When arranging an equity release plan or lifetime mortgage, our primary focus is helping you access the tax-free cash tied up in your home to achieve your retirement goals. Whether you are planning home improvements, gifting an early inheritance to children, or boosting your monthly income, modern equity release plans offer exceptional flexibility.
However, as professional mortgage brokers, our duty of care goes beyond securing the lowest interest rate. We need to ensure that the mortgage plan you establish today remains fully operable throughout your entire life.
That is why we strongly recommend every lifetime mortgage client speak to an expert estate planning firm or legal professional to advise you on what you need to do to either consider or set up a Property and Financial Affairs Lasting Power of Attorney (LPA) alongside their mortgage application to protect you and your family in the event that you lose mental capacity.
A lifetime mortgage may not be appropriate for individuals who are under 55, those who wish to maximise the inheritance left to their family, people receiving means-tested benefits that could be reduced by a cash injection, or homeowners who have cheaper borrowing alternatives, such as downsizing or utilising existing savings. The information in this blog is intended for customers in England and Wales.
What Is an LPA and Why Does It Matter for Mortgages?
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A Lasting Power of Attorney (LPA) is a formal legal document that allows you (the donor) to choose trusted people (your attorneys) to make decisions on your behalf if you become unable or unwilling to do so in the future.
There are two separate types of LPA:
- Health and Welfare LPA
Covers decisions regarding medical treatment, daily care, and residential choices.
- Property and Financial Affairs LPA
Covers your bank accounts, paying bills, selling property, and, crucially, managing your mortgage and equity release facilities.
It is a common misconception that being married automatically gives your spouse authority to manage all of your financial affairs if you lose mental capacity. It does not. In England and Wales, a registered Property and Financial Affairs Lasting Power of Attorney (LPA) can give someone you have chosen legal authority to make financial and property decisions on your behalf, subject to the terms of the LPA. Without appropriate legal authority, a spouse or other family member may not be able to deal with important matters relating to your finances or property on your behalf.
The Drawdown Trap: What Happens If Mental Capacity Is Lost?
Many lifetime mortgages arranged today include a drawdown facility. This allows you to take an initial cash sum while leaving a reserve pot sitting with the lender. You only accrue interest on the funds you actually withdraw, which can save you money over time.
Scenario | With a Registered Property & Financial Affairs LPA | Without an LPA in Place |
Requesting further cash from your pre-agreed reserve | Your appointed attorney signs any financial documentation on your behalf, according to the instructions in your LPA and subject to the Lender’s criteria. | The lender or institution will typically freeze access. Nobody can access the funds without a formal Court of Protection order. |
Porting your mortgage to a new home | Your attorney deals with conveyancing, legal, and mortgage paperwork for you so that your financial transactions run smoothly. | The move is delayed or blocked; your family will find it difficult (or impossible) to complete the sale or purchase without court authority. |
Accessing funds to pay for home care | Your attorney manages bank accounts, pensions, or property equity to cover care and other costs without interruption. | Family must apply to the Court of Protection, which can take several months and cost thousands in fees before funds are released. |
How to Set Up Your LPA Correctly
To prevent delays and ensure your lifetime mortgage operates smoothly, follow these four rules:
- Set It Up While in Good Health
An LPA can only be created while you have full mental capacity. Once cognitive decline or a serious medical event occurs, it is too late.
- Appoint Attorneys Jointly and Severally
This allows your attorneys to act together or independently. If you appoint them purely “jointly,” the entire LPA becomes void if one attorney passes away or falls ill.
- Register Immediately with the OPG
Registration with the Office of the Public Guardian can take several weeks. An unregistered LPA cannot be used by your attorneys.
- Notify Your Mortgage Lender
Provide your mortgage broker or lender with a certified copy of the registered LPA as soon as it is approved, ensuring all identity checks are pre-cleared.
- Enduring Power of Attorney
If an EPoA was put in place prior to 2007, it may achieve the same outcome as arrangements outlined in this blog. More information here
Clear Advice for Your Later-Life Lending
Securing an equity release plan can provide greater financial flexibility in retirement; putting an LPA in place can help ensure that you and your family can retain control no matter what the future holds.
At Liddle Perrett, our mortgage specialists guide you through every stage of the later-life lending journey, helping you coordinate with trusted legal advisers to secure your borrowing and your estate.
A Lifetime Mortgage will reduce the value of your estate and may affect your entitlement to means-tested benefits and tax status. The impact of not servicing monthly interest payments on a Lifetime Mortgage is that the outstanding debt can grow rapidly, thus reducing the value of your estate. For example, if the interest rate was 7% a year, a £50,000 loan would double to £100,000 after 10 years assuming no repayments are made. This is an example for illustrative purposes only and personalised advice and recommendations should be sought from a qualified professional. You are strongly advised to register a lasting power of attorney. This will allow your affairs to be managed by somebody else if your mental abilities significantly decline.
Disclaimer
Equity Release advice is provided by Liddle Perrett. Liddle Perrett is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Lasting Power of Attorney (LPA) and legal services are referred to a third party. Liddle Perret does not provide legal advice. Neither Liddle Perret nor PRIMIS are responsible for the service received by that third party. Equity Release Mortgages are regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage. The information contained within was correct at time of publication but is subject to change ((insert date) published XX/XX/2026). This is for information purposes only and does not constitute advice.