Interest Only Lifetime Mortgages

Interest Only Lifetime Mortgages are equity release schemes which allows you to pay the interest on a monthly basis to prevent any debt increasing overtime.

As such they are similar to any ordinary mortgage you have had in the past, except for the following differences:-

  1. The amount you can borrow is not based on income or affordability but simply age and property value so you can get an immediate idea of just how much you could borrow by using our instant calculator.
  2. You only repay the interest each month – not the capital. Consequently, providing you do repay all of the interest, your debt will never increase.
  3. There is no maximum age limit.
  4. There is no end date. They are Lifetime Mortgages and the money owed will only need to be finally repaid when your (or the last one in joint applications) die or go into care.
  5. The interest is normally fixed for life not just 2 or 5 years – thus giving you absolute security in budgeting.
  6. Unlike ordinary mortgages, if you find you can no longer afford the repayments you can stop paying without needing to sell. The interest is then simply added to your debt (compounded) from that date forward, in effect transforming it into a roll up lifetime mortgage.
No Income Needed & No Age Limit

Advantages

  • Available from age of 55.

  • The amount you can borrow is not based on income, affordability, or credit rating – simply on age and property value.

  • Providing you pay the interest each month, the debt doesn’t increase.
  • You can cease paying the interest at anytime without having to sell.
  • You do not need to repay the loan until your house is finally sold –normally on death or going into a care home.
  • Any money released is TAX FREE and can be used for any legal purpose.
  • You still retain ownership of your home and will still benefit from any future growth.

  • You can also arrange an additional facility to drawdown overtime if required, giving you reassurance that if your circumstances change or need more money you can drawdown further funds. No interest is charged until you do decide to borrow further funds.

Disadvantages

  • Monthly repayments will increase your expenditure.

  • The amount you can borrow is limited to a set percentage of your home’s value based on your (or the youngest applicant’s) age. Depending on your homes’ value this may be insufficient to clear any outstanding mortgage.

  • Due to having a fixed interest rate for life, the interest rates offered may be more expensive than ordinary short term mortgage rates.
  • If you wish to voluntarily repay the loan early, you may incur an Early Repayment Charge.

Equity release schemes will reduce the value of your estate and may affect your entitlement to means tested benefits. Before releasing any equity, it is important to understand the costs, features and risks and to request a personalised illustration.

WHO ARE INTEREST ONLY LIFETIME MORTGAGES BEST SUITED TO?

Interest Only Mortgages can be ideal for homeowners aged 55 + who do not wish to see any debt increase and have sufficient income to afford monthly repayments.

They can be ideally suited to those who:-

  • Who wish to extend an existing ordinary interest only mortgage but their existing lender needs it repaying.
  • Wish, or need to release some money to help just one child, but wants to avoid any interest adversely affecting other children’s inheritance.

Other alternatives

There are numerous possible alternatives to releasing equity from your home and these should always be considered. But should you decide that equity release is right, before settling on an interest only lifetime mortgage, we would suggest you also consider the following alternative schemes.

“Roll Up” Lifetime Mortgages

These schemes allow you to borrow one single lump sum and make no monthly repayments of interest but allow the interest to accumulate with time.

Read More

Retirement Mortgages

These schemes are ordinary mortgages with availability and the amount you can borrow being based on income and affordability.

Read More

Home Reversion Plans

Although with these schemes you sell legal ownership of your home, you can sell just a percentage of your home and therefore preserve the remainder for your family.

Read More

What Next?

We are experts in interest only lifetime mortgages.

Should you wish to release some equity and prefer an interest only lifetime mortgage we would be pleased to help.

Simply call us on FREEPHONE 0800 180 4883 and we will be pleased to check your eligibility and arrange for a consultant to contact you to discuss your plans, and find the most suitable interest only Lifetime Mortgage for you from all available lenders.