Interest Only Lifetime Mortgages
What is an Interest Only Lifetime Mortgage?
An interest only lifetime mortgage is an attractive option, when it comes to alternative lifetime mortgages because it allows you to release equity and reduce the interest. You can choose to pay off some, if not all, of the interest during the term of your loan. This allows you to future proof the inheritance you leave too.
Can you get an Interest Only Lifetime Mortgage if you’re retired?
Previously, retirees have found it difficult to secure additional finance due to their age and income. Lifetime mortgages, however, paved the way with equity release plans where age is no barrier. By assessing each individual circumstance, and using a thoughtful lending approach with flexibility, we can offer plans to suit your retirement goals.
Interest only lifetime mortgages do not suit everybody. Individual circumstances play a huge part on whether an interest only lifetime mortgage is the best option for you.
How does an Interest Only Lifetime Mortgage work?
Interest only mortgages tend to follow the same set of principles as standard lifetime mortgages; the minimum age is 55 and the loan to value (LTV) is based on the youngest applicant as well as the market value of your property.
The amount of equity released tends to increase with the age of the homeowners and their life expectancy. Moreover, the level of interest repaid back to the lender can be determined by the homeowner, depending on factors like pension income, inheritance and the size of the loan.
You are free to select your level of contribution, in terms of repayments. If the contribution level towards your interest only lifetime mortgage is lower than the interest charged, it will begin to ad dup. However, the most popular option is to fully repay the interest each month, in order to maintain a static mortgage balance.
What are some of the benefits & drawbacks of a drawdown lifetime mortgage?
- Interest rates can be fixed
- Repayments are flexible and advantageous
- You still own your property
- Interest only lifetime mortgages can be ported, if you move house
- Paying the loan off early could result in additional charges
- Can reduce the inheritance you pass on
- Monthly repayments must be maintained