Interest-serviced lifetime mortgages

What is an interest serviced lifetime mortgage?

An interest serviced lifetime mortgage works in a very similar way to a drawdown lifetime mortgage. The mortgage is secured against your home and only repayable when you die or move permanently into long-term care.

The main difference is that you have an opportunity to pay some, or all of the monthly interest being charged, which will reduce the overall amount owed.

Typically, how much can you borrow?

The maximum amount you can borrow will be determined by a number of factors, including your age and the value of your property. The amount of interest that you are able to pay each month will be assessed by your adviser against your income and all outgoings.

You can typically borrow between a minimum of £10,000 and a maximum of £2,000,000 if you live in the UK.

How is the interest calculated?

The interest rate applied to the mortgage is fixed for life and will not change, regardless of what happens to interest rates in the future. But any monthly payment you make will reduce the amount of interest that is being added to the mortgage each year.

You can choose to pay either some or all of the interest built up on your lifetime mortgage – your financial adviser would advise you on this and it would depend on how much you could afford. 

Could I get this type of lifetime mortgage?

Your circumstances are different to everyone else’s. Do talk to a professional adviser before considering a lifetime mortgage. In general though, to qualify for most providers’ interest-serviced lifetime mortgages, you have to be:

  • aged 55 and over. 
  • home owners or buying a home to live in or rent out.
  • UK residents
  • able to evidence your income and expenditure (your adviser will help with this).

Your property must also be:  

  • in England, Scotland or Wales
  • worth a minimum of £70,000
  • made of standard construction.

Is there anything else I should know?

Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.

We recommend that you talk to a professional adviser before making any decisions about buying equity release products.

Also, if you miss payments – unlike a conventional mortgage where your property could be repossessed – the interest will be ‘rolled up’ and added to the loan and repaid when you die or go into long-term care.

In the meantime, if you would like an indication of the total you could release from your property, please look at our Equity Release Calculator.

Find out how much equity you could release

Many factors are taken into account by the lender, your age, health, and the value of your home. Use our Equity Release Calculator tool to see how much money you might be able to release from your property. It only takes a couple of minutes and you don’t have to provide any personal details if you don’t want to.

No personal information required, get instant results

Need more information?

The best way we can help you is to have a quick conversation to understand your situation and recommend appropriate products. Contact us today for a no-obligation discussion.