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Fixed Lifetime Mortgage

Should you take out a fixed-rate lifetime mortgage? Find out if this loan type is right for you in our guide

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 18, 2021

A lifetime fixed-rate mortgage is a type of lifetime mortgage and, just like any other mortgage arrangement, it has its benefits and considerations that you should be aware of.

The experts we work with are regulated by The Financial Conduct Authority and so you will be dealing with a highly trained person that adheres to strict rules of conduct.

What is a fixed lifetime mortgage?

Lifetime fixed-rate mortgages are a type of mortgage for those aged 55 or over who already own a property, and by name they are set up to last your lifetime –  for example, if you pass away or move into permanent residential care.

In this type of mortgage your equity is always building up, which means that you can borrow against it if you need funds to pay for things like home improvements or a holiday.

At completion of the contract (when you move into residential care or pass away), any remaining loans taken out against the property are repaid to the lender.

How does a fixed repayment lifetime mortgage work?

Opting for a fixed lifetime mortgage means that you know in advance what percentage of the property will be repaid at the end of the contract. This means you’ll also know how much inheritance will be left over.

While you have the fixed repayment lifetime mortgage, you can take out a lump sum of cash or request to receive a regular income over a number of years. The contract will end in one of two ways:

  • Mortgage owner passes away – Once you pass away, the agreed percentage of the sale of the proceeds of the property goes directly to the lender. Whatever is left is likely to be the inheritance that you pass on to your beneficiaries.
  • Mortgage owner moves into long-term care – Once the lender has taken back what they are owed, you will have several options and may be able to purchase a lifetime annuity. This means you’ll continue to get an income for life, which could be used to cover any fees while you’re in care.

Are lifetime mortgage rates always fixed?

When you take out a lifetime mortgage, you can decide whether to go with a variable or fixed interest rate, the latter is typically the more common option.

One of the ways in which a lifetime mortgage differs from other mortgages is that you don’t have to make monthly payments. Instead, it’s paid off when the contract ends (i.e. you die or move into residential care), although you can make optional payments in advance if you wish to.

Should I take a lifetime tracker or fixed-rate mortgage?

The main difference between the two is that with a lifetime tracker, your mortgage rate will vary according to the Bank of England’s base rate, which may also be linked to the standard variable rate (SVR) offered by most lenders.

However, with the fixed-rate option, your interest rate won’t change so you know exactly what you’re paying and can budget accordingly

Should I take out a fixed lifetime mortgage?

As with all mortgage products, there are pros and cons to fixed lifetime mortgages that you’ll need to weigh up against your personal circumstances.

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Which lenders offer lifetime fixed-rate mortgages in the UK?

Fixed-rate lifetime mortgages are specialist mortgages offered by equity release companies who are members of the Equity Release Councils. As with all mortgages, there are variations in what they offer.

For example, the Hodge lifetime fixed-rate retirement mortgage is available for applicants aged 55-85 who have a minimum property value of £1million while the Aviva fixed rate lifetime mortgage will consider mortgages that have a minimum property value of £75,000 – other lenders will also vary.

Speak to an expert

Due to the specialist nature of fixed-rate lifetime mortgages, you may find it in your best interest to get advice from an experienced mortgage broker who understands exactly what is involved.

For example, a lifetime mortgage can impact on any benefits you might receive, and an expert advisor will explain these implications to you as well as advise on the best mortgage solution for your personal needs.

To get help finding one, give us a call on 0808 189 2301 or make an enquiry and we’ll put you in touch with one of the experts that we work with.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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