Explaining Lifetime Mortgage
An interest only lifetime mortgage is a type of mortgage that is paid off over the course of your lifetime instead of being amortized. This means you will have to pay more in monthly payments, but you will also not be paying for any principal on the loan. Interest only mortgages are typically used when someone wants to own their home and make some improvements, or if they want a place with a fixed rate but don’t plan on living there for long.
When an investor purchases this property from them, it can either turn out positive (if they sell quickly) or negative (if they stay put). The downside is that many people use these loans as temporary places and then end up moving before paying anything off – so what starts out like a low monthly payment can really add up over time.
Some people also use these types of loans to consolidate debt, which is why some companies will offer a low interest rate on an initial loan and then increase the rates after five years. They hope that by this point the person has paid off their other debts or made enough money in those five years to refinance at better terms.
One concern about such loans is that they do not help build equity in your home because you are only paying the interest.
This type of loan also does not factor in inflation, but it can be a great value for some people who are looking to stay put and pay off their home over time while avoiding monthly mortgage payments. Interest only loans will typically have higher fees than traditional mortgages because they require more work on behalf of the lender. The increased risk is often worth it though as this type of loan has lower fixed rates than many other types which makes them attractive if you want stability in your monthly payment but still like the flexibility that comes with owning a property outright instead of having to make constant repayments into an account every month.