If you're over the age of 55 an interest only lifetime mortgage could allow you to release a cash lump sum via a mortgage secured on your home. You also retain full ownership of your property.
This is the most cost-effective method of equity release as it allows you to manage the associated interest charges by making monthly repayments. As long as you keep up with the interest payments the amount you owe never increases. This avoids the compounding of interest associated with lifetime mortgages, where interest is charged on the interest already added to the mortgage.
To qualify, you must meet the provider’s affordability criteria. If you can’t afford or choose not to make full repayments you can elect to make partial payments, to help reduce the long-term cost.
Fixed interest rate
Unlike conventional mortgages the interest rate for lifetime mortgages is fixed for the life of the plan giving you peace of mind and certainty that your repayments will not increase.
If your circumstances change in the future, you have the option to switch to a lifetime mortgage not requiring repayments. A higher interest rate may apply but this feature ensures you can remain in your home even if payments become unaffordable.
Some products will also allow you to:
- Add a protected equity option, to guarantee some of the value of the property will be available to leave as an inheritance
- Add a pre-approved flexible borrowing facility, to enable you to access further funds if you need to in the future
Your advisor will discuss all of your available options before making a specific recommendation based on your individual needs and objectives.