Lifetime Mortgage Myth 6: It’s an Expensive Way to Borrow
When people hear the term “Lifetime Mortgage,” one of the first thoughts that often comes to mind is:
“It’s too expensive.”
It’s a fair concern—after all, we’re talking about borrowing money against your home. However, like many common beliefs about lifetime mortgages, this one doesn’t always stack up to reality.
Let’s take a closer look.
Is It More Expensive Than Other Mortgages?
On the surface, yes—interest rates on lifetime mortgages are typically higher than those on standard residential mortgages. But comparing the two directly isn’t quite as straightforward as it may seem.
Lifetime mortgages are designed for a completely different purpose. They offer:
- No mandatory monthly repayments
- No fixed term—repayment happens when you move into care or pass away
- The ability to stay in your home for life
- Optional features like inheritance protection and drawdown flexibility
In other words, you’re paying for flexibility, not just funds.
What Are You Comparing It To?
Before labelling a lifetime mortgage as “expensive,” it’s important to look at the alternatives.
- Downsizing: Moving to a smaller property might avoid borrowing, but comes with moving costs, stress, and possibly leaving an area or home you love.
- Using Investments or Pensions: Releasing capital from your pension or investment portfolio might have tax implications, impact growth potential, or be unsuitable for your long-term plans.
- Standard Mortgage or RIO Mortgage: These often rely on passing strict affordability checks and committing to monthly repayments—something that might not be realistic or desirable in retirement.
A lifetime mortgage might look expensive if you compare it to a mortgage you can’t actually get—or a financial strategy that has other downsides.
How People Manage Cost
Modern lifetime mortgages offer a lot more flexibility than many people expect:
- Voluntary repayments: Many products allow you to pay off interest regularly or occasionally, reducing the total cost over time.
- Drawdown facilities: You can access funds gradually, meaning you only pay interest on the money you actually use.
- Protected equity options: If inheritance is a priority, you can ring-fence a portion of your home’s value.
These features can help keep costs down and put you in control of the balance.
It’s Not Just About the Cost—It’s About Value
If accessing equity from your home allows you to:
- Stay in your property long-term
- Repay an interest-only mortgage with no monthly payments
- Support your retirement lifestyle or help family
- Avoid triggering large tax liabilities by accessing pension funds
…then the question becomes: Is it worth it to you?
In the right scenario, a lifetime mortgage can offer significant value. But it’s not for everyone. The key is to get tailored advice that looks at your full financial picture.
Final Thoughts
So—is a lifetime mortgage an expensive way to borrow?
It can be. However, it can also be the most flexible, suitable and strategic option available—depending on your circumstances.
The cost alone doesn’t tell the full story.
With the right advice, you can weigh up the true value of a lifetime mortgage against your alternatives and decide what’s right for you, your future, and your family.
This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
Symmonds de Lacey is a trading name of Easy Street Financial Services Limited which is authorised and regulated by the Financial Conduct Authority. Easy Street Financial Services Limited is a company registered in England and Wales with company number 6430453. The registered office address is Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.
Information correct at time of writing – June 2025
