Qualification Criteria of Interest Only lifetime Mortgages
Interest only lifetime mortgages – like any other financial product have certain specific terms of eligibility. These equity release mortgages are designed for older homeowners and are essentially mortgages with no fixed term, and can potentially go on for life. Interest only lifetime mortgages have proved to be highly popular within the equity release sector thanks to their flexibility. Let us look at the main qualification criteria for these equity release mortgages.
The first eligibility factor for interest only lifetime mortgages is age. These mortgages are available to over 55’s, however; some providers may have a higher age limit. For instance, Stonehaven’s Interest Select Plan is available to clients 55 years and over, while More2Life’s Interest Choice Plan and the Hodge Lifetime Flexible Release Plan both commence at 60 years. Interest only lifetime mortgages have no fixed term and are designed for older homeowners to assist in their provisions for retirement. The second criterion to qualify for interest only lifetime mortgages is the value of the property. Lifetime mortgages cannot be viable unless the property valuation is above a certain threshold. Different providers will have different thresholds. The More2Life Interest Choice Plan is currently available only on property valuations above £70,000, as are the Stonehaven Interest Select Plans. However, Hodge Lifetime insist on a minimum property valuation of £100,000, thus it is always best to seek independent equity release advice.
The minimum amount you can release on both Stonehaven & more2life products is also the same – £10,000. However, Hodge Lifetime again raise the bar with minimums of £15,000 or £20,000 dependent on whether the lump sum or drawdown lifetime mortgage option is selected.
Location of the property is also an important factor as not all providers will be available in all locations within the UK. As it stands today, only two of the three interest repayment equity release companies offer lifetime interest only mortgages throughout England, Wales and mainland Scotland. These are the Stonehaven Interest Select Plan range and Hodge Lifetime’s Flexible Lifetime Mortgage plan. Unfortunately, the more2life interest choice plan is not available in Scotland.
The maximum amount that can be borrowed depends on your individual circumstances. Each provider will work out the loan-to-value ratio based on the age (which helps determine the expected length of the loan) and the valuation of the property. This information helps lenders work out the viability of the loan and determine the maximum amount that can be potentially released. The older one is, the more each lender will potential lend as life expectancy gets shorter.
The minimum monthly repayment amount for both Stonehaven Interest Select and More2Life Interest Choice is £25. Applicants must be able to make this minimum payment. The maximum amount is the full interest amount charged which provides the template for ensuring that the lifetime mortgage will maintain a level balance. You must also be a permanent resident of the UK, and be able to show proof of history of residence for the required period.
Interest only lifetime mortgages are available subject to specific criteria. It is necessary to make sure that you meet the necessary criteria before making an application. Information provided must always be accurate and to the best of one’s knowledge to succeed. This is even more so with regards to any adverse credit you may have on your credit file. Although most lender will accept defaults and CCJ’s, they must always be stated on the application form where applicable otherwise a lender may decline on grounds of providing false information.
For any information on these interest only mortgages call 0800 678 5159.