Lifetime Mortgage

Seeing the word mortgage there alerts to the key difference between this and home reversion plan: this time it is a loan you are getting, and it is a loan that is secured against your property.

However, unlike a normal mortgage, payments don't start until you leave the property or die. So, since you still own your home and have no payments whilst alive, what is the con?

Well the con comes in terms of what is left of your estate after you die: the interest increases whilst you live as you are not paying it off, meaning that the sum of money you borrowed and the interest will be repaid by your estate on your death meaning that there could be a large chunk taken away from whoever is set to inherit your estate.

As with the other type of equity release scheme, ultimately the value of your estate decreases with either option, so you will need to consider both options carefully whilst deciding what you are going to do. For those who are particularly keen to pass on as much as they can to whoever will inherit their estate the concerns are particularly pressing. For those sadly who either have no direct relatives to pass their estate onto or even no-one at all then the concerns are less pressing, and in this circumstance it may be felt that the money should be released now for you to enjoy in your lifetime particularly if there is no-one to inherit the money that is locked up in your home.

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