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Interest only lifetime mortgages are available throughout the UK.

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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.

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If you're 55 or over, an interest only lifetime mortgage could allow you to release a cash lump sum through a mortgage secured on your home without needing to move. 

As long as you maintain your monthly repayments throughout the plan, you’ll only be required to repay the original amount borrowed when it ends. Our expert advisors can offer free, impartial advice on which type of equity release is right for you.

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 add a protected equity option, to guarantee some of the value of the 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

  • Releasing equity 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 our knowledgeable team on 0808 168 6719 or arrange a callback at a convenient time.

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How to apply

  1. Speak to our expert advisors for free, impartial advice. You can call us on 0808 168 6719 or use our online form to arrange a callback.
  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.
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Why choose us?

  • 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?

If you're considering an interest only lifetime mortgage, call our expert team on 0808 168 6719 or arrange a call back at a convenient time.

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StepChange Financial Solutions is a registered trading name of Consumer Credit Counselling Service (Equity Release) Ltd. Authorised and regulated by the Financial Conduct Authority.

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

*This is the average rating of our service based on the StepChange reviews on Feefo by DMP and DRO clients three months into their solution.

© StepChange Debt Charity 2018