There are steps you can take to protect how much you can pass on as an inheritance
Choose inheritance protection
A lifetime mortgage is a loan secured on your home. When you take out the loan you can choose to protect a percentage of the net sale proceeds of your property with many lenders. This will reduce the amount you can take as a loan.
For example, if your property is currently worth £200,000 and you want to protect 30%, then the maximum amount the loan will be calculated on 70% of the property value, £140,000 instead of £200,000.
The amount you’ve protected could increase in value if the value of your home increases, though it could be worth less if house prices fall.
Make repayments during your lifetime
You can choose to repay some or all of the interest on the loan. You can also pay off some of the capital. This way you reduce the amount you owe, which could leave more for your family to inherit on your death. It’s up to you. There are limits on how much you can repay and how often you can make repayments. If you prefer, you don’t have to repay anything until you die or move permanently out of your home and into long-term care.
Living inheritance is another option
You can use a lifetime mortgage to pass on money as a ‘gift’ while you’re still alive. For example, to help children with university fees, wedding costs or getting onto the property ladder. If you give the money this way, the recipient might need to pay inheritance tax in the future.