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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 6885 to speak with one of our specialist equity release advisers. You can also try our online equity release calculator.