Interest-Only Lifetime Mortgages
An interest-only lifetime mortgage enables you to make monthly interest payments on the mortgage balance without ever increasing. There are two important elements
- They can provide inheritance protection for the beneficiaries
- It is for people who still have mortgages in their retirements and are being pressured by lenders to make repayments.
Like any other standard lifetime mortgage, the criteria to qualify for an interest-only mortgage is the same. You have to be at the ages of 55 and above and a property under your name that is worth 70, 000 euros.
This type of plan could be the best for the elderly generation as they are eligible to release equity solely because of their life expectancy. There are still certain features of the plans that you can change as a roll-up plan as time goes by.
Interest-Only For Pension Or Retirement
It has become difficult for people in retirement who need to borrow money just solely based on their age. However, the trend of not having to worry about the criteria of age in the application, lifetime mortgages and equity release schemes have been made easier to obtain, allowing the elderly ages of 55 to 90 and above. Health and lifestyle trends gave the opportunity to raise more financial freedom for pensioners and people in retirement.
Pros and Cons Of Interest-Only
Some advantages and disadvantages of an interest-only mortgage maybe a useful comparison:
PROS OF INTEREST-ONLY MORTGAGE
- Ownership - your property and house price are 100% owned by you.
- Eligible for people from the ages of 55 and beyond.
- Repayment - no fixed payment dates allowed to pay anytime.
- Monthly costs - cheaper compared to capital and repayment mortgages.
- Roll-up option - you can switch to a roll-up as a back-up plan should you not be able to afford the mortgage and to avoid possible repossession.
- Fixed interest rate - an option to fix your interest rates for life.
CONS OF INTEREST-ONLY MORTGAGE
- Regular payments - in order to ensure a level mortgage balance then regular payments must be maintained.
- Inheritance reduction - the overall value of the estate will be reduced.
- Repayment penalties - if the loan is repaid early there may be early repayment charges.
- Loan-To-Values - are not as generous as equity schemes. Starting at 11% of the property value for a person aged 55.
- Death of a partner - affordability may become an issue should a partner pass on.
For more information, go to SmartMortgagesUK and get a quote today.