Can I Buy a House with a Lifetime Mortgage

A lifetime mortgage is one of the most common forms of equity release in the UK. It allows homeowners over a certain age, usually 55 and above, to unlock some of the money tied up in their home without selling it. Instead of making monthly repayments, the loan is repaid when the property is eventually sold, often after the homeowner passes away or moves into long-term care. While lifetime mortgages are often used to release cash from a home you already own, many people wonder whether they can also be used to buy a property. The answer is yes, but it works slightly differently to a standard mortgage.

Using a Lifetime Mortgage to Buy a Home

It is possible to buy a house with a lifetime mortgage, and this is known as a lifetime mortgage for purchase. The process allows you to take out the loan at the point of buying, rather than releasing equity from an existing property. The money provided by the lifetime mortgage, combined with any deposit or cash you contribute, is then used to buy the home. This can be a practical solution if you want to downsize to a more manageable property but do not want to tie up all of your funds in the purchase, or if you want to move closer to family without committing to a traditional repayment mortgage in later life.

Eligibility Requirements

To qualify for a lifetime mortgage for purchase, you generally need to be at least 55 years old and buying a home that meets the lender’s criteria. The property must usually be your main residence and in good condition. The amount you can borrow depends on your age and the value of the property, with older borrowers typically able to borrow a larger percentage. Some lenders also take health and lifestyle factors into account, which can increase the amount they are willing to release. Because this type of mortgage is not repaid monthly, lenders place more emphasis on the property itself than on your income.

When It May Be Suitable

Buying a house with a lifetime mortgage can be suitable if you want to free up money for other uses while still moving into a new home. For example, you might sell your current house, use part of the proceeds alongside the lifetime mortgage to buy a smaller property, and keep the remainder as savings. It can also work if you want to move but do not have enough funds to buy outright and prefer not to take on a standard mortgage at an older age. Many people use it as part of retirement planning to balance housing needs with financial flexibility.

Considerations and Risks

While lifetime mortgages can make home ownership possible later in life, they do come with important considerations. Interest is added to the loan over time, and because repayments are not usually made monthly, the debt grows until the house is sold. This reduces the value of the estate you leave behind, which is important for those wishing to pass on an inheritance. There are also fees involved in setting up a lifetime mortgage, and not all properties are eligible. Seeking advice from a regulated financial adviser is strongly recommended to make sure the arrangement is right for your situation.

Summary

Yes, you can buy a house with a lifetime mortgage, and this option is often used by people over 55 who want to move home without committing to monthly repayments. It allows you to combine the loan with your own funds to purchase a property, with the debt repaid when the house is eventually sold. While it can be a helpful financial tool, it is important to understand how interest will accumulate and how it might affect your estate, making professional advice an essential step before going ahead.