Liverpool Victoria, known now as LV=, offers an equity release scheme that helps homeowners unlock the value in their property without having to sell it.

This type of financial product is popular among retirees or those approaching retirement who want to access extra funds for various needs, such as home improvements or supplementing their income.

COMMENT: TimeBank is an independent third-party data provider, and the information shared here reflects their views alone, not necessarily those of Liverpool Victoris. This article is for informational purposes only and should not be considered financial advice or a recommendation to engage with any products offered by Liverpool Victoria.

What Is Equity Release?

Equity release is a type of later-life lending product that allows you to convert part of the value of your home into cash while continuing to live in it.

There are two main types of equity release, namely home reversion plans and lifetime mortgages.

Home Reversion Plans

With this kind of plan, you sell a part or all of your home to a reversion company in exchange for a lump sum or regular payments.

You continue living in your home until you pass away or move into care.

Lifetime Mortgages

This is the most common type of equity release plan.

With a lifetime mortgage, you take out a loan against your home’s value, which you don’t have to repay until you die or move into long-term care.

The loan and accumulated interest are repaid from the sale of your property.

How Does LV= Equity Release Work?

LV= offers lifetime mortgages, which let you borrow against the value of your home but retain ownership.

Here’s how it typically works:

• Repayment: You don’t make regular repayments. Instead, the loan and interest are repaid when the property is sold, usually after death or when you move into long-term care.
• Eligibility: To qualify, you need to be at least 55 years old. The amount you can borrow depends on your age, the value of your home, and other factors.
• Application: You’ll need to undergo a detailed application process, including a property valuation, which will help determine how much equity you can release.
• Interest: Interest is charged on the amount you borrow and is compounded (or ‘rolled up’). This means the interest builds up on both the original amount borrowed and the interest that accumulates.

What Lifetime Mortgage Plans Does LV= Offer?

LV= offers four different lifetime mortgages, two in their Lifestyle range and two in their Plus (+) range.

Lifestyle range plans:

• Lifetime Mortgage Lump Sum Lifestyle
• Lifetime Mortgage Drawdown Lifestyle

Plus (+) range plans:

• Lifetime Mortgage Lump Sum+
• Lifetime Mortgage Drawdown+

Let’s take a closer look at each of these plans.

Lifetime Mortgage Lump Sum Lifestyle

LV=’s Lifetime Mortgage Lump Sum Lifestyle enables homeowners aged 55 to 90 to release equity from their property to support their financial needs in later life.

The product offers flexibility, with features such as fixed interest rates, inheritance protection options, and additional borrowing opportunities (subject to eligibility).

LV=’s Lifetime Mortgage Lump Sum Lifestyle has been recognised with a 4-Star rating from Moneyfacts and Defaqto, following their annual market assessments.¹

Key Features:

• No Monthly Interest Payments: The loan and accumulated interest are repaid when the homeowner passes away or moves into long-term care.
• Eligibility: Available to individuals aged 55–90, with lending up to £1.5 million.
• Inheritance Protection: Up to 99% of the property’s value can be safeguarded for beneficiaries.
• Flexible Repayments: Unlimited voluntary repayments of at least £50, totalling up to 11% of the original advance annually, without early repayment charges.
• Fixed Early Repayment Charges (ERCs): End after eight years, with joint mortgage repayment exemptions within four years of the first death or move into long-term care.
• Additional Safeguards: Includes a No Negative Equity guarantee and downsizing protection from year five.
• Fixed Interest Rates: Rates are based on the borrower’s age and loan-to-value ratio (LTV).

Additional Considerations:

• Long-Term Commitment: The loan balance can grow quickly due to compounding interest.
• Future Cash Advances: Subject to LV=’s lending criteria at the time of application.
• Family Communication: Discussing the decision with family and beneficiaries is strongly recommended.
• Personalised Illustration: Prospective borrowers should request a tailored illustration to fully understand the features and risks.

LV= also provides added benefits such as Doctor Services and Care Navigator to support borrowers and their families throughout the process.

Lifetime Mortgage Drawdown Lifestyle

LV=’s Lifetime Mortgage Drawdown Lifestyle offers a flexible equity release solution designed to adapt to changing retirement needs.

It provides an initial lump sum with access to a pre-agreed cash reserve for future withdrawals, allowing homeowners to manage their finances confidently while retaining ownership of their property.

LV=’s Lifetime Mortgage Drawdown Lifestyle has achieved a 5-Star rating from Moneyfacts and Defaqto, based on their annual market evaluations.²

Key Features:

• Flexible Borrowing: Borrow an initial amount starting from £10,000, with further withdrawals available on request (minimum £500, limited to one per calendar month).
• Inheritance Protection: Safeguard up to 99% of your property’s value to leave as a guaranteed inheritance for loved ones.
• No Monthly Repayments: The loan and accrued interest are repaid when the homeowner passes away or moves into long-term care.
• Interest Rate Structure: Interest rates are linked to the loan-to-value ratio (LTV) and fixed for the duration of the loan, though rates may vary for subsequent withdrawals.
• Downsize Protection: Allows full repayment without early repayment charges if the property is sold after five years.
• Additional Borrowing: May be considered after exhausting the reserve, subject to a new property valuation and lending criteria (minimum of £5,000).
• Safeguards: Includes a ‘No Negative Equity’ guarantee and fixed early repayment charges that end after eight years.
• Flexible Repayments: Unlimited voluntary repayments of at least £50, totalling up to 11% of the total advances annually, free from early repayment charges.

Important Considerations:

• Access Limitations: Access to the reserve is not guaranteed and may be reduced or removed under certain conditions.
• Cost of Borrowing: Compounded interest can cause the loan amount to grow quickly.
• Family Communication: It’s essential to discuss the decision with family members, especially beneficiaries.
• Tailored Illustration: Prospective borrowers should request a personalised illustration to understand the features and risks fully.
• Terms on Additional Borrowing: Requires a new property valuation and is available only as a one-off advance once the reserve is fully used.

To help borrowers and their families every step of the way, LV= also offers extra perks like Care Navigator and Doctor Services.

Lifetime Mortgage Lump Sum+

The Lifetime Mortgage Lump Sum+ from LV= is designed to help homeowners aged 55 to 84 unlock the equity in their property to support their later-life financial goals.

This product offers flexibility and safeguards while allowing borrowers to retain ownership of their home.

It has been recognised with 4-Star and 5-Star ratings from Moneyfacts and Defaqto for its comprehensive features.³

Key Features:

• No Monthly Interest Payments: The loan and accrued interest are repaid when the homeowner passes away or moves into long-term care.
• Eligibility: Available to individuals aged 55–84, with borrowing up to £1.5 million.
• Flexible Repayment Options: Unlimited voluntary repayments of at least £50, totalling up to 10% of the original loan annually, free of early repayment charges.
• Fixed Interest Rates: Rates are linked to the borrower’s age and loan-to-value ratio (LTV) and remain fixed for the duration of the loan.
• Downsize Protection: Full repayment without early repayment charges if the property is sold after five years.
• Inheritance Safeguards: A No Negative Equity guarantee ensures borrowers or their estates will never owe more than the property’s sale value.

Important Considerations:

• Early Repayment Charges: Fixed early repayment charges apply for the first 10 years.
• Interest Accumulation: The loan balance can grow quickly due to compounded interest.
• Additional Borrowing: May be available but depends on LV=’s lending criteria at the time of application.
• Family Discussions: It’s important to consult family members, particularly beneficiaries, before proceeding.
• Personalised Illustration: A tailored illustration is essential to understand the features, risks, and costs fully.

With added benefits like Doctor Services and Care Navigator, LV=’s Lifetime Mortgage Lump Sum+ supports both homeowners and their families, offering confidence and flexibility for later-life financial planning.

Lifetime Mortgage Drawdown+

The Lifetime Mortgage Drawdown+ from LV= is designed to provide flexible access to equity, enabling homeowners to manage their retirement finances in response to rising costs of living.

Recognised with a 5-Star rating by Moneyfacts and Defaqto, this product offers control and adaptability for those aged 55 to 84.⁴

Key Features:

• Flexible Equity Access: Borrow an initial sum starting at £10,000, with additional withdrawals available from a pre-agreed cash reserve (minimum £1,500 per withdrawal, limited to one per calendar month).
• No Monthly Repayments: The loan and rolled-up interest are repaid when the borrower passes away or moves into long-term care.
• Interest Rates: Rates are linked to the loan-to-value (LTV) ratio and fixed for the life of the loan. Rates for additional withdrawals are based on the prevailing rate at the time.
• Voluntary Repayments: Unlimited voluntary repayments of at least £50, up to 10% of the total advances annually, without incurring early repayment charges.
• Safeguards: Includes a ‘No Negative Equity’ guarantee and fixed early repayment charges ending after 10 years.

Additional Considerations:

• Eligibility: Available for individuals aged 55–84, with total borrowing up to £1.5 million. Additional borrowing may be considered but only after the existing reserve is fully used and subject to a new valuation (minimum £2,000).
• Cost Implications: The loan balance can grow quickly due to compounded interest.
• Family Communication: Discussing the decision with family members, particularly beneficiaries, is advised.
• Terms on Withdrawals: Access to the reserve is not guaranteed and is subject to LV=’s terms and conditions.
• Personalised Illustration: A tailored illustration is essential to fully understand the features, risks, and costs.

LV=’s Drawdown+ also includes added-value benefits such as Doctor Services and Care Navigator, providing additional support for borrowers and their families.

What Does LV= Equity Release Cost?

The costs associated with LV=’s equity release products include interest charges and various fees.⁵

We’ve provided a quick summary here.

Application Fees:

• Lifetime Mortgage Lump Sum+: For loans of £50,000 or more, there is no fee. For loans under £50,000, the fee is £595.
• Lifetime Mortgage Drawdown+: No fee.
• Lifetime Mortgage Lump Sum Lifestyle & Drawdown Lifestyle: No fee.
• For further advances, there is a £125 application fee, deducted from the loan amount on completion.
• For transferring to a new property, there is a £595 application fee, with additional valuation and legal costs.

Valuation Fees and Legal Costs:

• Initial loans include a free valuation.
• Valuations are valid for six months; a re-evaluation may be required if the process takes longer.
• Fees for valuations (when applicable) depend on the property’s estimated value and are payable at the time of application.
• Borrowers cover their own legal expenses for all applications, further advances, and property transfers.

Early Repayment and Discharge Fees:

• Partial or full repayment is allowed at any time, but early repayment charges (ERCs) may apply, based on product terms.
• If the loan is fully repaid, a discharge fee of £125 will also apply.

Interest:

• The interest rates on LV= lifetime mortgages are typically fixed for the duration of the loan.
• The specific rate is influenced by factors such as the loan-to-value (LTV) ratio and the borrower’s age.
• It’s important to note that, due to compound interest, the total amount owed can increase significantly over time.

Consulting with an adviser ensures you understand all costs and terms before proceeding.

Benefits of LV= Equity Release

Benefits of LV= equity release include potential access to future lending.

Pros of LV=’s lifestyle mortgages:

• Access to Funds: It provides a lump sum or regular payments that can be used for anything, such as home improvements, holidays, or supplementing your pension.
• Additional Borrowing: Subject to lending criteria, borrowers may access further funds in the future, providing additional financial flexibility.
• No Monthly Payments: Since you don’t need to make monthly repayments, you can manage your finances without the burden of regular loan payments.
• Continue Living in Your Home: You can stay in your home for as long as you want, giving you peace of mind.
• Flexibility: You can often choose how to receive your funds, whether as a lump sum, drawdown payments, or a combination of both.
• Inheritance Protection: You have the option to safeguard a portion of the property’s value, ensuring a guaranteed inheritance for beneficiaries.
• Flexible Repayment Options: Allows voluntary repayments of up to 10% of the original loan amount each year without early repayment charges, providing control over the loan balance.
• Downsize Protection: Enables full loan repayment without early repayment charges if the borrower moves to a smaller property after a specified period, typically from the fifth year onwards.
• Fixed Early Repayment Charges: Offers transparency and certainty regarding potential early repayment fees, which typically end after a set period, such as eight or ten years.
• Wellbeing Support Services: Access to LV= Doctor Services and Care Navigator, offering medical advice and assistance with care options, enhancing overall support for clients and their families.

Potential Drawbacks to LV= Equity Release

While LV=’s lifetime mortgages offer several benefits, it’s important to consider potential drawbacks.

These include:

• Impact on Inheritance: Equity release reduces the value of your estate, which may affect the inheritance you leave to your heirs.
• Access to Additional Funds Is Not Guaranteed: While LV= offers the option to access further borrowing or drawdowns, this is subject to lending criteria at the time, including property revaluation. Changes in market conditions or your financial circumstances could limit or deny access to additional funds.
• Costs and Fees: There may be fees involved, such as arrangement fees, valuation fees, and legal costs. Make sure to factor these into your decision.
• Interest Accumulation: Interest can accumulate over time, potentially reducing the amount left for your estate. It’s important to understand how interest will impact your loan.
• Effect on Means-Tested Benefits: Releasing equity could affect eligibility for certain means-tested benefits, as the additional funds might push income or savings above qualifying thresholds.
• Early Repayment Charges: Repaying the loan early may incur substantial fees, especially within the initial years of the agreement, limiting financial flexibility.
• Property Ownership Considerations: While homeowners retain ownership, the terms of the lifetime mortgage may impose restrictions on property alterations or subletting, potentially limiting future options.
• Eligibility: You need to meet specific criteria, and not all properties or circumstances will be eligible for equity release.
• Restrictions on Moving Home: If you decide to move, the new property must meet LV=’s eligibility criteria. If it doesn’t, you may need to repay the loan in full, potentially incurring early repayment charges.
• Long-Term Financial Commitment: Equity release is a long-term product that could limit future financial flexibility. For instance, it may reduce the ability to secure additional loans or remortgage in the future, as much of the property’s equity will already be tied up.

Speak to a qualified financial adviser to understand these implications and determine if an LV= lifetime mortgage aligns with your financial goals and circumstances.

Mandatory Equity Release Advice

Mandatory equity release advice is a crucial step in ensuring that homeowners fully understand the implications of their decision before proceeding.

In the UK, it is a legal requirement for anyone considering equity release to seek advice from a qualified financial adviser.

This process ensures that the chosen product aligns with their financial goals and circumstances while highlighting potential alternatives, such as downsizing or using savings.

Advisers are also responsible for explaining key features, risks, and costs, including the impact on inheritance and means-tested benefits.

By providing a personalised recommendation, equity release advice safeguards homeowners against unsuitable choices and ensures they make informed, confident decisions.

Common Questions on LV= Equity Release

Final Thoughts on LV=’s Lifetime Mortgages

LV=’s lifetime mortgages provide flexible solutions for homeowners looking to unlock the value of their property in later life.

With a range of features and safeguards, they cater to diverse financial needs.

However, it’s essential to consider the long-term implications and seek personalised advice before proceeding.

For those seeking financial freedom in retirement, LV= equity release could be a valuable option.