Interest-only equity release available without affordability checks
16 October 2019
The advantages of an interest-only equity release plan
If you have sufficient income to make the monthly interest payments on a lifetime mortgage comfortably, then you have the option of releasing equity from your home to realise your retirement dreams without the interest on your equity release plan rolling up. This gives three key advantages at the end of the plan:
- There will only be the original loan to repay
- You retain as much equity as possible in your property
- You maximise the inheritance that you leave to your loved ones.
To avoid any interest rolling up, you have to be able to meet the full monthly interest charges, however there are some products with options to repay only some of the interest, which is a good halfway house between preserving your equity in your home (and the inheritance you leave) and maintaining a comfortable level of disposable income.
You might want to consider an interest-only equity release plan if…
- You are over 55 and are unable to get a traditional mortgage – especially as you don’t have to demonstrate your income or ability to pay
- You have sufficient income to be able to service the interest payments without compromising your day-to-day lifestyle
- You want clarity about your monthly budget, as the interest rates and monthly payments can be fixed for life.
Flexible options on some interest-only equity release plans
It can be hard to look into the future; you may be confident about meeting monthly interest payments in the short or even medium term, but unsure about whether you would still be able to afford them in several years’ time. Some equity release schemes give the option of switching from interest only to roll-up, meaning you can stop the interest accruing for as long as you can afford it, but with peace of mind in case the interest payments ever became too much.
Is an interest-only equity release scheme right for you?
“As with all equity release schemes, there are advantages and disadvantages,” explains Jan Johnson, director of 55+ Equity Release. “It’s important to seek professional advice from an honest adviser who will talk you through both the pros and the cons and will look at your complete financial situation to advise on appropriate solutions that meet your personal circumstances and requirements.”
If you think an interest-only lifetime mortgage could be a sensible option as part of your retirement finances, our 55+ Equity Release advisers will be happy to meet with you to help you understand the whole picture.