An interest only lifetime mortgage is a method used to release equity in your property, whilst only paying interest on a monthly basis, and the balance remaining static.
This type of mortgage can help a home owner who is either retired or nearing retirement to release cash from the equity in their home, but have an affordable monthly repayment. Affordability checks still apply, along with credit checks, and there are variations of this type of mortgage available. There are a number of benefits to be found with this type of mortgage, although it is strongly recommended that you seek advice from a professional who has undertaken a CeMAP qualification.
The rate of interest payable on the loans are fixed for the duration of the term, so you have fixed monthly payments. As the interest is paid each month, the balance outstanding will remain the same. The property is retained by the owner, so that any future increase in value will be kept by the owner.
As an interest only lifetime mortgage runs for the remainder of your life, you won’t have to repay the amount outstanding until you either move into long term care, or you die. Any remaining equity in the property once the amount of the loan has been repaid, can be distributed accordingly.
An interest only lifetime mortgage can also be ported across to a new property, subject to criteria, if you decide to move to a new home. As with all financial decisions, it is advisable to seek advice.
