What is compound interest? It’s also important to know that lifetime mortgages are subject to compound interest, which will significantly increase the amount owed if no payments are made. Your Key adviser will provide you with a full personal illustration of how compound interest will affect the amount that you owe over time.
Compound interest example
Year 1
Year 2
Year 3 Year 4
Year 5
Find out more on our website
Original loan amount owed
Interest added to the loan amount plus any interest already added
The loan, plus interest owed, is typically repaid from the sale of the home when the last borrower dies or moves to long-term care.
The amount of interest increases each year as is based on a larger loan amount
22 Get advice today 0800 953 3743
Made with FlippingBook. PDF to flipbook with ease