Interest Only Lifetime Mortgage Providers: Our Experts Guide
Later Life Finance are the trusted name in the later life mortgage market and interest only lifetime mortgages. We compare the whole market.
Whether you are considering raising funds for inheritance tax planning, a flexible remortgage solution or a dream holiday, we can help explore all your options
“I cannot recommend them highly enough. Their service goes above and beyond. Very happy customers!”
Interest Only Lifetime Mortgage Providers
Author- Paul Murphy
Later Life Finance Limited.
What is An Interest Only Lifetime Mortgage?
As demand for greater financial freedom and control over personal finances grows, we are often asked what exactly is a retirement mortgage, and how does an interest-only lifetime mortgage work?
A popular form of modern retirement mortgage is the interest-only lifetime mortgage, which often ‘fits the bill’ for many borrowers, simply because they avoid the big negative of traditional equity release-compound interest, and provides the flexibility to maintain full control of the balance with regular interest payments.
We are frequently asked, can you still get an interest-only mortgage? Most of our customers are either long-term settled in their home, or have recently downsized and require a suitable mortgage solution to fit their retirement income needs.
If you are considering using our interest-only lifetime mortgage calculator to establish whether you can release equity on an interest-only mortgage, or how taking equity release to pay off interest-only mortgage actually works, the good news is the range of solutions available are better than ever before.
Interest-Only Lifetime Mortgages can be used for many purposes and benefit from some of the best discounted equity release interest rates for paying the interest monthly.
Plans can be used for:
-
- Cash lump sum
- Repay existing mortgage
- Home improvements
- Lifestyle purchases
- Retirement Income
- Purchase a new house
- Divorce settlement
- Contingency funds
- Gifts to family/friends
- Debt repayment
- In-home care costs
How do they work? (How they compare to rio mortgage providers)
What is an Interest Only Lifetime Mortgage?
The plans are a flexible form of equity release used to pay off interest only mortgages, with features including:
- Flexible Interest Payments: Pay a portion of your monthly interest and potentially lower your overall costs.
- Optional Payments: Stop payments at any time.
- Lifetime term: No pressure to repay
Key Differences from Mandatory Payment Mortgages (RIO):
- Flexibility: Optional payments vs. required payments.
- Risk: No risk of losing your home if payments stop (unlike mandatory payment options).
- No Deadline:No set end date to repay the interest only mortgage by
Later Life Finance provide tailored quotes based on your preferred payment level. Our voluntary repayment lifetime mortgage calculator is a good starting point to establish how much you can borrow and how the voluntary repayments work.
Later Life Finance have helped 1000’s homeowners safely raise tax free wealth since 2014. We are a family business serving borrowers UK wide as a trusted expert in later life mortgages.
As a specialist FCA authorised lifetime mortgage broker, we will guide you through your options in confidence, with a first-class level of service throughout.
Later Life Finance are proud to be members of:
What happens when the payment term ends?
When the set payment term ends on an interest only lifetime mortgage, the interest begins to roll up and the plan will continue like a typical lifetime mortgage.
You would continue to owe interest on the mortgage until you die, or move into long-term care.
However, under the rules of the equity release council codes of conduct, you are still able to exercise the voluntary overpayment rule to avoid compound interest accruing.
Our lifetime mortgage calculator tools help you get started with estimating how much you can release with a lifetime mortgage.
Key features and benefits
- No default risk: Roll up interest if you can’t make payments.
- FCA Authorised & Equity Release Council Members: Your peace of mind is assured.
- Safely release tax free equity from your home
- Make voluntary repayments which can be stopped at any time
- Avoid compound interest eroding your equity
- No deadlines to settle the mortgage by & no risk of default
- Preserve your equity for inheritance/long term care
- Stay in your home for life & plans are ‘portable’ if you wish to move later
If you would like to calculate how much equity you can release? Contact us for expert guidance
Eligibility Criteria
Eligibility for an interest only lifetime Mortgage
Key Requirements:
- Age: Typically 50+ years old
- Payments: Interest payments maintained
- Property: Your main residence in England, Scotland, or Wales
- Ownership: You must own the property
- Mortgage: Mortgage remaining needs settling on completion
- Property Value: Meets lender’s minimum of £70,000-£100,000
Other Factors:
- Property restrictions (e.g., location, use)
- Multiple tenants
- Contaminated land
- Farming/commercial use
- Spray foam insulation
Ready to discuss your options with our experts?
Cash Lump Sum
Pay Off your Mortgage
Help family with a gift
Dream Holiday
Finding the Best Interest-Only Lifetime Mortgage Providers
Later Life Finance provide home and office appointments to discuss your plans. We spend time to understand your current and longer-term needs to identify the most suitable interest only lifetime mortgage provider for your needs.
As a specialist broker we review all your mortgage options, including equity release, lifetime and retirement mortgages.
We provide a complete lender research service, including:
- Interest only lifetime mortgage payment projections
- Detailed analysis of regular, ad hoc and lump sum payments
- Graphs showing how interest payments effect your remaining equity and the impact on inheritance tax
Factors to Consider When Choosing a Provider
Choosing a Lifetime Mortgage Provider
Key Considerations:
- Interest Rates: Compare rates from different lenders.
- Early Repayment Charges: Understand any potential exit fees.
- Downsizing Rules: Review the impact on your equity.
- Interest Payments: Maintain regular payments to avoid higher interest rates.
When choosing a suitable provider, there are several important considerations to make. For example, it may be logical to focus on the most competitive interest rate, but early repayment charges and downsizing rules are also important factors to consider.
It’s also important to consider interest payments should be maintained to ensure the interest rate does not roll up.
Reputation and Experience
Provider reputation and familiarity is an area our clients highlight as an important consideration when selecting a lender.
All lenders carry full FCA regulatory protection and follow the equity release council codes of conduct.
As a specialist broker, we help you safely navigate all your options with the full range of providers from the whole market.
Choosing a Lifetime Mortgage Provider
Key Considerations:
- Provider Reputation: Choose a reputable lender with a strong track record.
- FCA Regulation: All lenders are FCA regulated and adhere to Equity Release Council codes.
Our Role:
- Specialist Broker: We help you compare options from the entire market.
Product Range and Features
The range of plans and features available are more diverse than ever before.
More2life Apex Interest Reward:
- Earn interest rate discounts: Pay a portion of your monthly interest and save.
- Flexible payment options: Choose from 25%, 50%, or 75% interest payments.
- Competitive rates: Starting at 7.81% MER.
- LTV up to 52%
- Fixed 4-year ERC period
Just For You Lifetime Mortgage: Interest Payment Options
- Flexible Payment Options: Choose to pay some or all of the monthly interest.
- Minimum Payment: £25 per month.
- Payment Flexibility: Stop payments at any time with one month’s notice.
- Interest Roll-up: If payments stop, interest will roll up and increase the loan amount.
- Payment Holiday: One payment holiday of up to three months per year allowed.
Pure Heritage Lifetime Mortgage
Key Features
- No Contractual Monthly Payments Required
- Lump sum and drawdown options available
- Interest Servicing Option
- ERC-Free Repayments (Up to 10% per year, maximum 6 payments)
- Fixed Interest Rates
- Discounted Rates with Interest Servicing
- Loan Sizes: £10,000 – £800,000
Customer Service and Support
Later Life Finance:
- Long Establised:Founded in 2014
- Trusted Broker: Over £10 million safely raised for clients
- FCA Regulated: We are authorised by the Financial Conduct Authority
- Member of Equity Release Council: Follow their codes of conduct.
- Award-Winning Support: Excellent customer service on Trustpilot & Google.
- Specialist Expertise: Expert broker service providing a first-class level of advice and professional expertise
Fees and Charges
Lifetime Mortgage Fees Explained
- Advice Fee: Covers your advisor’s costs for providing advice.
- Arrangement Fee: Covers the lender’s costs for setting up your mortgage.
- Funds Transfer Fee: Covers the lender’s costs for transferring funds to you.
- Legal Fee: Covers your solicitor’s costs for legal advice.
Top Rated Interest-Only Lifetime Mortgage Providers
Pure Retirement - Also offer cash drawdown facilities
Pure Heritage Lifetime Mortgage
Key Features
- No Contractual Monthly Payments Required
- Lump sum and drawdown options available
- Interest Servicing Option
- ERC-Free Repayments (Up to 10% per year, maximum 6 payments)
- Fixed Interest Rates
- Discounted Rates with Interest Servicing
- Loan Sizes: £10,000 – £800,000
More To Life -Payment term lifetime mortgage
More2life Apex Interest Reward:
- Earn interest rate discounts: Pay a portion of your monthly interest and save.
- Flexible payment options: Choose from 25%, 50%, or 75% interest payments.
- Competitive rates: Starting at 7.81% MER.
- LTV up to 52%
- Fixed 4-year ERC period
Legal & General (Offer lifetime, RIO)
Just (Formerly Just Retirement)
Just For You Lifetime Mortgage: Interest Payment Options
- Flexible Payment Options: Choose to pay some or all of the monthly interest.
- Minimum Payment: £25 per month.
- Payment Flexibility: Stop payments at any time with one month’s notice.
- Interest Roll-up: If payments stop, interest will roll up and increase the loan amount.
- Payment Holiday: One payment holiday of up to three months per year allowed.
How to Compare Interest-Only Lifetime Mortgage Quotes
Key Comparison Factors
Choosing an Interest-Only Lifetime Mortgage
- Flexibility is Key: Select a plan that adapts to future changes.
- Consider Early Repayment Charges: Ensure they align with your long-term plans.
Expert Advice:
- Contact Later Life Finance to explore your options.
- Get guidance on interest rates, providers, and the best deals.
Using Online Comparison Tools
- How Much Equity Can I Release Calculator: A simple tool on their website where users input basic information (age, property value, etc.). The tool provides an estimated release amount and links to a page for requesting a callback from an advisor. This helps filter out unqualified leads and identify those with serious interest.
- Later Life Mortgage Eligibility Checker: A more detailed tool that asks about property type, existing mortgage, and desired release amount. This tool can pre-qualify leads based on basic eligibility criteria, reducing the need for advisors to spend time on unsuitable cases.Client Education & Engagement:
- Equity Release vs. Downsizing Calculator: This tool could help users compare the financial implications of equity release versus selling their home and downsizing. It could factor in potential costs, income needs, and desired lifestyle changes.
- Lifetime Mortgage Interest Rate Comparison: A tool that allows users to compare interest rates offered by different lenders, potentially with interactive filters for age, loan amount, and property value. This helps users understand the market and the potential range of options available.
- Advisor Support & Efficiency:Internal Advisor Tools”: Back-end tools that allow advisors to quickly compare products from different lenders based on specific client profiles. This can streamline the advice process and improve efficiency.
- Risk Assessment Tools: Tools that help advisors assess client suitability for equity release, considering factors like age, health, and financial situation.
Getting Personalised Advice
Tailored Recommendations: An advisor can assess your individual circumstances, financial goals, and risk tolerance to recommend the most suitable equity release plan. This may involve comparing different product features, interest rates, and lenders to find the best fit for your needs.
Expert Guidance: Advisors possess in-depth knowledge of the equity release market, including complex regulations and product nuances. They can explain the pros and cons of different options clearly and answer all your questions.
Identifying Suitable Products: Navigating the equity release market can be complex. An advisor can help you identify products that meet your specific requirements and eligibility criteria, saving you time and effort in your research.
Assessing Your Financial Situation: A comprehensive assessment can help identify potential risks and challenges associated with equity release. This allows you to make informed decisions about whether it’s the right choice for you and how to mitigate potential risks.
Negotiation and Administration: Advisors can handle the complexities of the application process, including negotiating with lenders, gathering necessary documentation, and ensuring a smooth and efficient application.
Ongoing Support: Many advisors provide ongoing support and guidance even after the equity release plan is in place. This can be valuable for addressing any questions or concerns that may arise in the future.
Peace of Mind: Knowing you have received professional advice can provide peace of mind and confidence in your decision-making process.
In summary, personalised advice can be invaluable when considering equity release. It ensures you understand your options, make informed decisions, and navigate the process with confidence and peace of mind.
The Pros and Cons of Interest-Only Lifetime Mortgages
Advantages of Interest-Only Lifetime Mortgages (IOLMs)
- Financial security in your home
- Lower Debt: Debt doesn’t grow significantly as you only pay interest.
- Maintain Equity: Retain a portion of your property value.
- Financial Freedom: Access equity with stable monthly payments.
- Inheritance Potential: Pass on increased property value to beneficiaries.
Disadvantages of IOLMs
- Monthly Payments: Requires consistent interest payments to avoid rolled up-interest
- Reduced Inheritance: May impact the value of your estate.
- Full Loan Repayment: Original loan amount must be repaid.
- Property Price Risk: Future property value fluctuations could impact your situation.
- Negative Equity Risk: Potential for loan exceeding property value with certain providers
Alternatives to Interest-Only Lifetime Mortgages
Retirement Interest Only Mortgages
A retirement interest only mortgage is an option we explore when providing advice to ensure all your mortgage solutions available are fully explored.
A RIO has contractual monthly repayments which means you must continue with payments and would not have the option to ‘roll up’ interest which a lifetime mortgage provides the flexibility to do. You are also at risk of default and repossession if payments are not maintained.
Consider a Retirement Interest-Only (RIO) Mortgage:
- Includes a monthly payment to help cover interest for the full term
- Potentially lower final balance compared to IOLMs.
Mainstream Mortgages
Your bank may have refused to extend your mortgage term or said you are outside their lending criteria based on your age. If this is the case you may be ineligible for a mainstream mortgage. Our experts will ensure you have access to the full range of plans available to you from the later life mortgage market.
Traditional Lifetime Mortgages
A traditional lifetime mortgage can offer greater flexibility to make ad hoc interest and capital repayments. This may be a more suitable option to consider if you require more flexibility than committing to a fixed payment term.
Frequently Asked Questions (FAQs)
What are the risks of an interest-only lifetime mortgage?
Risks of Interest-Only Lifetime Mortgages (IOLMs)
- Reduced Inheritance: Less to pass on to beneficiaries if interest payments are stopped
- Impact on Benefits: May affect eligibility for means-tested benefits.
- Compound Interest: If payments are stopped, Interest grows over time.
- Early Repayment Penalties: Potential for penalties if you end the mortgage early.
How do I repay the capital on an interest only lifetime mortgage?
The capital is repaid when your home is eventually sold. You can also make overpayments to the mortgage during the term to reduce the capital balance.
What are the pitfalls of a lifetime mortgage?
Pitfalls of Lifetime Mortgages include:
- High Interest Rates: Typically higher than standard mortgages.
- Compound Interest: Interest can grow significantly over time.
- Reduced Inheritance: Can impact the amount you can leave to heirs.
- Benefits Impact: May affect eligibility for means-tested benefits.
- Early Repayment Charges: Some plans have penalties for early repayment.
- Limited Flexibility: Switching products or repaying early can be costly.
- Long-Term Commitment: Designed for long-term use, with repayment typically upon death or entering long-term care.
Can I make overpayments on an interest only lifetime mortgage?
Yes, most lenders allow 10% per year overpayments if you wish to reduce the capital balance without incurring early repayment charges.
What is the average interest rate on a lifetime mortgage?
The best lifetime mortgage interest rates in 2025 typically range from around 6% to 8%, though rates can vary based on factors including lender, the borrower’s age, the sum released and market conditions.
Lifetime Mortgage Interest Rates
- Average Rate (Jan 2025): Just over 6% (may vary)
- Factors Influencing Rates:
- Borrowing Amount (The higher the LTV the higher the rate)
- Lender (Certain lenders are more competitive)
- Economic Conditions (Influenced by the UK gilt yield market)
- Discounted interest rate for interest payment term
- Finding the Best Rate:
- Use a lifetime mortgage calculator
- Seek expert advice from our experts
How to minimise interest costs:
- Make voluntary payments
- Consider switching to a lower rate deal or a lower voluntary repayment
- Use a drawdown plan and take a smaller initial lump sum
Is a lifetime mortgage or RIO better for me?
This depends on your plans to make repayments, and how much flexibility you require.
Ultimately, the overall lender and plan criteria, such as early repayment charges and interest rate are also important to consider when comparing options.
How to calculate lifetime mortgage interest?
How do you calculate lifetime mortgage interest? The lifetime interest is calculated using the sum borrowed and the lifetime fixed interest rate.
Certain lenders use Monthly Equivalent Rate, and some use Annual Equivalent rate.
Our advisers will calculate the interest costs for you based on the estimated term and any repayments you plan to make.
Can you still get an interest-only mortgage?
Yes, Interest-only mortgages are still available. If you are over 55 you can apply for a lifetime interest only mortgage which offer greater flexibility than traditional interest only mortgages.
What happens if I downsize or move?
You can still downsize and move home in the future, as the mortgages offer a portability feature. The new property must be acceptable to the lender for lending purposes, and a new valuation and legal costs will be required.
Contact us for a personalised quotation
If you are ready to explore your options further you can get in touch to book a free market review with a qualified mortgage adviser, it’s free and there’s no obligation.
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