Using a Lifetime Mortgage to Purchase a property

Could a lifetime mortgage help you buy your next home?

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Using a Lifetime Mortgage to Purchase a property

Could a lifetime mortgage help you buy your next home?

Yes, if you’re over 55 and thinking about moving, a lifetime mortgage could be an option worth considering and they can be used to buy a new property. Whether you’re downsizing, relocating to be closer to family, or starting afresh after a divorce, this type of mortgage allows you to buy a property, or it can be used to boost your buying power to get that new bungalow you really like in your ideal location!

Example

Imagine you’ve found the ideal Bungalow and its £240,000, and they won’t go any lower than £220,000, but after your divorce you only have £200,000 and still need money to cover Stamp duty, legal and moving costs and some money to cover new furniture.

Well, that’s where a Lifetime mortgage could come in. Let’s say based on your age and the property value, you qualify for a lifetime mortgage of £50,000. You buy the Bungalow using £170,000 of your own cash and £50,000 from the lifetime mortgage. Plus you still have some of your own money left over to cover legal costs, moving and furnishings!

We offer clear, no-pressure advice tailored to your needs, so you feel confident every step of the way.

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Quest Finance doesn’t charge any upfront fees or charges. we will meet with you and discuss lifetime mortgages and see if they are suitable or not.

Our competitive Advice fee is ONLY payable should you complete an application with ourselves, and in most cases it’s paid out of the monies raised by the equity release.

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What is a Lifetime Mortgage?

Am I eligible for equity release?

What is a Lifetime Mortgage?

A lifetime mortgage is a type of equity release that lets you borrow against the value of a property while retaining full ownership. Unlike a traditional mortgage, you don’t need to make monthly repayments – instead, the loan (plus interest) is repaid when you pass away or move into long-term care.

Key features:

Available to homeowners aged 55+
No mandatory monthly repayments
Loan is eventually repaid from the sale of your home in the future
Can be used to buy a new property outright or as part of the purchase price

How does Equity Release work ?

Have you ever wondered, “How can I get money from my home without selling it?” You’re not alone—many UK homeowners are using Equity Release and Lifetime Mortgages to unlock tax-free cash while staying in the home they love. But how do they work, and is it the right option for you?

Before we dive in, let me reassure you—you’re in safe hands.
We are impartial advisors and proud members of the Equity Release Council, meaning we follow strict guidelines to ensure you get clear, honest advice that’s in your best interest—not the lender’s.

💬 Would it help to explore how much you could access and what that might mean for your retirement? Let’s chat—no pressure, just answers

Why Use a Lifetime Mortgage to Buy a Property?

Many people assume equity release is only for those who already own a home. However, a lifetime mortgage can be used to buy a new home, offering flexibility in later life.

Reasons you might consider using a lifetime mortgage to buy a property:

Moving to a More Suitable Home

As we get older, our needs change. A lifetime mortgage can help you move into a more comfortable home, such as a bungalow with fewer stairs or a property closer to family and essential amenities.

Divorce and a Fresh Start

Divorce later in life is more common than ever. A lifetime mortgage can provide the funds needed to buy a new home independently, ensuring you can continue living in a safe and comfortable environment without the financial pressure of large repayments.

Relocating to a Nicer Area

Maybe you want to move to a seaside town, a quieter village, or a location with better facilities or nearer family. A lifetime mortgage can make this possible, even if you don’t have enough savings to cover the full property price.

Freeing Up Cash for Retirement

Rather than tying up all your money in a property purchase, a lifetime mortgage allows you to keep some of your savings intact for other expenses, such as travel, home improvements, or supporting family members.

Avoiding Downsizing

If you’d rather not sell your existing home to afford your next property, a lifetime mortgage can allow you to buy without needing to move to a significantly smaller or cheaper house.

How much can you release?

Use our Instant equity release calculator without personal details or email address etc – to give you a rough guide as to how much you could release. This is just a broad indication, you would be best advised to call us for a personalised quote based on your circumstances.

How Does a Lifetime Mortgage for Buying a Property Work?

If you’re considering using a lifetime mortgage to buy a new home, the process is simple:

Choose your property – Find a suitable home that meets your needs.
Apply for a lifetime mortgage – Work with a specialist mortgage broker to secure the right deal.
Legal work and approval – Solicitors handle the paperwork and ensure everything is in order.
Receive the funds and complete the purchase – Once approved, the funds are released, and you move in.

What Types of Properties Can You Buy with a Lifetime Mortgage?

Not all properties are eligible, so it’s important to check with your lender. Generally, you can buy:

Standard Houses and bungalows (including some retirement properties)
Some leasehold flats (with a long lease remaining e.g. 100 years+)
Properties in good condition (lenders may refuse homes needing major repairs)

Things to Consider Before Taking a Lifetime Mortgage

Before deciding, it’s crucial to weigh up the pros and cons.

Advantages:
✅ No monthly repayments (unless you choose to make voluntary ones)
✅ Enables you to move to a more suitable home without selling your existing property first
✅ Flexibility to access cash without depleting savings
✅ You retain full ownership of your new home

Potential drawbacks:
❌ Interest rolls up over time, increasing the total amount owed
❌ Can affect inheritance plans, as the loan is repaid from your estate
❌ May impact means-tested benefits

How Does Equity Release Work ?

How does Equity Release work? – Well it’s really quite simple;

It is mainly based on your AGE and your PROPERTY VALUE, (and in small part your health, as if you have chronic health conditions lenders may lend more – as life expectancy is shorter so they don’t have to allow for the long-term potential roll-up).

How Equity Release works in practice – then lenders will lend based on a combination of your age and property value. The younger you are the lower the LTV ( loan to value ) eg if you are aged 55 they might only lend up to 20% of the property value, whereas if you are 80 you might get more like 50%.

You apply, and based on your age, health and property value, the lender will confirm how much equity you can release ( we have a quick equity release calculator on this page as a rough guide)
The lender sends a RICS property valuer to check and confirm the property value and that it meets their criteria ( some lenders don’t like nearby commercial premises etc )
They confirm the amount they will lend to you
The money is tax-free and there are NO mandatory monthly payments ( you can make optional payments or service the interest if you wish).
Each month the interest is added to the mortgage balance, and so it slowly grows each year.
At the end of the deal ( normally when you pass away or go into a retirement care home), the mortgage is repaid from the proceeds of your property sale.

What is the catch with equity release ?

Ok well first off there is no deliberate or dodgy ‘catch’ with equity release and lifetime mortgages, they are highly regulated and come with lots of consumer protections. The one thing you have to be mindful of is the potential roll-up of interest. As the longer the deal runs the more interest will accrue. The interest is what’s called compound interest, in other words, the interest amount gets larger as the mortgage balance gets larger.

however you also have to factor in the potential increase in property value that could occur so in the above example the mortgage interest in the first year was £3,000 – if however, the property prices went up by 1.5% in that year then the property value £200,000 x 1.5% = now is valued at £203,000.

( Note the FCA require us to inform you that property prices are not guaranteed to rise each year and could go down as well as up ) So you will have to make your own estimate on if you think property prices will rise and by how much each year.

Lifetime Mortgages ( age 55+)

A lifetime mortgage is a unique type of loan designed exclusively for homeowners aged 55 and above. It allows you to release a portion of the equity tied up in your property while retaining full ownership. This means you can access the wealth accumulated in your home without the requirement to move.

How Does it Work?

With a lifetime mortgage, you borrow against the value of your home, and the loan, plus accrued interest, is repaid when you pass away or move into long-term care. The flexibility of this arrangement ensures that you can stay in your home for as long as you wish, enjoying the financial benefits without the stress of immediate repayment.

Key features of Lifetime Mortgages

We work with many of the main equity release / lifetime mortgage lenders including;

'Hybrid' Lifetime

The over 55’s later life lending market continues to evolve, and one of the newer products is a Hybrid between a Lifetime Mortgage and an Interest only mortgage.

Under this hybrid product a customer is required to make monthly payments to the mortgage lender in respect of all or part of the interest, or part of the capital, charged on the lifetime mortgage. A customer may choose to stop making payments and from that time until the lifetime mortgage is repaid the loan converts to a full interest roll-up mortgage.

Hybrid = Lifetime + Interest Payment

In essence you might take out a ‘lifetime mortgage’ but have agreed to pay 25% or 50% or even 100% of the monthly interest for a number of years. This helps stop the debt accruing.

There are numerous advantages to these products such as.

Alternatives to Equity Release?

Downsizing or Moving to a Cheaper Property

One of the most direct alternatives is to sell your current home and move to a smaller, less expensive property. This approach enables you to release equity tied up in your home while eliminating or reducing mortgage payments

Remortgaging or Retirement Interest-Only Mortgages

Remortgaging or opting for a retirement interest-only mortgage are other options. With remortgaging, you borrow against the value of your home with the understanding that the loan will be repaid while you’re still alive. A retirement interest-only mortgage is similar to a lifetime mortgage but with the key difference that you make regular interest payments, so the amount you owe does not increase

Renting Out a Room

Renting out a room in your home is another way to generate extra income without needing to sell or borrow against your property. This option can be particularly attractive if you live in an area with high rental demand .

Selling Assets

If you have other valuable assets, such as a second car, jewelry, or collectibles, selling these can provide a lump sum of money without impacting your home ownership .

State Benefits and Grants

Depending on your circumstances, you may be eligible for state benefits or grants that can help support your financial needs. It’s worth exploring what assistance may be available .

Continue Working or Starting a Small Business

Continuing to work during retirement, whether part-time or on a consultancy basis, can provide an income stream. Similarly, starting a small business based on a hobby or skill can also be a way to generate extra income .

It’s crucial to consider all options and seek professional advice before making a decision. Each alternative has its pros and cons, and the best choice will depend on your personal financial situation and long-term plans.

Talk to a specialist

Let us help you, talk to an expert mortgage advisor about your holiday let mortgage needs and benefit from their expertise in finding you a great deal.

One Tailored recomendation

Let us help you, with tough additional criteria for these types of mortgages . Let us help you find a lender that WILL LEND on your chosen property, at the best rate for your circumstances

Advice & Guidance

Every step of the way, from initial enquiry, through to meeting lenders criteria, the application and through to completion. we will be at your side

Conclusion

Equity release mortgages and lifetime mortgages offer a valuable financial solution for homeowners aged 55 and over in the UK. Whether it’s to supplement retirement income, fund home improvements, or support family members, the flexibility these schemes offer is undeniably attractive. However, as with any financial decision, it’s crucial to seek professional advice to ensure it’s the right choice for you and your circumstances.

Remember, your home is more than just a property; it’s a valuable asset that can support your financial health in later life. By understanding and leveraging equity release products, you can make your home work for you.

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Using a Lifetime Mortgage to Purchase a property

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