Interest-only mortgages were popular in past years as the monthly payments for such were extremely low.
However, in many cases the means for eventual repayment of the amount borrowed was not dealt with properly – leaving many with money still owing on their mortgage and a relatively short number of years in which to repay it.
For those over 55 there is now an option to secure an indefinite interest-only mortgage arrangement at a fixed rate for the life of the borrowing. This is a new development in the Equity Release marketplace. Previously the only option one had with a Life-Time Mortgage was to allow the interest to accumulate. The repayment of the interest and original amount borrowed would take place on the eventual sale of the property. Now, however, many providers are offering an option which allows those taking out a Life-Time Mortgage arrangement to make voluntary payments of interest, and even capital. Since these payments are voluntary, you can miss payments without penalty or even stop payments altogether. There are also no affordability requirements as the borrowing is based on age and not on income.
Note: this type of equity release is only available from age 55. At age 55 you can only take about 25% of property value. This rises to about 48% of property value for those in their 80s.
Contact us with any questions you have or for quotations.
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