A lifetime mortgage is a type of equity release available to homeowners aged 55 and over. It allows you to unlock some of your property wealth as tax-free cash to spend however you wish – including paying off the mortgage, taking holidays and gifting to loved ones.

You’ll still own 100% of your property and have the right to live there as long as you wish. It means you or your loved ones can still benefit from any increases in property values in the years ahead.

There are no mandatory monthly repayments to make, and the loan typically comes to an end when you pass away or move into long-term care. At this point, your home is sold so the loan plus interest can be repaid. Anything left over is returned to you or your beneficiaries.

As with most decisions about financial matters, you do need to weigh up the pros and cons of a lifetime mortgage. Although lifetime mortgages can help you to do more of the things you want, there are potential disadvantages to consider:

• Unlocking your property wealth will reduce the size of inheritance you can leave. The loan plus interest is repaid from the sale of your home, so there’s less equity to pass on.

• If you leave the interest to roll-up each month, the amount owed can grow quickly. Lifetime mortgages work on a compound interest basis, where interest is applied to the loan amount plus any interest already accrued.

• When you release money, it might affect your eligibility for homecare funding and other means-tested benefits.

• Early repayment fees will typically apply should you wish to repay the loan plus interest early. However, lenders may waive these fees in some circumstances.

• If you gift some of the money you release to family or friends, they may be liable to pay inheritance tax when you pass away.