An interest only lifetime mortgage is a scheme that will allow you to keep as much equity in your property as possible once it is sold, and which will help you to generate a maximum income, with fairly small repayments.

Basically, instead of repaying your mortgage debt in conventional instalments which are, of course, dictated by the value of your home, you simply repay the interest during your lifetime. Once this term is ended, this means that the value of your home should be equivalent to your remaining debt, and this makes repayment ultimately simple.

Defining Equity Release Mortgages for over 55s
There is another defining aspect of interest only lifetime mortgage products to discuss in terms of repayment. The repayment term is your lifetime. At the time of your death the loan has to be paid back, unless you sold your home and paid it earlier to move into a long term care facility. Unlike conventional loans, even regular interest only mortgages, all you have to do with this loan is pay interest as long as you wish to. Conventional mortgages, particularly interest only loans, require a repayment in 10 years. The capital is paid back in a balloon payment, meaning you need to have those funds to pay up.

For lifetime mortgages the answer to repayment is often selling the home which has the value of the loan. As you used it as collateral it means the loan cannot exceed 100% of the value. Often you only get a percentage such as 75% of the full home value or a lesser amount. The percentage accounts for any depreciation that may occur during your lifetime to ensure no negative equity situation arises.

For some companies it gives you a chance to rollover to a standard lump sum lifetime mortgage in the event you are unable to maintain the interest payment each month.

Advantages of Interest Only Lifetime Mortgages
There are several benefits to the interest only lifetime mortgage. Chief amongst these is perhaps the fact that the debt should not fluctuate in value in any way, as long as you make each payment every month. In addition, you will find that you preserve more equity in your property in the long term than you would with a conventional mortgage scheme.

As the advantage indicates the home value can fluctuate, but your loan never will. It allows you to preserve leftover equity for an inheritance purpose, unlike the conventional mortgage that requires repayment.

The main advantage is inheritance. There is only one other lifetime mortgage that can nearly guarantee an inheritance unless you expressly use an inheritance guarantee in the contract. As long as you do not need to roll over the lifetime mortgage your children can inherit cash from the sale of the property.

You also receive tax free cash from the loan to help you live out your retirement comfortably.

The youngest homeowner has to be 55, which is an advantage as you can access equity at such an early age.

Disadvantages of the Loan
There are, however, also disadvantages. Of course, the lifetime mortgage demands that you make payments every month. It needs to be paid regularly for the value of the property to be maintained. However, with someone in retirement it can be difficult to continue paying out with no income coming in. Pensions and equity releases can be used up rather quickly.

The age of the youngest homeowner can also be a disadvantage should the person not be old enough or the company you want to get your product from requires a higher age limit. Some companies provide interest only lifetime equity releases to individuals with a starting age of 60 or 65.

Differences in Qualifications
As there are differences in age and other qualifications it is very important to shop around. By shopping around you can find a lifetime mortgage that fits your situation versus one a representative is keen to give you. Plus, when one company has a higher or lower age requirement, it means there is an option out there you just need to find it. By going through an independent broker it is easier to compare products as they can discuss all options versus someone who is tied to a specific company.

Therefore, a lifetime mortgage is an interesting and useful solution if you are keen to release equity from your home. However, before you make any hard and fast decisions concerning whether you participate in this kind of scheme or not, you will want to consider both advantages and disadvantages of interest only lifetime mortgage products.