| |
Interest Only Mortgages from The equityRelease Centre
There are a few Building Societies and Banks that are prepared to offer ordinary interest only mortgages for life to retired people, to allow them to release capital.
Interest only mortgages mean that you only repay the interest not the capital to the lender, therefore, the monthly repayments can be relatively affordable.
In keeping with specialist schemes the intention is that you do not repay the debt until you die or sell the property.
Providing you pay the interest each month, your debt remains the same, unlike other specialist schemes. The amount you can borrow under such schemes are based on your incomes including pensions not your age or life expectancy.
Advantages of Interest Only Mortgages
- Debt remains the same
- Amount available can be higher for younger people than roll up schemes, as not based on age.
- Short term fixed interest rates are lower than available under roll up schemes.
- Set up fees can be considerably lower.
- Can be particularly useful as a temporary alternative measure for people who would prefer a specialist scheme, but are currently too young to obtain any of the best specialist schemes. (Then once eligible a specialist scheme may be used to replace the mortgage thus stopping the need to make monthly repayments.)
Disadvantages of Interest Only Mortgages
- You need to make monthly repayments for the lifetime of the mortgage - thus increasing your expenditure.
- If you fail to keep up the repayments your home could be repossessed.
- Although interest rates are currently low they may increase, unlike a specialist scheme where once taken the interest rate remains fixed or capped for life. Although, fixed rates are available they will only be fixed for between 2-5 years. Thereafter you would need to find a new fixed rate deal or the rate would revert to the standard rate, both of which could be considerably higher at the time, leading to increased repayments.
- If you wanted to move, the loan would be repaid at the time, which may leave insufficient money to buy a new property, you would then need to obtain a new mortgage. Lending or personal circumstances may change resulting in you finding it difficult if not impossible to raise sufficient new money at the time.
- Should you want the loan to continue once you retire, lenders may limit the amount available to a multiple of your pension income, which may not be sufficient for your needs.
- Mortgages established based on joint incomes, may become unmanageable on first death, possibly forcing you then into moving or taking a specialist equity release scheme.
If you do not qualify for an equity release plan or would prefer an Interest Only Mortgage please complete our online mortgage enquiry form:
|
|
