Interest Only Plans

If you’ve heard people talking about releasing equity from their property while making sure some inheritance is protected, they could well have been discussing an interest only lifetime mortgage or equity release plan.

Here, we’ll aim to give you detailed explanation of how an interest only plan would work, answer some frequently asked questions and lay out what to do if you’d like to discuss this type of equity release in a bit more detail.

What is an Interest Only Plan?

An interest only lifetime mortgage is very similar to a lump sum equity release – but with the notable difference that a monthly payment becomes due from the homeowners.

So, as with a lump sum agreement, a valuation of the property is obtained – along with some details about your personal circumstances, including age and finances currently attached to your home. Based on this information, an amount of equity that could be released is calculated.

Your chosen amount of money is released – but, unlike a lump sum plan, the interest on this amount does not accrue or ‘roll up’; instead, you pay it off each month. By doing so, you can maximise the amount of money released – or ensure there’s the potential for a larger amount of equity in your property that can be left in your estate for inheritance purposes.

Benefits of an Interest Only Plan

If you’re familiar with mortgage interest rates you’re probably aware that they can be subject to large fluctuations based on interest rates elsewhere. The good news is, with an interest only lifetime mortgage this isn’t the case – so affordability and your personal budget won’t be impacted into the future, regardless of bank interest rates.

As we’ve previously mentioned, paying the interest on this type of equity release product helps to maximise the amount that you can borrow – or will be left as equity in your property upon your passing – meaning any inheritance you’ve earmarked for loved ones is also maximised.

Of course, as with all lifetime mortgage plans, you retain ownership of your property and have a fully protected right to stay there for the rest of your life. What’s more, your wider estate is kept completely safe – as a lifetime mortgage is fully settled by your property upon death or moving into full time residential care. Even if there’s a shortfall owing to property prices, that is firmly the problem of the lender – not yours or your family’s.

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Who Would an Interest Only Plan suit?

Interest only plans are often seen as ideal for those who have a generous pension plan that has afforded them a good disposable income that’s surplus to their average living costs.

Of course, a large lump sum is still released from the equity in the property, so interest only plans are useful if you have a large purchase or a desire for some financial flexibility in mind.

An interest only plan could also suit you if you think that moving home in the future might be a possibility. This is because interest only products, subject to the suitability of the new property, can be transferred – offering some great flexibility.

Am I eligible for an Interest Only Plan?

Assessing your eligibility for an interest only plan would begin with a quick look at your age and the value of your property. Where a more senior age would often present a problem for standard mortgage lenders, the opposite is true with lifetime mortgages, making them ideal for people approaching or into retirement.

The lifetime mortgage products we offer require that the youngest applicant is at least 55 and your property is worth £75,000 or more. If you fit these criteria there’s a very good chance we’ll be able to find you a suitable equity release product.

It’s not just eligibility for an equity release we’d discuss with you though – taking a large sum from your property could impact means tested benefits and therefore change your disposable monthly outgoings – but don’t worry, our specialists can help you with the finer points of all these considerations.

Would you like to hear a little more?

If an interest only lifetime mortgage plan sounds like it could be the right one for you or for someone you know – we’d recommend getting in touch to talk about how we could help in a little more detail.

If you give us a call, you won’t find yourself talking to a salesperson who tries to talk you into taking action or choosing a particular product, instead, you’d be talking to someone whose job it is to answer all your questions, explain the facts and perhaps even suggest types of equity release that would be even more perfect for you.

Whatever happens, you can be certain that your enquiry is handled with the strictest confidence and is always without any obligation. You can also rest easy knowing that we only recommend products that meet with the strict guidelines laid down by the Equity Release Council, meaning all parties are protected in what is an important financial decision.

You can get in touch with us by calling 0131 644 3664 or 0333 360 1958 – we’d be delighted to have an informal chat about your exact needs.

Our Success Stories

What our Customers say About Us

“We just wanted to be able to stay in our home for some years to come and the local advisor from Equity Release Scotland was very helpful and understanding. We now feel very comfortable that we can afford stay in our home for the foreseeable future and have options further down the road.”

Mr & Mrs Davidson

Glasgow

“What a relief, our mortgage and debts repaid, one easy monthly payment which we can afford and the option to stop paying that in the future if we choose’ . The process was smooth and everything was clearly explained to us. We had lots of questions but our adviser was always available to answer any concerns we had....thanks a million”

Mr & Mrs Curran

Edinburgh

Our Guarantees

Why You should always choose a product from a lender approved by the Equity Release Council

Guarantee 1

equity release council logo approvedYou have the Right to Remain in your Home for as long as you choose

Guarantee 2

equity release council logo approvedYou will NEVER owe more than the value of your home due to the "no negative equity" guarantee.

Guarantee 3

equity release council logo approvedYou have the freedom to move to another property without financial penalty (subject to provider criteria)

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