A lifetime mortgage is an equity release scheme where a loan is secured against your property, usually your house, but instead of taking all the money right away you get paid in monthly installments. This will reduce the overall interest that you have to pay significantly, especially when compared to other equity release schemes or to the normal interest rates provided by banks or credit institutions. And you get this monthly income while still living in your house and, another plus, you don’t have to make any payments until the house is sold (and the value you owe will come right out of the house’s selling price) or until you no longer have it as your permanent residence (because you, for example, moved into senior long term care). There is another option for a lifetime mortgage called a drawdown plan. In this plan you don’t have a fixed income, but you can release equity funds as you need them.

There are, of course, some drawbacks to doing this. You reduce the amount of inheritance you leave for your family, since some of the money of the sale of your house will go toward payment of the loan. Also, in case you choose a variable interest rate, you may face a sudden increase in the interest you owe.