Interest reward lifetime mortgage Save thousands in interest over the life of your plan by making interest payments, helping you reduce your total cost of borrowing and giving you more control over your financial future. With an interest reward lifetime mortgage, you could receive an interest rate discount by making monthly interest payments. The longer you commit to making payments, and the more interest you pay, the bigger the discount. How does it work?
How an interest reward lifetime mortgage could work for you
CASE STUDY EXAMPLE Save thousands in interest charges Marge is a 71-year-old divorced retiree looking to release £100,000 from her £600,000 property to gift money to her grandchildren and help making some home and garden improvements.
You could reduce your interest rate by between 0.02% up to 0.45% compared to the equivalent standard lifetime mortgage rate. The discount that you get will depend on the amount you want to borrow compared to the value of your house, how much interest you can pay each month and how long you want to make these
interest payments. The combination of making payments and the reduction in interest rate could help you save thousands – even with a small discount on your interest rate. Your adviser can give you an illustration of what discount you could get and how much it could save you.
By committing to paying 100% of the monthly interest for 10 years, Marge is rewarded with a 0.30% interest rate discount. Through this interest rate discount, and by paying monthly interest payments for 10 years, Marge can save more than £56,000 over 20 years compared to making no repayments through the same standard lifetime mortgage.
Interest Reward Lifetime Mortgage
Lifetime Mortgage
Initial loan amount
£100,000 6.5% MER*
£100,000 6.2% MER*
Interest rate
£517 (for 10 years) (100% of the monthly interest) £309,597 (inc. payments)
Monthly payments
£0
Total cost of borrowing after 20 years
£365,645
Net saving
£0
£56,048
*Monthly Equivalent Rate. Interest rates, monthly payments and savings amounts are for illustrative purposes only. Interest rate received and plan features are subject to eligibility. Ask your adviser for a personalised quote.
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