Lump Sum Lifetime Mortgage

How Does a Lump-Sum Equity Release Plan Work?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Are You Looking To Unlock Funds With a Lump-Sum Lifetime Mortgage? Discover the 6 Benefits & 3 Negatives of a Lump-Sum Lifetime Mortgage. Find Out More in This Ultimate Guide.

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Access the locked-up money in your home with a modified lump-sum lifetime mortgage.

As experts in our field, we discuss the following in this article:

    Whether it’s to boost your retirement income, improve your present lifestyle quality or get to those home renovations you’ve dreamed of for a long time, a lump sum lifetime mortgage can give that to you.

    Your Complete Guide to Lump-Sum Lifetime Mortgages

    When you want extra cash while you’re retired, you have a few options available to you.

    If you want or need that money to pay for the rest of your life, a lump-sum lifetime mortgage plan is your best option or at least one of them.


    There are so many devious providers popping up daily. You can get yourself worried about the unknown and the risks involved with taking out an equity release plan.

    It’s a good idea to educate yourself on this matter so that you don’t worry and so that you can spot the devious providers when you come across them.

    Find out exactly how a lump-sum lifetime mortgage works before doing anything else.

    Let’s dive in

    Luckily, our complete guide will help you understand all the benefits, pitfalls, and how a lump-sum equity release plan works.

    However, if you’re still unsure about equity release in general, feel free to read the article about ‘What’s Equity Release’ to learn about your potential financial freedom.

    But first, what’s a lump-sum?

    Breaking Down What a Lump-Sum is

    A lump sum is a form of payment. It’s a large sum of money paid as a single installment, rather than repaying in smaller amounts more regularly.

    When it comes to loan vocabulary, people also refer to it as a bullet repayment.

    Equity release plans, for example, can be repaid as a lump sum when you pass away, or in monthly installments.


    What’s the big hype about lump sum mortgages anyway? Read on to find out about this kind of equity release plan.

    We also tell you how to calculate the amount you’ll be able to receive.

    Are you wondering about a lump-sum plan?

    Lump-sum lifetime mortgages are the most popular mortgages people take out when they want to release equity from their homes.

    This type of equity release allows you as a homeowner to pay interest only at the end of your plan.

    It will enable you to withdraw a single amount of money, which eliminates the worry about future withdrawals and repayments.

    Simply put…

    You won’t have to make any additional payments during the lifetime of your lump-sum lifetime mortgage plan!

    However, keep in mind that the interest gets collated annually until you pass away or need to move into long-term medical care.

    Lump-sum lifetime mortgage plans are among the lifetime mortgage plans with fixed interest rates, which are very good for your finances.

    Let me tell you something:

    In actuality, it’s a core lifetime mortgage financial product with a few extra features where you benefit from a low interest rate.

    If this type of mortgage doesn’t suit your needs exactly, look at ‘Types of Lifetime Mortgage Schemes’ to get the one that will help with your financial needs.

    But how does it work?

    Before You Continue Reading….

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    Discussing How These Plans Work

    The plan works when you ask for the amount of cash you need from your home so you can meet your financial needs.

    Meaning, you’ll take out a loan against your home and receive a tax-free lump-sum amount.


    Your provider will ask for a fixed interest rate on your total loan amount, and usually, they don’t ask for repayments during your loan’s lifespan.

    You can choose to pay it back in that way if you’d like to. If you don’t want to make voluntary repayments, the interest will rollover time and continually increase the total loan amount.

    How does it get repaid?

    The lump-sum equity release lifetime mortgage plan is repaid when the homeowner passes away or needs permanent care.

    Please, keep in mind that equity release ultimately decreases your inheritance that’ll be passed on to your heirs.

    We advise you to discuss this with your family and children before taking out a mortgage plan.

    What does this mean for you?

    The Six Benefits

    Wondering why most people choose lump-sum lifetime mortgages above the rest? Here are a few reasons:

    1. This type of mortgage doesn’t come with many extra features or additional add-on’s. So, it’s an attractive and straightforward equity release option.
    2. Most providers on the market give you a lump-sum plan with competitive interest rate prices.
    3. This lump-sum mortgage plan doesn’t require you to make provisions for future withdrawals or drawdown reserve facilities. It also doesn’t require any monthly repayments. Some providers pass on your savings by giving you more reliable equity release mortgage deals, like larger lump-sums.
    4. The lump-sum lifetime mortgage plan gives you control over your loan balance. So, it’s a great option that allows you to monitor the use of money from the loan. Say, your parents took out this mortgage, then you can also watch them.
    5. You’ll get financial liberty to use the money as you please.
    6. You still have 100% ownership of your home until the plan ends.

    3 Negatives Of Lump-Sum Lifetime Mortgages

    Everything in life has its ups and downs, as does lump-sum lifetime mortgages:

    1. Interest accumulates and can be costly over a long period.
    2. If you want to release more money, you’ll probably have to go through another application set-up and process.
    3. It may affect your means-tested benefits entitlement.

    How Much Can I Borrow With This Plan?

    The possible loan amount with a lump-sum lifetime mortgage plan depends on the age of the youngest homeowner and the market value of the property.

    So, if you’re older, you’ll receive a higher loan of tax-free money.


    If you want to determine how much equity you’ll be able to release from your property, examine and evaluate the specific plan requirements with a financial adviser of your choice.

    He or she will then thoroughly analyze the plan and its policies and find the best loan amount for you. If you want to borrow more money in the future, your provider will look at the policy and potentially offer you more money.

    They will have to make new calculations to find out if there’s any extra money available.

    Simply put…

    The estimation of your next loan amount will depend on your loan balance at that time, your age, and if the estate’s value allows for an increased borrowing limit than the credit.

    If that’s the case, the minimum extra money you can release is around £5,000. There are also setting-up costs.

    Let me tell you something.

    Equity release can be one of the most puzzling financial products out there. It’s essential to do your research and to make sure you understand the terms of the plans carefully before taking out a lump-sum lifetime mortgage plan.

    So, to help you with some research, let’s compare some deals:

    Lump-Sum Lifetime Mortgage Deals

    ProviderProductTypeRateThe amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.APRThe Annual Percentage Rate (APR) includes not only the loan's interest expense, but also all fees and other costs associated with the loan's acquisition.
    Pure RetirementClassic Elite Super LiteFixed2.35%2.4%
    More2LifeFlexi Choice Premier Super LiteFixed2.35%2.44%
    Canada LifeLifestyle LiteFixed2.44%2.58%
    Scottish WidowsLifetime Mortgage LS1Fixed2.54%2.6%
    LV=Lump Sum+ LiteFixed2.55%2.6%
    Scottish WidowsLifetime Mortgage LS3Fixed2.82%2.9%
    More2LifeCapital ChoiceFixed2.85%2.96%

    After seeing some of your possibilities, you might want to work out how much you qualify for.

    Common Questions

    What's A Lump-Sum Lifetime Mortgage Equity Release Plan?

    How Do I Take Out A Lump-Sum Lifetime Mortgage?

    Do I Qualify For A Lump-Sum Lifetime Mortgage?

    What Are The Requirements For A Lump-Sum Lifetime Mortgage?

    In Conclusion

    In the world we are living in today, you never know what will happen and you might find yourself in a position where you need urgent money.

    There are a variety of reasons as to why someone would need some extra money and it’s clear to see that a lump-sum lifetime mortgage is a great option!

    It gives you the cash you need when you need it, it lets you make voluntary repayments, and you also have the opportunity to take out a bigger loan in the future!

    As mentioned, there are some potential pitfalls to this option but the potential benefits far outweigh them.

    We advise you to speak to one of our trusted advisers and they will help with any lingering questions you may have about lump-sum lifetime mortgages.

    How Much Can You Release?

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    Equity Release Calculator

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    Editorial Note: This content has been independently collected by the EveryInvestor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.