An interest only equity release plan, also known as an interest only lifetime mortgage, enables you to release tax-free money from your property, but rather than interest rolling-up each month and being added to your loan, the balance remains level (assuming you service the interest in full every month). Unlike a standard interest-only mortgage, you are free to choose the amount you pay, so if you do not wish to make full repayments each month then you can choose to make partial payments. This will still help to reduce the interest that accrues on your loan. These types of equity release schemes are popular with homeowners aged 55+ who wish to protect the remaining equity in their home for inheritance purposes.

Thanks to the flexibility of interest only lifetime mortgages, you have the option to switch from interest only to roll-up at any time (a higher interest rate may apply but your selected adviser can discuss this with you during your appointment). At this point, the interest that accrues is ‘rolled up’ each month and added to the balance of your loan.  Your loan plus any interest that accrues isn’t repaid until the plan comes to an end, usually when your house is sold after you pass away or move into long-term care.