Interest only lifetime mortgage An interest only lifetime mortgage is a relatively new kind of equity release plan where you can pay the interest due on a monthly basis. This means the size of your loan never goes up, making them an increasingly popular option for over-55s What is an interest only lifetime mortgage?You pay off the interest on your lifetime mortgage monthly – rather than paying it off along with the loan through the sale of your home when you pass away or move into long-term care.Interest is fixed, so your monthly payments never change and the amount you owe never increases, provided you continue to make payments.See how much you could borrow with an interest only lifetime mortgage using our equity release calculator. Calculate amount Interest only versus lump sumInterest only mortgages are relatively new, but are already proving an attractive option to many. Here are some of the reasons why:Reduced cost of borrowing – as you are paying the interest each month the effects of compound interest are reducedSecurity for the future – you have the peace of mind knowing that the amount that you borrowed isn’t increasingThere’s no upper age limit – you just need to be over 55 and be able to afford the repaymentsInterest can be fixed for life – helping you plan your retirement financesYou can stop paying any time – you’ll still stay in your home, but the ongoing interest will be added to your debt from that point, effectively becoming a roll-up lifetime mortgage Getting started Get a quick quoteUse our free equity release calculator to find out in less than a minute if you qualify and how much you could release. Calculate now Speak to an adviserBook a free Fact Find call to find out from an experienced Equity Release Adviser if equity release is right for you. A fee of £1,695 is payable only if you choose to proceed and your case completes, and can be added to your loan. Book adviser call FAQsIt’s important that you fully understand equity release before taking out a plan. Find out more Other types of lifetime mortgagesAn interest only lifetime mortgage isn’t your only option. Here’s three other types of lifetime mortgages that your adviser will consider for you depending on your individual circumstances: Roll-up lifetime mortgageA roll-up lifetime mortgage (also called a lump sum lifetime mortgage) enables you to take a lump sum of tax-free cash and typically no repayments are made. This means the interest is added to the loan amount and the balance grows (compounds) over time. Explore roll-up Drawdown lifetime mortgageA drawdown lifetime mortgage is a type of equity release plan that enables you to take cash from your home in chunks, as and when you need it. Interest is only charged on the cash which you have drawn down, meaning this can be a cost-effective way of borrowing. Explore drawdown Enhanced lifetime mortgageAn enhanced lifetime mortgage – also known as an ‘impaired’ lifetime mortgage – enables you to release more tax-free cash from your home, by taking into account your health and lifestyle choices. Put simply, the poorer your health, the more you can borrow. Explore enhanced Frequently asked questions about interest only lifetime mortgages Do I qualify for an interest only lifetime mortgage?To qualify for a lifetime mortgage you must be over 55 (both if in couple). Your home must be in the UK and worth at least £70,000, and – like with a traditional mortgage – must be ‘mortgageable’ in the eyes of the lender. If you have an existing mortgage you must repay the outstanding balance with the money released. An interest only lifetime mortgage might be perfect for you if you want to make monthly payments but don’t qualify for a standard Mortgage. Check eligibility What happens at the end of my mortgage?Interest only lifetime mortgages are designed to be repaid when the plan come to an end – either because you have passed away or moved into long-term residential care. At this point your home the home is sold and the money from the sale is used to pay off the loan. Anything left goes to your estate and therefore beneficiaries. If your estate can pay off your lifetime mortgage without having to sell the property they can do so. Speak to an adviser Can I stop making repayments?As long as you keep up with the interest payments the amount you owe never increases – thus avoiding compound interest. If you can’t afford or choose not to make full repayments you can elect to make partial payments, to help reduce the long-term cost. If you can no longer afford or wish to stop making payments altogether then (depending on your plan) you can do this without penalty and your mortgage will simply become a roll-up lifetime mortgage. Compare plans Is an interest only lifetime mortgage the right option for you?An interest only lifetime mortgage might seem like a good option if you want some extra money and don’t want to move house. However, there are some important ‘Things to think about‘. You need to look at how it will affect your future choices and financial situation in later life too.Our friendly advisers can help you to explore interest only lifetime mortgages – and the alternatives – without it costing you a penny. Only if you decide to go ahead we charge an advice fee of typically £1,695, payable on completion, and this can be added to your loan.Your adviser will be able to explain how:An interest only lifetime mortgage is a loan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits now and in the futureCompared to some other types of mortgages lifetime mortgage interest rates are usually higher because they’re fixed for lifeInterest repayments add to your overall monthly spending – unlike other types of equity release plans where there’s nothing to pay monthlyIf you want to pay off the loan early repayment charges (ERCs) can be substantialYou can only get one if your home is mortgage free, or if you can borrow enough to clear any existing mortgage or secured loanThe amount you can borrow is a percentage of your home’s value based on your age. If you want to access more of your equity, there are other mortgage options you could explore Speak to an adviser