What is the difference between Equity Release and a normal mortgage?

The main differences between a Lifetime Mortgage and a standard residential mortgage relate to who can apply, when the mortgage must be repaid and how much you can borrow.

So far as age is concerned, an application for a Lifetime Mortgage is only available to those over the age of 55 and there are fewer rules about the maximum age. Applicants for a standard residential mortgage must be at least 18 and then have a maximum age by which a mortgage will need to be paid off. This based on how long the applicant is likely to be able to afford monthly payments.

Both types of mortgage are secured on your home. This means that if payments are not made to the lender when they fall due, the lender is entitled to ask the court for permission to take possession. Because a Lifetime Mortgage does not have compulsory payments, this only happens when the homeowner, or the second homeowner in joint cases, dies or moves into permanent residential care. There is usually an allowance of a year for the property to be sold before the lender will take any action.

Finally, you may be able to unlock more cash from your home with equity release than if you were to remortgage with a standard mortgage. The amount you can borrow, and the interest rate, depend on your age and property value, not what you can afford to pay every month.