Equity Release Schemes - Interest Only Lifetime Mortgage
An interest only lifetime mortgage is a form of equity release but with inheritance protection.
For those looking for an alternative to roll-up equity release schemes, an interest only lifetime
mortgage can be a sensible retirement option. If pension income is sufficient to meet regular
monthly payments & you are adverse to the risk of reducing your beneficiaries inheritance,
then a lifetime mortgage on an interest only basis could prove to be sound financial advice.
Lifetime interest only mortgages for retirement
Anyone over the age of 55 is eligible for an interest only lifetime mortgage. As long as monthly payments of interest
are maintained, then the mortgage balance with remain exactly the same throughout the term of the loan. With an
interest rate that is fixed for life, you have the assurance of knowing that monthly repayments will never change.
Therefore, should mainstream mortgage rates rise, the interest only mortgage is protected from such increases.
Haven't interest only mortgages been withdrawn?
Mortgage lenders have come under pressure from the FCA to withdraw interest only mortgages, if no repayment
vehicle is in place. However this usually applies to pre-retirement mortgage lending. Until recently, the Halifax
Retirement Home Plan was an interest only lifetime mortgage option. Halifax withdrew this in August 2011, but
alternatives are still available. Compare Equity Release specialise in pensioner mortgages & have ties with
retirement mortgage lenders, thus we can research the whole of the mortgage market to find you the best deal.
Can I get a mortgage in retirement on pension income?
The answer is yes!
Compare Equity Release have various interest only lifetime mortgage options. These are based on a multiple
of pension income or a self certification basis to warrant a retirement mortgage. Most high street lenders will
only offer a maximum age limit of 70-75, however we have access to mortgages upto age 80 & beyond. If your
location is England, Scotland, Wales or Northern Ireland we have interest only lifetime mortgages available.
Visit our 'Focus On' - Stonehaven Interest Select Plan page for further details.
...or call us on 0800 678 5169 to check eligibility.
The advantages of interest only lifetime mortgages
- Paying back monthly interest to the lender maintains a level mortgage balance for the whole term
- The mortgage will run for the rest of your life & repayment will be upon the sale of the property
- Option of a fixed rate of interest for life, meaning affordability is known now & into the future
- Retain 100% of the property value & any escalation in its value is passed on to your heirs
- Mortgages are portable, thus if you move house it can be transferred subject to property criteria
- Some plans allow you to 'switch' over an equity release plan with NO payments if difficulties arise
- Interest only mortgages can be repaid at anytime
The disadvantages of interest only lifetime mortgages
- With all lifetime mortgages, if the mortgage is repaid early there could be repayment charges
- You must maintain monthly payments for the rest of your life. Repossession is possibility if not
- If a variable interest rate is taken, then payments could become unaffordable if interest rates rise
- Borrowing money secured on your house will reduce your beneficiaries inheritance
- No 'drawdown' format exists currently. Only further advance applications can raise additional cash
- Change in circumstances may render the payments unaffordable. Contingency plans are required
The decision making process for an interest only lifetime mortgage can be just as important as a roll-up
equity release scheme. Firstly, all current & future scenarios must be considered & action plans put in
place for such scenarios. We also advise that life insurance is considered to repay the mortgage on death.
Call the Compare team on FREEPHONE 0800 678 5159 to find out how equity release could help you.
Further information on interest only lifetime mortgages:-
The following links help & provide key information on ways to manage the release of equity from your home: -
These are interest only lifetime mortgages. To understand the features and risks, ask for a personalised illustration.
Your home may be repossessed if you do not keep up repayments on your mortgage.