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What is Interest Only Equity Release?

Interest only equity release plans allow homeowners to unlock the value of their property while making regular interest payments on the amount borrowed. This type of equity release helps to keep the loan balance from growing, as you only pay the interest charged on the loan. These plans are ideal for those who can afford regular interest payments and want to preserve as much equity in their home as possible. Interest only equity release products are regulated by the Financial Conduct Authority (FCA), ensuring consumer protection and oversight .

Key Features and Benefits

  • Regular Interest Payments: Pay only the interest charged on the loan, preventing the loan balance from increasing.
  • Access to Funds: Receive a lump sum or regular income from your home’s equity.
  • No Need to Move: Continue living in your home while accessing its value.
  • Flexible Options: Choose from different interest rate options and repayment terms.
  • No Negative Equity Guarantee : Thanks to the standards set by the Equity Release Council (ERC), you will never owe more than the value of your home.

Factors to Consider

Eligibility

Interest only equity release plans are typically available to homeowners aged 55 and over with a qualifying property. The amount you can release depends on factors such as your age, the value of your home, and your ability to make regular interest payments. Make sure your property meets the lender's criteria, which often include the type and location of the property.

Costs

Understanding the costs associated with interest only equity release plans is crucial. While you only pay the interest on the loan, there may be other fees such as arrangement fees, valuation fees, and legal costs. It’s important to compare different plans to ensure you understand all the costs involved.

Impact on Inheritance

Releasing equity from your home will reduce the value of your estate, which means you might leave less to your loved ones. However, by making regular interest payments, you can help preserve the principal loan amount, leaving more equity in your home. Discuss the impact on your estate with your family to ensure everyone understands the implications.

Impact on State Benefits

Taking out an interest only equity release plan can affect your eligibility for means-tested state benefits. The additional income or savings may reduce the benefits you receive. It’s crucial to discuss this with an adviser to fully understand the implications.

Advice

Seeking professional advice is essential when considering an interest only equity release plan. An adviser can provide personalised recommendations based on your situation and goals. They can help you understand the pros and cons and find the best plan for you. Speaking to an adviser is crucial to ensure you are making an informed decision.

Next Steps

Choosing the right interest only equity release plan can be complex, but getting expert advice can make it easier. By understanding your specific needs and circumstances, an adviser can help you find the best plan that provides access to your home’s equity while allowing you to manage the loan effectively.

Interested in the benefits of interest only equity release plans? Speak to a knowledgeable adviser who can guide you through the process and help you make the right choice.

Get Expert Interest Only Equity Release Plan Advice Now

Frequently Asked Questions

Interest only equity release allows you to unlock the value of your home and receive a lump sum or regular income. You make regular payments to cover the interest on the loan, keeping the loan balance from increasing. The loan is typically repaid when you die or move into long-term care.

Why Use Us?

Unbiased & Impartial - We search every equity release lender in the UK. We're an independent website with no affiliation to any equity release lender and therefore we don't promote any "special offers" from specific lenders.

Whole of Market - We search the whole of the equity release market including exclusive quotes and rates sometimes available to equity release brokers.

How It Works

  1. Complete our simple form
  2. Our partner, Unbiased, will connect you with one equity release adviser perfectly suited to meet your needs. Expect an email with their details.
  3. You'll receive a no-obligation equity release quote
  4. Your assigned broker will then contact you to schedule your first meeting.

What People Say

"He has kept me posted every step of the way and explained everything fully. There were no hidden costs. I would definitely recommend and will not hesitate to use them in the future"


"Very satisfied with the service received ! The advisor was excellent handling our equity release and was very helpful with all questions we had and changing our term twice! Thanks again!"

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*Example rate shown is from Hodge with a rate of 6.05% (12/09/2023). The rates shown are for illustrative purposes only, they should not be taken as any form of advice or recommendation. Actual mortgage quotes are based on individual circumstances.

  1. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.