This means that the loan plus accrued interest is repaid after you and your partner have both either passed away or moved into long-term care, using funds from the sale of your home. Any remaining proceeds from the property sale will form part of your estate.
Since there are no monthly repayments, equity release can be less of a burden than other forms of loan – and some people choose to use it to repay off existing debt and therefore reduce their household’s monthly expenditure.
With lifetime mortgages, there are plans available for people who would like to make either regular interest payments or voluntary partial repayments
- Interest payment plans allow you to choose how much interest (subject to a minimum) you want to pay, and how long you want to pay the interest for. If for any reason you are unable to make payments, the plan can be converted to a standard lifetime mortage, allowing the interest to roll up - although charges may apply.
- One of the newer features is the option to make voluntary, ad hoc repayments of typically up to fifteen percent of the initial amount you've borrowed each year, without incurring an early repayment charge (subject to a minimum).