Interest Only Equity Release For Retirement Income

Interest Only Equity Release For Retirement Income

Approaching retirement age is the time when many people start to consider how much money they will need to have a comfortable lifestyle. However, planning for retirement should begin many years before this.

Many people regard their homes as their primary asset and seek to release the money that is tied up in their property to help with their retirement. If you have your own property, you might want to consider an interest only equity release scheme.

Interest Only Lifetime Mortgages

Interest-Only Lifetime Mortgage schemes are only available for people who are aged over 55 years old – but many providers are more restrictive and offer them to people who are aged 60 or 65.

You must own your own home and occupy it as your main residence. In other words, you will be restricted if you try to take out an Interest Only Lifetime Mortgage for a Buy-To-Let property that you own, or home that might be used for holiday lettings, etc.

Your home must be valued at more than £70,000.

How Much Can You Borrow With An Interest Only Lifetime Mortgage?

The provider of your Interest Only Lifetime Mortgage will decide how much money they are prepared to lend you based on your age and the value of your property. This is the same principle that is used for other equity release schemes such as a Home Reversion Plan or traditional Lifetime Mortgage.

Once your Interest Only Lifetime Mortgage has been agreed and you have received your money, you will need to start making monthly payments which will be based on the interest on your loan. With conventional mortgages, your monthly payments would normally consist of capital repayment and interest payment. An Interest Only Lifetime Mortgage is different because you only pay the interest that has been charged on the capital that you have been loaned – you do not repay any of the capital. Therefore, you monthly payments should be relatively low but you should make sure you have the means to make the payments.

The interest rate that is applied to your loan will be fixed for life so you know precisely how much you need to pay each month.

When your home is sold, usually when you die or move into care, the capital element of the loan is repaid.