What are Interest-Only Mortgages?
When it comes to equity release, there are many options to choose from. An interest-only mortgage1 is one of them.
With interest-only plans, you only need to repay the interest on your loan until the end of its term. When you die or go into long-term medical care, the period ends. Then you’ll be required to repay the loan, or your loved ones will need to repay it to the equity release provider. As with equity release mortgages, interest and capital repayment may be held indefinitely until the house is sold.
As mentioned before, this is when the equity release user dies or needs constant care.
Let me tell you something.
Although many people choose, interest-only mortgages, interest-only and equity release mortgages are popularly used by older people, significantly since most providers increase older age limits on interest-only products.
You might be wondering about the amount you can loan through this type of mortgage. Well, there’s an excellent tool for this: the Interest-Only Equity Release Calculator2. You don’t have to struggle to figure out the maths yourself. This calculator will tell you how much money you can end up with within just a few simple steps.
How Do Interest-Only Mortgages Work?
An Interest-Only Mortgage is a type of mortgage that only pays interest to the lender for an agreed-upon period. After this time, typically ten years, it switches over to being amortized where both principal and interest are scheduled on monthly payments.
The borrower is not required by law to pay down any debt while in the interest-only stage; he or she will however be charged penalties if they stop making their payment before the end of the term.
Benefits of Interest-Only Mortgages
Interest-Only mortgages are popular for a few reasons. Firstly, it’s easier to qualify because of the lower down payment required. Secondly, there are no monthly principal and interest payments which means that more money can go towards other expenses like groceries or utilities.
Additionally, mortgage rates tend to be higher in this type of loan but they also have a shorter-term – ten years instead of thirty years on an amortized mortgage with fixed payments.
Drawbacks of Interest-Only Mortgages
The downside to this kind of mortgage is that you won’t own anything after paying off your house; if you stop making your scheduled biweekly or monthly installments due before the end date (ten years), then all debt will still have been incurred which is a major risk.
The Interest-Only Equity Release Calculator
So, you’re seriously considering taking out this mortgage. Well, to give you that final nudge, we’ll tell you how much you can loan from your provider. This is a tool that can help people to plan for Interest-Only Mortgages as they retire.
How Do I Use The Interest-Only Equity Release Calculator?
The amount of money you release through an interest-only mortgage will differ from provider to provider. However, it’s possible to get an estimated amount with the help of this calculator. It’ll calculate your estimated loan amount if you have an interest-only equity release plan.
Well, you’ll need to provide the calculator with a few crucial details about yourself. But don’t worry, it’s perfectly safe to do so. Firstly, it’ll ask for the value of your house. Since mortgages have to do with your property, the value of your home is significant to know. The loan provider will send someone to your house to evaluate its worth. However, if you haven’t had your property evaluated, simply input your home’s market price for now.
Secondly, the calculator will then ask your age, the person’s name taking out the loan, and contact details. Simple as that! You’ll then be provided with the estimated loan amount of an interest-only mortgage.
Does This Calculator Tell Me How Much Equity Do I Qualify For?
The amount of money you release through an interest-only mortgage will differ from provider to provider. However, it’s possible to get an estimated amount with the help of this calculator. This calculator will precisely calculate your estimated loan amount if you have an interest-only equity release plan.
How Does The Interest-Only Equity Release Calculator Work?
The first thing it asks you is the value of your property or home that you’ll sell to release equity. Then, it asks you how old you are, your name and phone number.
Is The Interest-Only Equity Release Calculator Safe?
Yes, it’s 100% secure. You don’t have to be afraid that the calculator will use your information for something else. It’s only there to give you an estimated amount of your possible loan.
What Do I Use The Interest-Only Equity Release Calculator For?
You can use this excellent tool to work out how much money you’ll be able to end up with when you take out an interest-only equity release mortgage. So it’s great for those who are considering equity release and want to know if it’s the best option for them financially.
As we mentioned earlier, in the UK we have more and more homeowners looking into ways of making extra income. They understand that there is value within your property and are trying to enter into the market and reap the benefits from it. With an interest-only mortgage, then more flexible options avail themselves to you.
It’s relatively easy to determine what amount you can get when you take out an interest-only mortgage through an equity release provider. You simply need to input a few details, and there you have it! If you’re still considering whether or not interest-only mortgages are for you, feel free to contact us with any further questions.