Transitioning to Equity Release with interest-only payments.

Because of an ageing population, many people are put off the idea of starting an equity release plan from age 55 onwards. One of the strongest arguments against considering equity release is that the interest rolls up and eats away at the capital. Now there is a sensible and clever alternative.

The current 'baby boomer generation' are going to live much longer as the saying goes "The eighty year olds today behave like sixty year olds, sixty year olds like forty year olds". They consider the equity in their homes is theirs to spend on themselves or maybe lend to their children.

A very clever plan has been developed where you can decide at outset how much of the interest you can actually afford to repay every month and for how long you would like to pay it. So this way, you control how much of the interest rolls up. The interest rate is fixed for the life of the loan.

It is an interesting statistic that currently 1 in 3 homeowners over 55 still have a mortgage and the average mortgage is £55,000. At this age, many want to reduce their monthly payments. This is one way that they can consolidate debt. Of course, being unemployed or on a low income isn't an issue as the lender will lend against the age of the younger applicant and the value of the house.

'HELPING THE KIDS'

If children need a lump sum, with this interest-only lifetime mortgage, they can be helped with needed capital possibly as a deposit and they can repay the interest to their parents or grandparents. Maybe the grandparents can even help their own 'credit-crunch' affected middle-aged children with difficult debt situations due to job loss?