Interest Only Lifetime Mortgage

A conventional mortgage secured on your property, usually on an interest only basis, where the repayment vehicle to clear the debt will be the funds released on the eventual sale of the property. There is usually no fixed term on the mortgage although at some point in the future the loan will have to be repaid, however, in the meantime you pay a regular payment of interest to the lender.

Interest-only mortgages

You pay interest each month, but you have a lump sum to spend as you wish.

Advantages

  • The amount you owe is fixed so any increase in the value of your home belongs to you or your family.
  • You can borrow at a fixed rate so you know exactly what you have to pay every month.

Disadvantages

  • You need to be able to afford the ongoing interest payments
  • You should think very carefully about investing the lump sum you borrow. It is very unlikely that an investment would make a sufficient return to guarantee paying the interest on a mortgage.
  • Many schemes involve buying an annuity. Because annuity rates are so low and they increase with age, these schemes are often only suitable for elderly homeowners.
  • Variable rate loans can be very risky: your payments could rise more than your pension or other income.

These schemes are not suitable for everyone. There are advantages and disadvantages involved and it is prudent to seek qualified professional advice before committing yourself.  It is important that you consider all the options available in order to be sure you take the most suitable action for your own needs and circumstances.

There are other factors to consider when arranging an equity release mortgage, such as any effect it may have on your tax status, or your entitlement to means tested benefits or age allowance.  Releasing equity also means your estate would receive less or nothing upon your death, depending on the type of plan taken

To understand the features and risks of each option please call us for a personalised illustration.

Call us for equity release advice on Northampton 01604-832932.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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Cade & Co provides financial advice and planning, in plain English, to people who want to ensure they make the right financial decisions at the right times and at the right cost. It's simple!
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