Interst Only Lifetime Mortgage

Interest Only Lifetime Mortgages are similar to the Lifetime Mortgage being that you are able to access a Tax Free lump sum. However, under the Lifetime Mortgage no interest payments are made and the balance of loan increases until the property is sold to repay the loan, whereas with an Interest Only Lifetime Mortgage you have the flexibility of protecting any remaining equity within your home by way of either:

A. Making the monthly interest payments, or
B. Allowing the monthly interest charge to be added to the loan and utilising a 10% per annum overpayment facility.

Therefore, opting for an Interest Only Lifetime Mortgage you are paying the chargeable interest and the loan balance remains the same. As with the Lifetime Mortgage, the loan is repaid out of the future sale of the property, for example, if you’re applying as a couple, when the surviving partner is admitted into long term care or sadly passes away.

Interest Only Lifetime Mortgages offer an alternative to those who wish to maximise the amount of inheritance they leave for their beneficiaries.

Interest Only Lifetime Mortgages differ dependent on provider and it may be possible to release up to 75% of the value of your property. Alternatively, initially a smaller amount may be released with the potential to borrow more at a later date. In order to qualify for making the monthly payments providers will need to be satisfied that your current income is sufficient whilst meeting all other criteria. However, it may be possible to choose your monthly payments, which can be anywhere between £25pm up to the full amount of interest charged, or allow the interest charged to roll up utilizing the over payment facility as mentioned earlier. No affordability checks are required as any payment is classed as a ‘contribution’ towards the interest.

Importantly, for Interest Only Lifetime Mortgages make sure you can always afford any agreed monthly payments as the loan is secured against your home and failure to keep up with the repayments may result in having your home repossessed. Furthermore, consideration should be given to meeting any required payments should one of you no longer be around due to death or long term care.

Speaking to us will help you understand the advantages and disadvantages of Interest Only Lifetime Mortgages and will also explore and explain any alternatives.

IMPORTANT
Lifetime Mortgages may affect your entitlement to state benefits and will reduce the value of your estate. Think carefully before securing other debts against your home. To understand the features and risks, ask for a personalised illustration.