What Is a Lifetime Mortgage?
A lifetime mortgage is the most common form of equity release. It is a loan secured against your home, with no required monthly repayments. You retain ownership of your property, and the loan plus all compound interest is repaid from the sale of the property when you die or permanently enter care.
A lifetime mortgage is a secured loan with no required monthly repayments. Interest compounds and is repaid with the loan from the property sale. You remain the owner and keep the right to live in your home for life.
How a lifetime mortgage works
When you take out a lifetime mortgage, you borrow a lump sum (or set up a drawdown facility) secured against the value of your home. The lender registers a first charge on your property at HM Land Registry, in the same way as a conventional mortgage. However, unlike a conventional mortgage, you are not required to make any monthly repayments.
Instead, interest is added to the outstanding balance each month. This is compound interest — the interest added in month one itself earns interest in month two, and so on. Over many years this causes the outstanding balance to grow substantially. The entire amount — original loan plus all accumulated interest — is repaid when the plan ends, from the proceeds of the property sale.
When does the plan end?
A lifetime mortgage ends when you die, or when you permanently leave the property to enter long-term care. At that point, your estate (or care-fee administrators) has a defined period — typically 12 months — in which to sell the property and repay the loan. The no-negative-equity guarantee ensures the estate can never owe more than the property sells for.
For joint applicants, the plan continues until the last remaining borrower dies or moves into care — the surviving partner cannot be forced out of their home while they are alive and living there.
Lump sum vs drawdown lifetime mortgages
Lifetime mortgages are available in two main structures. A lump sum plan releases a single amount at the outset. A drawdown plan releases an initial amount, with a pre-approved reserve facility you can draw from as and when needed — interest only accrues on funds actually drawn, which can significantly reduce the long-term compound interest effect compared to taking everything upfront.
For most people who do not need the full sum immediately, a drawdown plan is worth considering carefully. See What is drawdown equity release?
Voluntary repayments
Although no repayments are required, most modern lifetime mortgage plans allow voluntary partial repayments — typically up to 10% of the original loan per year — without incurring an early repayment charge. Making regular partial repayments significantly limits the compound interest growth and can preserve substantially more of the estate. See also Are equity release interest rates fixed?
Reviewed by Chris, CII-qualified equity release specialist · Last reviewed July 2026
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