Lifetime mortgage is a tax free lump sum of cash that can be used for any purpose that you want. More & more retirees who have homes now obtain a lifetime mortgage, so that they can have more income or cpaital coming into their household. When it comes to receiving a lifetime mortgage, you don't have to borrow the entire equity on your home.
You can just borrow what you need initially & the remainder over time. By doing this, it will allow you to pay less interest as you are only charged on any capital actually withdrawn. If you want, so that a loved one can still inherit the home when you pass away or go into a nursing home you can build in an inheritance protected guarantee.
When you receive the funds from a lifetime mortgage , you can use it for whatever purpose; you may want to upgrade your car, make home improvements or consolidate debts such as credit cards & loans. Since you are retired, you probably deserve a new car & holiday to go with it. You shouldn't be driving around the city with a car that is having mechanical problems in retirement!
Since there are two main types of lifetime mortgages, you will want to make sure you are getting the right one. Speak with an independent equity release adviser to find out which one is the best one for you. The two main ones are the interest only and roll-up lifetime mortgage.
With an interest only roll-up scheme you can take a one-off maximum lump sum on your home. With a roll-up, you don't have to get the maximum amount all at once. You can just borrow what you need at the time & take the remainder by drawdown, a more flexible approach. With both of them you can remain in the home rent free, except with an interest only, obviously you have to pay the interest each month.
On both of the lifetime mortgages, interest will continue to be added monthly or annually dependent upon the terms of the lender concerned. You don't have to pay the interest back, except with an interest only. Once you pass away, the interest & capital is automatically repaid from your estate. While you are still alive, you deserve to spend the money that is on your home to get out of life what you deserve.