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Interest only lifetime mortgage

An interest only lifetime mortgage from StepChange Financial Solutions is the most cost effective method of equity release.

Interest only lifetime mortgages are available throughout the UK.

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.

Equity release advice is provided by StepChange Financial Solutions, a subsidiary of StepChange Debt Charity. It is not a lender but works on behalf of our clients to search the market for a range of mortgage and equity release products that will best suit their needs.

Benefits of an interest only lifetime mortgage

  • Unlike conventional mortgages, the interest rate for lifetime mortgages can be fixed for the life of the plan
  • If your circumstances change, you have the option to switch to a lifetime mortgage not requiring repayments (a higher rate of interest may apply)
  • If leaving an inheritance is important to you, some products allow you to protect and retain a certain amount of equity in your property 
  • If you want to access more funds in the future, some products will allow you to add a pre-approved flexible borrowing facility


Risks of an interest only lifetime mortgage

  • You don’t pay tax by releasing equity, but the way it’s released might affect your tax position and entitlement to means-tested benefits
  • Future property prices might be higher or lower than they are today
  • Releasing equity from your home will reduce the value of your estate, affecting the amount of inheritance you might leave
  • There are implications of securing other debts against your home
  • Consolidating debts over a longer period may mean you pay more overall


To understand the features and risks of an interest only lifetime mortgage ask for a personalised illustration.

Considering an interest only lifetime mortgage?

Call us now for FREE on 0808 1686 719 for no-obligation advice.


How to apply

  1. Speak to our expert advisors for free, impartial advice.

    You can call us for free on 0808 1686 719.
  2. We'll talk through your situation to see whether an interest only lifetime mortgage could be your best option.
  3. If you qualify, we'll guide you through the entire process.

    There's no need for a home visit; we'll do everything over the phone.


Why choose us?

  • Fee-free: We don't charge you for our advice
  • Unbiased: Our advisors are salaried with no commission
  • Trust: We're the UK's only charity-operated equity release advice service

Common interest only lifetime questions

The outstanding amount is repaid from the proceeds of the sale of your property either on death (with a couple it’s on the death of the last survivor) or following a move into permanent long-term care.

All equity release plans that meet the standards set by the Equity Release Council carry a 'no negative equity' guarantee. This means that the amount owed can never exceed the value of your property.

Usually, the amount you can release is linked to your age; the older you are the greater the cash sum that can be released. 

Most providers will release a fixed percentage based on your age. For example a 60-year-old could release 20%, a 65-year–old could release 25%, and so on. The amount available varies between providers.

The amount you can borrow also depends on the value of your property, your age, and sometimes your health. 

New mortgage rules mean any interest only lifetime mortgage applications will be assessed based on whether you can afford to repay the loan.

The amount of inheritance available will be the difference between the proceeds from the sale of the house and the amount outstanding on the plan when it’s redeemed. 

If your plan has a lifetime fixed interest rate, you’ll have the certainty of knowing exactly what your future liability will be.

We can’t predict the future value of your property when it's eventually sold so we can't predict what inheritance will be available.

Some providers offer an inheritance protection facility on their plans which allow clients to protect a specific percentage of the property’s future value. Your advisor will discuss this option if protecting an inheritance is one of your priorities.

There are four main costs associated with equity release.

1. Advice fee

At StepChange Financial Solutions we don't charge any advice fees.

2. Valuation fee

This is payable when you submit your application and usually depends on the estimated value of your property.

3. Legal fee

We recommend that you agree a fixed fee with your solicitor once your equity release offer is confirmed. Typical legal fees range between £400 and £500. If you’re purchasing a property, or the legal position of your property is not straightforward, additional costs may apply.

4. Application fee

Some lenders may charge an application fee. Where this is the case it typically costs £695.

Is an interest only lifetime mortgage right for me?

Call us now for FREE on 0808 1686 719 for no-obligation advice.

StepChange Financial Solutions is a registered trading name of Consumer Credit Counselling Service (Equity Release) Ltd. Authorised and regulated by the Financial Conduct Authority. FCA reg. no. 517674.