Interest Only Mortgage News

What’s the Maximum Tax Free cash Available with an Interest Only Equity Release Scheme?

September 25th, 2013

The maximum amount you can release through an interest only equity release scheme depends on different factors used to assess the viability of lending to a particular applicant. There is no one maximum release interest only lifetime mortgage in the market that allows you to release the maximum amount no matter what.

Rather, the maximum you could release depends on your individual circumstances. To understand maximum equity release interest only mortgages and how this amount is worked out by lenders, it is important to understand how interest only equity release schemes work.

Also known as an interest only lifetime mortgage, it is an equity release mortgage wherein you need to make monthly interest payments on the loan. By making regular payments of the full interest amount you could potentially keep the end balance on the mortgage the same as the original balance. Interest only equity releases are therefore the perfect option for those who can afford to make monthly payments, and want to protect their inheritance by keeping the balance level.

The loan to value ratio of interest only equity release schemes depends on the expected term of the loan, and the valuation of the property. Equity releases do not have a fixed term and can go on until the end of life. Therefore the expected term of these forms of lifetime mortgage depends on the age of the applicant, and sometimes on the health of the applicant. In general lenders are more reluctant to lend to younger applicants in good health, so the older you are the more equity you are likely to be able to release.

Health also plays an important role in the maximum amount you could release. Lenders often have special criteria to lend to clients in ill health, or with certain special lifestyle or medical needs. This type of maximum release interest only lifetime mortgage can be a good option for people who meet the eligibility criteria, and have care costs to meet, or want to release the maximum amount for any other reason.

The best way to find what the maximum release interest only mortgage would be in your circumstances would be to use an online interest only equity release calculator. This is a quick and efficient way to get a fairly accurate idea of how much you could potentially release. The calculator uses basic relevant information – including your age, property valuation, and a basic health questionnaire to assess whether you meet the enhanced lending criteria. The health questionnaire aims to find out basic information such as whether you smoke, your height and weight, any chronic health conditions, etc.