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Heating or Eating, does there have to be a choice?

Updated: Jun 18

lifetime mortgage

With the cost of living rising faster than it has done in decades and global problems only going to make this worse, hundreds of thousands of people are really starting to struggle to make ends meet. The most vulnerable are now having to make the decision to put food on the table or to turn on the heating. But for many, there is a way of avoiding this terrible dilemma.

If you are a homeowner and are over 55 years old, then you could consider a Lifetime Mortgage or Equity Release plan as your saviour.

The largest asset for most people is the property in which they live that ties up thousands of pounds. A Lifetime Mortgage is a way of unlocking equity, without putting the home that you live in at risk. Unlike a traditional mortgage, you don’t need to have an income to qualify and there are no mandatory monthly payments to make. Yes, this could reduce the value of your estate that you will leave to your beneficiaries, but consider that that if you asked them if they would be happy to receive a little less from you, in exchange for you being able to put your heating on, most would agree that it is a small price to pay.

With a Lifetime Mortgage you still own your home, you just owe money that is secured against its value, just like any other type of mortgage. People are often worried that borrowing a small amount against its value will eliminate any legacy that they will leave their loved ones, but this is just not true. When the inevitable happens your executors sell the property for as much as they can achieve, then once the Lifetime Mortgage is repaid, whatever is left will be distributed according to your Will.

Let’s look at an example of how this might work.

If you are 70 years old and live in a property valued at £200,000, based on the interest rates available today (25/02/2022) you could borrow as little as £10,000 with a lifetime fixed rate of interest of just 2.92%. Assuming you don’t make any payments on the Lifetime Mortgage, and you lived until you were 90, the total amount you would owe in 20 years’ time would be less than £18,000 Including the £10,000 borrowed! Now we don’t know what will happen to the value of properties in the future, but let’s assume that it remains at £200,000, then there will still be over £180,000 to leave to your beneficiaries if that is when the plan came to an end.

In these uncertain times you can also have a cash reserve or drawdown in place so that if you need more money it is available to you at any time. With this arrangement you do not pay any extra interest until you borrow more money and then it is paid only on what you take.

With this option it allows clients to take only what they need for now and then have the peace of mind that more is available if needed in the future.

It is still commonplace that the property in which a person lives is the legacy that they will leave to their families, but that shouldn’t come at the sacrifice of one’s own standard of living. And utilising the equity in the property to maintain a standard of living might not be as expensive as you think.

If you would like to discuss if this could be an option for you, please contact us today, give us a call on 0800 046 9776 or e-mail us at

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