What is an interest only lifetime mortgage? | Compare rates - Finder UK

Interest only lifetime mortgages

If you want to unlock the equity in your home but keep your interest costs down, an interest-only lifetime mortgage could be for you.

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How does interest only equity release work?Learn more

Table: sorted by the lowest AER from each brand included. Please use the filters to tailor the comparison to your needs.

Data updated regularly
Name Product Product type Rate type Maximum LTV Monthly rate Annual rate (AER)
Optional Payment Black Lifetime Mortgage
Interest only
Interest Payment Roll-Up Lite Variable
Interest only
J1 Interest Servicing 75% Lump Sum
Interest only
Retirement Mortgage 2 Year Fixed
Interest only
Optional Payment Black Lifetime Mortgage DTV
Interest only
Optional Payment Black Lifetime Mortgage
Interest only
Optional Payment Black Lifetime Mortgage DTV
Interest only
Optional Payment Pink Lifetime Mortgage
Interest only

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We work with Age Partnership, one of the UK’s leading equity release specialists, which scours more than 500 deals to find the best equity release products. We compare only lifetime mortgages, and do not compare any home reversion plans. To understand the features and risks of lifetime mortgages, ask for a personalised illustration from a lifetime mortgage company. Check that this type of mortgage is suitable for your needs if you plan to move or sell your home or you want your family to inherit it. If you're not certain, seek independent advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
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What is an interest-only lifetime mortgage?

An interest-only lifetime mortgage is a form of equity release which lets you unlock the equity you have in your home via a loan that’s secured against your house. The difference with an interest-only lifetime mortgage is that you’ll need to make monthly interest repayments, which can help keep your overall interest costs down by avoiding compounded interest charges.

Like all forms of equity release, you’ll also retain full ownership of your house with an interest-only lifetime mortgage, but releasing equity will also reduce the amount you receive when you sell the property.

How does an interest-only lifetime mortgage work?

With an interest-only lifetime mortgage, you’ll need to be a homeowner aged over 55. You can then apply to unlock some of the equity you own in your home by taking out a new loan that’s secured against the property. The equity amount is repaid in full once the house is sold, and is therefore deducted from the sale price.

As with all forms of equity release, the amount you can borrow will depend on a number of factors including your age and lifestyle and the value of your home, with older homeowners able to unlock more equity.

Like a lump sum lifetime mortgage, you’ll receive the full equity amount immediately, but will also need to make monthly interest repayments for the lifetime of your loan. These monthly payments are designed to only cover the interest that is accruing on the loan, which means you’ll still need to repay the full equity amount at the end of the loan term.

What are the pros and cons of an interest-only lifetime mortgage?


  • Lets you access the equity you own in your home
  • Monthly repayments help avoid costly compounding interest
  • Interest rates can be fixed for life
  • No income or affordability checks required


  • You’ll need to make regular monthly repayments to cover the cost of interest
  • Releasing equity from your home will reduce the inheritance you are able to leave behind
  • Interest-only payments mean you’ll still need to pay off the equity amount in full at the end of the loan term
  • Equity release can complicate your tax position

How much do I need to repay each month with an interest-only lifetime mortgage?

While other forms of equity release require no monthly payments, with an interest-only lifetime mortgage you’ll need to pay off the cost of accruing interest every month. The size of your monthly payments will depend on both the amount of equity you unlock (your loan amount), as well as your personalised interest rate, but will remain the same every month, provided you always make a full repayment.

What are the best rates for interest-only lifetime mortgages?

Most interest-only lifetime mortgages are typically offered with fixed APRs between 2.4% and 5%, but the specific rate you receive will depend on a number of factors, such as your age and the value of your home. You’re also likely to need to pay a number of fees when setting up a lifetime mortgage, including:

  • Advice fee. This is the fee paid to the broker or financial adviser who helps advise you on taking out a lifetime mortgage. Some advisers and lenders may waive this fee.
  • Valuation fee. This covers the cost of the property valuation that is conducted as part of your application, and will vary depending on the type and value of your house.
  • Legal fees. These will typically be around £400-£500 and are paid to your solicitor or legal adviser once your offer is confirmed.
  • Application fee. Some lenders or brokers may also charge an application fee, which is generally around £500-£700.

Eligibility criteria

In order to apply for an interest-only lifetime mortgage, you’ll need to be at least 55 years old, and own a house worth at least £70,000. Certain interest-only lifetime mortgage providers may have additional lending requirements that you’ll need to meet in order to apply for a lifetime mortgage.

How to apply for an interest-only lifetime mortgage scheme

You can apply for an interest-only lifetime mortgage through a recognised equity release lender or broker. Like a regular mortgage, you’ll generally need to arrange an appointment with an equity release expert who will talk you through your lifetime mortgage options and help find the loan that best suits your circumstances.

Once you’ve discussed your options, you can apply for a quote to get an idea of the size of lifetime mortgage you’re eligible for, and can then begin the formal application process.

Frequently asked questions

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