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What is a lump sum lifetime mortgage?

Free up a tax-free cash payment from your home

Get your equity in one go with a lump sum lifetime mortgage

Planning on adding that extension, or helping one of your kids buy their first home? If you’re looking for a way to raise a large sum of money, then a lump sum lifetime mortgage could quickly unlock the cash you need from the value of your property.

What is a lump sum lifetime mortgage?

A lump sum lifetime mortgage is a type of equity release plan that provides all the money you release in a single one-off payment. To be eligible for a lump sum lifetime mortgage you must be 55 or over and own a house in the UK worth over £70,000.

How does a lump sum lifetime mortgage work?

A lump sum lifetime mortgage works in a similar way to a traditional mortgage, as you own your home but use its capital as security for the loan. There are a few differences to note:

  • With a lump sum lifetime mortgage, you don’t have to make regular monthly repayments unless you want to
  • The interest on the loan will accrue and be added to the capital, and all of this is repaid when you die or go into permanent long-term care
  • Interest rates on lump sum lifetime mortgages are typically higher than on a standard residential mortgage. Interest will accrue on the capital amount borrowed and on any interest that isn’t repaid, which means it will cost more over time
  • Usually the loan is paid off from the proceeds of the sale of your property, although families can choose to use alternative funds to settle the outstanding balance
  • You’re required to get financial advice before taking out a lump sum lifetime mortgage, and you should take the time to consider all the alternatives carefully.

If you don’t need access to a large sum of money all at once, you could also consider a drawdown lifetime mortgage where you get an initial lump sum from the agreed amount and then you can withdraw the rest as and when you need it.

How much can you borrow with a lump sum lifetime mortgage?

The amount you can borrow will depend on the location, value and condition of your home . It’s worked out based on the age of the youngest applicant, who must be at least 55 years old or over to qualify. You can also ask that your health and lifestyle are factored in, as this may affect the amount you can borrow and the overall cost.

Get an idea of how much equity you could release with a lump sum lifetime mortgage by using our online calculator. This will give you an indication but isn’t advice or a recommendation.

Visit the Saga Lifetime Mortgage equity release calculator

Use our calculator

The Saga Lifetime Mortgage is an exclusive product provided by Just and comes with a range of reassuring features and flexibility.

The advantages of lump sum lifetime mortgages

  • You get all the released equity in one go so it can help if you’ve got a big purchase to make.
  • You can spend the money on almost anything you want to, from home renovations to holidays.
  • You don’t pay income tax as the cash counts as a loan, even if you use it to top up your income.
  • You’ll still own your home and can stay living there until the last homeowner dies or moves into permanent long-term care.
  • The loan plus interest is repaid when your plan ends, and you don’t need to make monthly payments unless you choose to.
  • A ‘no negative equity’ guarantee means that you will never owe more than your home is worth when it is sold following death or moving into long-term care.

The disadvantages of lump sum lifetime mortgages

With a lump sum lifetime mortgage you should be aware of the following potential disadvantages:

  • A lump sum lifetime mortgage will reduce the value of the estate you leave when you die, which means that you leave less money to your family.
  • Taking a tax-free lump sum may push you over the barrier for some means-tested state benefits, so you might lose cash that you rely on for living expenses.
  • If you wanted to release more funds at a later date, you’re not guaranteed access to additional cash.
  • If you wanted to pay off the lump sum lifetime mortgage early you could face early repayment charges.

You must always take professional advice before going ahead with any equity release product.

How do I find out more about lump sum lifetime mortgages?

Saga Equity Release is our advice service for people thinking about taking out equity release, including lump sum lifetime mortgages. It’s a free service that includes an exploration of alternatives to equity release and a free state benefit check.

The product available through Saga Equity Release is the Saga Lifetime Mortgage, an exclusive product provided by Just, a leading provider of lifetime mortgages who have helped their customers release more than £4.9 billion from their properties. It’s a flexible product with multiple options to meet your needs, including different ways to access your money, to pay back some or all of the interest, and to request that certain health conditions and lifestyle factors are considered in your application.

This exclusive lifetime mortgage also comes with these exclusive features:

A 6-month Money Back Guarantee

If you no longer need the money, you can pay back what you borrow within six months of the completion date of your initial advance. You won’t need to pay any interest or any early repayment charges – you just pay the money back and walk away. To be eligible for this Guarantee your initial advance must not exceed £150,000. There are other eligibility terms that you need to be aware of and you can find all of these on our Terms and conditions page.

The Saga Service Promise

The Saga Lifetime Mortgage comes with a Saga Service Promise included as standard. Saga Equity Release will aim to have your money released to your solicitors account within 40 working days after your application has been accepted by Just (T&Cs apply). This promise will not apply if you're using the Saga Lifetime Mortgage to purchase a new property, rather than re-mortgaging an existing one.

Find out more about the exclusive Saga Lifetime Mortgage

Find out now

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Whether you have questions about equity release or just want to find out more, the expert team are on hand to help.

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More on equity release

For more information and to help you understand equity release a little better visit some of our other articles and pages.