Is Now the Best Time to Take out an Interest Only Lifetime Mortgage With Interest Rates Being So Low?
September 25th, 2013The retirement mortgage market is hotting up as we speak. There is a genuine need for retirement credit solutions and the Halifax Retirement Home Plan previously proved this. The market may not be very dynamic at the moment, but this is not likely to last very long. More lenders will be entering the market very soon, and the increased competition could make interest only mortgage interest rates much more competitive.
At the moment, Stonehaven and more2life are the only lenders that offer a true interest only lifetime mortgages. These schemes are designed with longevity in mind as these mortgages will last your entire lifetime. There are other retirement options available but they are all subject to certain constraints and lending terms. For instance, the Leeds Building Society offers an interest only retirement mortgage that can be continued until 80 years of age. However, the Leeds Retirement Mortgage is only available to those who submit an application prior to their 70th birthday, and require net equity remaining after the mortgage has been granted of £150,000, subject to other criteria.
Stonehaven and more2life are currently the only lender in the market that offers a true ‘self-cert’ interest only lifetime mortgage that can continue throughout life. No income guarantee is required as the scheme only takes into account the value of the property and the age of the youngest applicant. The Stonehaven Interest Select plans are the cheapest of the two interest only lifetime mortgage, with their tiered interest rates starting at 5.99%. This can go up to 6.81% on their maximum release plan. On a £50,000 mortgage and qualifying for the interest select lite plan, then monthly payments would be circa £250pm.
The more2life interest choice plan is their new product offering and has simplified the interest only lifetime mortgage rate scenario by providing just one tiered rate of interest – 6.17%. Again on a £50,000 mortgage with them the monthly payments would be around £257pm. This plan is the first interest only lifetime mortgage with a drawdown facility attached. Therefore, following an initial release, after 6 months you are able to withdraw further cash from your reserve facility.
The fact is that if your future ownership of your property depends on you getting a lifetime mortgage of this type, it is not advisable to wait for interest rates to become more favourable. This is the lesson to be learnt from the Halifax pensioner mortgage, which was withdrawn at very short notice, leaving those waiting for the right time to apply in the lurch.
To ask questions regarding eligibility for an interest only lifetime mortgage, call the experts on 0800 678 5159. Our mortgage specialists are always on hand.
