February 5th 2012 - Eric's Guide to Equity Release
Interest-only Lifetime Mortgage
A Home Reversion Plan and Roll-up Lifetime Mortgage Plan do not require you
to make any monthly payments. If you have an Interest-only Lifetime Mortgage,
you pay interest on a monthly basis.
Unlike a conventional mortgage, the amount you can borrow depends on your
age, your property’s value and what you can afford.
Do I qualify for an Interest-only Lifetime Mortgage?
This type of Equity Release plan is only suitable if you have a regular source of income such
as a salary or pension.
What are the interest payment terms?
The interest rate (and therefore the monthly payments) is fixed at outset.
Payments are made monthly. This means that the amount of the loan does not
increase, unlike a Home Reversion Plan
or Roll-up Lifetime Mortgage Plan.
There is no fixed term unlike
a conventional mortgage and
the loan is repaid on the sale of
the property. This might be due to the
death or long-term care requirements
of the last applicant.
What are the consequences of
missing an interest payment?
It will depend on the plan, but typically, if
three payments are missed, the plan will
be converted to a Roll-up Lifetime
mortgage. This would mean that interest
would be charged at a different
rate which might be higher than
the original fixed rate.
If you have any questions about Interest Only Lifetime Mortgages and whether or not they might be suitable for you call freephone 0800 077 6599 to speak with one of our specialist equity release advisers. You can also try our online equity release calculator.
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