Frequently Asked Questions

Equity Release & Lifetime Mortgages Explained

Find answers to common questions about equity release and lifetime mortgages, with straightforward information to help you explore your options and understand what’s involved.

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Understanding equity release and lifetime mortgages can feel complicated. Our FAQs provide clear, straightforward answers to common questions, helping you understand your options and what to consider before taking the next step.

Whether you’re exploring how equity release works, the costs involved or how it could affect your family’s inheritance, we’re here to help.

Can’t find the answer you’re looking for? Contact Autumn Financial to discuss your questions and receive advice tailored to your circumstances.

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What is a lifetime mortgage?

A lifetime mortgage is a type of mortgage designed for later life. It allows you to borrow money against the value of your home while continuing to own and live in it.

Depending on the plan, you may be able to take a lump sum, access money gradually through a drawdown facility, and choose whether to make repayments or allow the interest to build up.

The mortgage is normally repaid when the last borrower dies, moves into long-term care or the property is sold.

Whether a lifetime mortgage is suitable depends on your individual circumstances, so it’s important to consider the alternatives before making a decision.

Equity release is a way of accessing some of the money tied up in your home without having to sell it and move out.

There are different types of equity release, including lifetime mortgages and home reversion plans.

A lifetime mortgage involves borrowing against your property. A home reversion plan works differently because you sell all or part of your property to a provider in return for a lump sum or regular payments.

Equity release can be a useful option for some people, but it isn’t right for everyone. It can affect your inheritance, benefits and future financial choices, so specialist advice is important.

The amount you may be able to borrow depends on a number of factors, including your age, the value and type of property, your circumstances and the lender’s criteria.

There isn’t a standard percentage that applies to everyone.

We’ll look at your circumstances and the options available before recommending whether releasing equity could be appropriate for you.

Yes. With a lifetime mortgage, you continue to own your home and can normally remain living there for the rest of your life, provided you meet the terms and conditions of the mortgage.

This is different from a home reversion plan, where you sell all or part of your property to the provider.

It’s important to understand exactly how any plan works before you proceed.

Not necessarily.

Some lifetime mortgages allow you to make no regular payments, with the interest added to the mortgage balance. Other plans allow you to make regular or occasional payments towards the interest or capital.

Making repayments can reduce the amount of interest that builds up, but the right option will depend on your circumstances and what you want the mortgage to achieve.

We’ll explain the different options and their long-term costs before you make a decision.

It can.

If you take out a lifetime mortgage and the interest is added to the loan, the amount owed can increase over time. This can reduce the amount of equity remaining in your property and therefore the amount that may eventually be passed on to your beneficiaries.

Some plans include features designed to help protect part of your property’s value for your family, and some allow you to make repayments.

Inheritance is an important part of any later-life lending conversation, so we’ll take your wishes and family circumstances into account when looking at your options.

It can, depending on your circumstances.

Money released from your property could affect your entitlement to certain means-tested benefits or other support.

That’s why it’s important to look at the wider financial picture before releasing equity. We can help you understand the potential implications and, where appropriate, discuss the alternatives with you.

A retirement interest-only mortgage, often called a RIO mortgage, is a later-life mortgage where you make monthly payments to cover the interest, while the capital is normally repaid when the property is sold, you die or move into long-term care.

Unlike an interest roll-up lifetime mortgage, the interest doesn’t automatically compound onto the loan balance if you keep up the required payments.

However, you will need to demonstrate that you can afford the monthly interest payments, including into retirement.

For some people, a RIO mortgage can be an alternative to equity release, so it’s important to compare the options rather than assuming equity release is the answer.

There are many possible reasons people consider releasing money from their home.

For example, you might want to:

  • Make improvements or adaptations to your home
  • Help family members financially
  • Clear an existing mortgage
  • Supplement your retirement income
  • Fund a major purchase or lifestyle plans
  • Provide financial support for later life
  • Consolidate certain existing debts

The reason you want to release the money is important because there may be other ways of achieving the same objective.

We’ll look at your reasons for borrowing as well as the amount you want to raise before considering the available options.

There isn’t a simple yes or no answer.

Equity release and lifetime mortgages can offer a way to access money tied up in your home, but they can also have long-term consequences. They may affect your inheritance, benefits and future financial flexibility, and some plans can become expensive if interest is allowed to build up over many years.

That’s why we don’t believe in simply looking at one product in isolation.

We’ll talk through your circumstances, your plans for retirement, your family considerations and the alternatives available before making a recommendation.

The aim is to help you understand your options and make a decision that you’re comfortable with.