A lifetime mortgage (also known as equity release) is a loan secured on the value of your home, allowing you to free up part of the wealth held in the property without having to sell up and move out. The value of the loan – plus interest – is repaid out of your estate once you die or move into long-term care. 

Here are the most popular ways people use their cash, according to Stonehaven’s Alice Watson: 

Clearing an existing mortgage

Four in 10 of Stonehaven customers are currently using some, or all, of the cash they release through a lifetime mortgage to clear an existing mortgage, according to Watson.

Buying a new property

Older homeowners wishing to move to a larger home or to a more desirable area can use a lifetime mortgage for their new purchase, Watson says.

She explains: “Many want to move closer to their grandchildren, while some want to live in an area with better amenities. One in five Stonehaven customers are using some of the cash they release for this reason.”

Gifting to family

With property prices spiralling upwards, there’s pressure on parents and grandparents to give heir younger relatives a step up onto the housing ladder. The lump sum released by a lifetime mortgage can serve as a deposit.

Other uses include helping to pay for university and school fees, and helping to invest in business opportunities, Watson says.

She continues: “The children can also help out with making interest payments on the lump sum released, which can safeguard their future inheritance.”

Home and garden improvements

Retirees spend a fair amount of time in and around their home but may not have the disposable income to make necessary improvements. Watson says: “Three in 10 of Stonehaven’s customers are using their cash for this reason.”

Consolidating debts

Three in 10 Stonehaven customers use their cash to consolidate any unsecured debt they have carried over into retirement. 

Watson says: “Unsecured debts, including credit cards, can cause financial stress to many. By choosing to consolidate them with a lifetime mortgage, customers can choose to take a fixed interest rate for life and make regular monthly repayments, offering them peace of mind and financial control.”