Lifetime mortgage vs home reversion: the key differences
Lifetime mortgage vs home reversion comes down to one core difference: a lifetime mortgage is a loan secured on your home, so you keep full ownership, while a home reversion plan is a sale, and a provider owns the share you sell. They are the two main types of equity release, and they differ in cost, minimum age and protections.
This guide compares the two head-to-head. It is general information, not financial advice. For how each works alone, see our equity release guide and equity release explained.
Lifetime mortgage vs home reversion at a glance
| Feature | Lifetime mortgage | Home reversion plan |
|---|---|---|
| What it is | A loan secured on your home | A sale of all or part of your home |
| Ownership | You keep 100% ownership throughout | Ownership of the share sold passes to the provider |
| Typical minimum age | 55 | 60 |
| How the cost works | Interest is added to the loan and compounds over time | No interest or loan; you sell the share for well below its market value (typically 20–60% of that value) and give up any future rise in its value |
| Effect on inheritance | The growing debt is repaid from the sale of your home, reducing what is left | The share sold is no longer part of your estate, so what you pass on is substantially reduced |
| Means-tested benefits | Money released can affect them | The same applies |
| No negative equity guarantee | Included on Equity Release Council member plans; conditions apply | Not applicable in the same way: there is no loan that could exceed the home's value |
| Right to move home | On Equity Release Council member plans, subject to the provider's criteria | On Equity Release Council member plans, subject to the provider's criteria |
| Ending the plan early | An early repayment charge may apply; fixed charges usually reduce over time | Not a loan, so there is no early repayment charge; ask the provider what happens if you want to end the plan |
| Share of new plans | More than 99% of new equity release plans | A small minority of new plans |
Types of equity release: what each one actually is
Lifetime mortgage: a loan against your home
A lifetime mortgage is a loan: the amount owed grows over time and is repaid from the sale of your home.
Home reversion: selling a share of your home
A home reversion plan is a sale: the provider owns the share you sell from the start, and you live there rent-free provided you keep to the plan's terms.
How the cost works for each type of equity release plan
With a lifetime mortgage, you keep ownership of your whole home, but interest is added to the loan and compounds, so the debt can grow substantially; at around 7% a year, the amount owed can roughly double in around 10 years.
With a home reversion plan, there is no interest and no loan. Instead, you sell a share of your home for well below its market value, typically around 20% to 60% of it, and less the younger you are. You then permanently give up that share of the property's future value, whatever happens to house prices afterwards.
Both reduce what you can leave. A lifetime mortgage's debt is repaid from your estate, while the share sold under a home reversion plan is no longer part of it, so your inheritance will be substantially reduced. Our guide to how equity release affects inheritance compares the two.
Money released by either type can also affect means-tested benefits: savings above £10,000 reduce Pension Credit, and some benefits stop above £16,000.
Minimum age, protections and ending the plan early
The minimum age for a lifetime mortgage is usually 55; for a home reversion plan it is usually higher, commonly from 60.
Both are regulated by the FCA: lifetime mortgages under the mortgage rules, and home reversion plans under their own rules since 6 April 2007.
Lifetime mortgages from Equity Release Council members include a no negative equity guarantee: provided the plan's terms are kept, you or your estate will not owe more than the home sells for.
A home reversion plan involves no borrowing, so there is no debt that could grow beyond your home's value; an adviser can explain what protections a specific plan includes. Plans of both types from Council members include a right to move to another suitable property, subject to the provider's criteria.
Ending a lifetime mortgage early can trigger an early repayment charge, particularly in the early years; see equity release costs.
A home reversion plan is a sale, so there is no early repayment charge as such. If you might want to end the plan or move, ask the provider and your adviser what the plan's terms say before you commit.
Which is more common: lifetime mortgage or home reversion
Lifetime mortgages make up more than 99% of new equity release plans, and home reversion is now a small minority of the market.
Home reversion is still a regulated form of equity release, but fewer firms offer it; see our guide to home reversion plans.
Next step: comparing equity release plans
Both are forms of equity release, each with its own benefits, costs and risks. An FCA-regulated adviser can explain how plans of both types would work in your circumstances. Our guide to finding a regulated equity release adviser explains what to check first.
Frequently asked questions
What is the main difference between a lifetime mortgage and a home reversion plan?
A lifetime mortgage is a loan secured against your home, so you keep full ownership and the loan plus interest is repaid when the home is eventually sold. A home reversion plan is a sale: you give up ownership of a share of your home straight away, in exchange for a cash lump sum or income, while keeping the right to live there rent-free, provided the plan's conditions are met. See our guide to home reversion plans.
Can money from a lifetime mortgage or home reversion plan affect means-tested benefits?
Yes, it can. Money released by either type of equity release, whether as a lump sum or as income, could reduce entitlement to means-tested benefits, local authority grants and council tax reductions. For example, savings above £10,000 reduce Pension Credit, and some means-tested benefits stop when savings are above £16,000. An FCA-regulated adviser can explain how released money might interact with any benefits you receive.
Does a home reversion plan have a no negative equity guarantee like a lifetime mortgage?
Not in the same sense. Lifetime mortgages from Equity Release Council members include a no negative equity guarantee: provided the plan's terms are kept, you or your estate will not owe more than the home sells for. A home reversion plan involves no borrowing, so there is no debt that could grow beyond your home's value. An adviser can explain what protections a specific plan includes. See our no negative equity guarantee explainer.
How does the cost of a home reversion plan compare with lifetime mortgage interest?
They are different kinds of cost. With a lifetime mortgage, interest is added to the loan and compounds, so the amount owed grows over time. With a home reversion plan there is no interest, but you sell the share for well below its market value, typically around 20% to 60% of it, and give up any future rise in that share's value. Our guide to equity release costs explains fees and charges.
Do both a lifetime mortgage and a home reversion plan let me move house?
Plans from Equity Release Council members include a right to move to another suitable property, subject to the provider's criteria. How a move works differs: a lifetime mortgage moves as a loan secured on the new home, while a home reversion plan involves the provider's share of ownership, so the provider's terms decide how it is handled. An FCA-regulated adviser can explain how this works for a specific plan.