41.5% |
| 68 |
37.7% |
42.5% |
| 69 |
38.7% |
43.1% |
| 70 |
40.0% |
43.8% |
| 71 |
41.3% |
45.2% |
| 72 |
42.5% |
46.3% |
| 73 |
43.6% |
47.5% |
| 74 |
44.7% |
48.6% |
| 75 |
46.0% |
49.1% |
| 76 |
47.0% |
49.3% |
| 77 |
48.1% |
50.5% |
| 78 |
49.0% |
50.6% |
| 79 |
49.6% |
51.0% |
| 80 |
50.5% |
51.5% |
| 81 |
50.5% |
51.5% |
| 82 |
50.5% |
51.5% |
| 83 |
51.3% |
51.5% |
| 84 |
52.0% |
51.5% |
| 85 |
50.5% |
51.5% |
| 86 |
51.0% |
46.4% |
| 87 |
52.0% |
46.4% |
| 88 |
53.0% |
46.4% |
| 89 |
54.0% |
46.4% |
| 90 |
55.0% |
46.4% |
| 91 |
55.0% |
46.4% |
| 92 |
55.0% |
46.4% |
| 93 |
55.0% |
46.4% |
| 94 |
55.0% |
46.4% |
| 95 |
55.0% |
46.4% |
| 96 |
43.0% |
46.4% |
| 97 |
43.0% |
46.4% |
| 98 |
43.0% |
46.4% |
| 99 |
43.0% |
46.4% |
To find the maximum lifetime mortgage loan amount, you need to multiply the LTV by your property value.
Examples of lifetime mortgages on a £300,000 house:
At age 55:
Perfect Health - The maximum lifetime mortgage is £70,500 (£300,000 x 23.5%)
Medically Enhanced - The maximum lifetime mortgage is £81,900 (£300,000 x 27.3%)
At age 60
Perfect Health - The maximum lifetime mortgage is £89,100 (£300,000 x 29.7%)
Medically Enhanced - The maximum lifetime mortgage is £102,300 (£300,000 x 34.1%)
At age 70
Perfect Health - The maximum lifetime mortgage is £120,000 (£300,000 x 40.0%)
Medically Enhanced - The maximum lifetime mortgage is £131,400 (£300,000 x 43.8%)
At age 80
Perfect Health - The maximum lifetime mortgage is £151,500 (£300,000 x 50.5%)
Medically Enhanced - The maximum lifetime mortgage is £154,500 (£300,000 x 51.5%)
At age 90
Perfect Health - The maximum lifetime mortgage is £165,000 (£300,000 x 55.0%)
Medically Enhanced - The maximum lifetime mortgage is £139,200 (£300,000 x 46.4%)
Please note: The above figures are for a standard construction freehold house in England. Should you wish to release more, other financial products may be available, including the other type of equity release, a Home Reversion Plan or a Retirement Interest Only Mortgage. Please contact us for further information surrounding these different types of plans.
It is essential to know that a lifetime mortgage must be the sole charge on your property. Therefore, you will be required to repay any existing mortgages on your property as part of the process. Don't worry, the lifetime mortgage funds can be used to repay any mortgages, and you will then receive the remaining net sum as cash.
To find out how much you could release, use our lifetime mortgage calculator; it requires no personal contact information, and the results are instant.
The youngest homeowner's age significantly impacts the maximum percentage you can release; however, this is not the only factor.
Medically underwritten lifetime mortgages
A medically enhanced lifetime mortgage can allow you access to larger release amounts.
With a medically underwritten lifetime mortgage, the lender will take into consideration your health and lifestyle. The lender asks a set of simple questions and will consider how your answers could impact on your life expectancy.
If the lender believes you will live shorter than average, they will anticipate being repaid sooner, and treat you as if you were older.
As you can see in the grid above, the impact on the maximum amount available for medically enhanced plans can be substantial.
The younger that you are, the more significant the impact could be!
Lender fees
With some lifetime mortgages, you may incur an arrangement fee with the lender.
You are not required to pay the arrangement fee up-front. Most lenders allow you to either deduct the arrangement fee from the loan amount or add it.
If you are trying to obtain the maximum amount available, I would suggest adding any arrangement fee to the loan amount.
Lifetime mortgages with cashback
Some lifetime mortgages also include cashback. Cashback can be great as it is in addition to the loan amount, and it does not attract any interest.
The cashback you receive can be used for anything you wish. However, it can be a great way to help pay for any setup fees associated with your mortgage.
Some lenders offer you a fixed sum regardless of your release amount. For example, some Pure Retirement lifetime mortgages provide £895 cashback on completion.
However, some lenders provide you with a percentage of the amount released. For example, 2% or even 5% extra.
The grid above does not include any cashback that you may be able to receive, but our calculator will show you lifetime mortgages, including cashback!
Joint vs Single
We have already explored how the maximum lifetime mortgage available is based on the age of the youngest applicant. However, some lenders offer differing LTVs for joint applications compared to single applications. This could mean that, as a couple, you could receive slightly less money than if you were to apply singularly.
I have never liked the fact that some lenders price their plans in this way. However, they have stated that for joint lifetime mortgages, there is a higher chance that the plan will run for longer (and their loan will be repaid later).
Another consideration is the impact on a married couple whose application will be in one name.
The majority of lenders require that if an applicant is married, the lifetime mortgage application be made in joint names.
But there are times when you may wish to apply in one name only, including:
- Where the property is already owned in one name;
- Where the spouse's primary residence is a different property;
- Where the youngest applicant is below the age of 55 (the minimum age for all lifetime mortgages);
- When one spouse is older, and you wish to apply in one name to obtain more money or a lower interest rate.
The lowest lifetime mortgage interest rate is currently 5.65%. You can expect interest rates to increase as you borrow more money, with 6% being average, and 7% plus rates being for more substantial borrowing with the most product features.
Remember: Lifetime mortgage rates are fixed for life, meaning you can borrow money long-term without making mandatory monthly payments.
There are currently no other ways of borrowing money similarly at such little cost!
Do you want to find out more? Use our lifetime mortgage calculator to find out what interest rates you can achieve.
For most lifetime mortgages, interest will be accrued daily and added to the mortgage monthly. On this basis, many lenders express their interest rates as a Monthly Equivalent Rate (or MER for short).
But if you are not planning to make payments, is this the figure that you should be considering?
While showing a 'lower' interest rate may look more attractive, I believe that the MER is usually not the most appropriate interest rate. For this reason, I will always provide you with the Annual Equivalent Rate (AER).
But what's the difference?
Put simply, the AER shows how interest accrues every year when you do not make any payments and your mortgage runs.
Note: Make sure that you understand if the rate you are quoted is MER or AER. You must compare the same type of interest rate on different financial products. I often use the phrase "you shouldn't compare apples to pears".
You are not required to make any interest payments while having a lifetime mortgage, although you can choose to make payments if you wish.
At the end of the lifetime mortgage (when you move into permanent long-term care or pass away), you must repay the money borrowed and the interest charged.
Please see our interest calculator below, which shows the cost of a lifetime mortgage over its estimated term.
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You will likely qualify for a lifetime mortgage if you are a UK homeowner aged 55 and over.
There are various underwriting factors which lenders take into consideration, including:
- the Country you live in;
- your age;
- your property value (there are varying minimum property values by Country);
- your requested loan amount (there are different minimum/maximum amounts).
Remember, you will also need to clear any existing mortgages/charges on your property as part of the lifetime mortgage application.
Now that we have explored the possible maximum release amounts available to you, and discussed the range of interest rates in the market, you may wish to compare the lifetime mortgages individually open to you.
Our lifetime mortgage calculator provides you with four tailored quotations. To compare the full range of plans available, use our lifetime mortgage calculator, and you will find out how to access our lifetime mortgage comparison tool.
To begin, use our lifetime mortgage calculator; it requires no personal contact information, and the results are instant.
If you have further questions, why not speak with one of our qualified advisors?
Call us on 0207 158 0881 or use our online form to book your FREE consultation.
While a qualified equity release advisor has written this guide, it is not intended to be used as financial nor legal advice and should not be relied upon.
To understand the full features and risks of a lifetime mortgage, ask for a personalised illustration.
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