Interest Only Mortgage Calculator Answers How Much a Person Can Borrow
For many people entering retirement, life can become more challenging instead of getting easier. A great number of people think that they will have few worries in retirement since they no longer need to think about stressful commuting, work pressures and striving for promotion. However, retired people are on a fixed income which makes obtaining finance extremely difficult. With the current economic climate, even people who have practised retirement planning can find that they have serious issues meeting the financial needs of their daily requirements. However, for those who are home owners, equity release can provide a solution for this dilemma. An interest only lifetime mortgage calculator can provide home owners with the information they need to decide if this is the best solution for their needs.
What is an Interest Only Lifetime Mortgage?
Interest only lifetime mortgages are one of the most common forms of equity release schemes. It is similar to a conventional repayment mortgage, securing a loan on your property. However, unlike a conventional mortgage, there is no minimum income requirement and there is no monthly repayment necessary to pay the interest for the loan. You retain the right to live in your home for the rest of your life without worrying about making a monthly payment. With an interest only lifetime mortgage, the interest is calculated and added to the loan balance. This is only repaid at the end of your lifetime when the property is sold to settle the debt. The overall cost of this type of scheme can be difficult to work out, so many people use an interest only lifetime mortgage calculator to show how the compounded interest affects the loan balance.
Can You Make Payments on a Lifetime Mortgage?
Lifetime mortgages are available to those aged over fifty-five. In cases where the applicant has sufficient income, they may opt to make a payment each month to cover the interest. This is usually a flexible arrangement to allow the home owner a little more control over the balance of the loan. However, since this is a lifetime mortgage, it is unlikely that the interest payments will be covered each and every month, so an interest only lifetime mortgage calculator can prove useful to monitor how the balance is affected by partial or no payments being paid.
What Other Information is Provided by an Interest Only Lifetime Mortgage Calculator?
Some of these forms of equity release calculator can be used to research your equity release options. An interest only lifetime mortgage calculator can be used to determine how much of a lump could be available for release. They can also supply scheme information for those products which you are eligible for and meet your requirements. This can be useful to compare interest rates and explore the long term consequences of choosing a product with a particular interest rate. For example, many people often look for the maximum amount of equity release. However, it can be beneficial to opt for a product which offers a slightly less release amount but at a far more attractive rate. This can prove extremely financially economical in the long term and could save you thousands of pounds. With the average balance of an interest only lifetime mortgage calculated to double approximately every eleven years, a more attractive rate can be extremely beneficially even if it offers slightly less for an initial lump sum.
Many forms of an interest only lifetime mortgage calculator will also highlight other options which are available to you. For example, for those people who have no need for the maximum lump sum possible immediately, a draw down lifetime mortgage may offer a more attractive solution. This allows you to draw down the funds up to your limit as and when you require them. You will only pay for interest on the funds which have been released to you, which could save you money in the long term.
Lifetime mortgages can seem a little confusing, especially for those people who are unfamiliar with the concept of compound interest. However, an interest only lifetime mortgage calculator can prove a useful research tool. It can allow you to explore the financial implications of the different options which are available to you. At the initial stages, it can provide a figure for the maximum possible release which can determine whether you would like to proceed or would rather explore alternative options. During your research, it can be an invaluable tool for assessing the financial viability of certain products and schemes. However, no matter how accurate the interest only lifetime mortgage calculator, it should not replace the expert advice of a professional and specialist adviser or broker. You should consult professional advice before making any final decisions about pursuing equity release.