Will the loan ever catch up with your home value?

With a lifetime mortgage the balance grows while, hopefully, your home value grows too. The worry people raise is whether the debt could one day exceed the value of the house. This tool projects both lines side by side, and explains the no negative equity guarantee that means you can never owe more than your home sells for.

When the loan would approach your home value

Not within 40 years

Year by year projection

Loan balance versus projected property value
Year	Loan balance	Projected home value

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Richard's view

Here is the reassurance that should defuse most of the fear. Every plan that meets Equity Release Council standards carries a no negative equity guarantee. It means that when the home is sold, after the last borrower dies or moves into long term care, the debt is settled from the sale proceeds and nothing more. Even if the balance has grown past the value of the home, neither you nor your estate ever has to make up the difference. So the line where the loan meets the value is not a cliff edge for you, it is a cost to the lender that they have already priced in. The real thing to watch is not negative equity but how much, if any, equity is left to pass on. These projections are illustrative and depend entirely on the growth assumption you choose.

Richard Parker, Equity release and later life lending adviser