At Friends Capital, we understand that your mortgage needs may change as you grow older. Whether you’re looking to stay in your home longer, manage your finances more flexibly, or unlock equity without downsizing, a Later Life Interest-Only Products mortgage could offer the solution you’re after.
These mortgages are specifically designed for people aged 55 and over. While they share similarities with standard interest-only mortgages, there are a few key differences that make them more suitable for borrowers in later life. In this blog, we’ll explore how they work, who they’re right for, and what to consider before applying.
Later Life Interest-Only (LIO) mortgages are specialist products tailored to older homeowners. Like traditional interest-only mortgages, you only pay the interest each month, meaning your monthly repayments are lower compared to a standard repayment mortgage.
However, unlike conventional mortgages, LIO products are designed with older borrowers in mind. The major distinction is that these mortgages typically have no fixed term or end date. Instead, they are usually repaid when the borrower sells the property, moves into long-term care, or passes away.
These mortgages are increasingly popular among older homeowners for a variety of reasons. Life expectancy is rising, retirement ages are shifting, and many people want to remain in their homes while accessing some of the equity they’ve built up.
It’s easy to confuse LIO products with equity release schemes like lifetime mortgages. While both allow you to borrow in later life, there are some key differences:
Feature
Later Life Interest-Only
Equity Release (Lifetime Mortgage)
Monthly repayments
Yes – interest only
No mandatory repayments
Age requirement
Typically 55+
Usually 55+
Interest roll-up
No – paid monthly
Yes – added to the loan balance
Ownership of home
You remain the owner
You remain the owner
Impact on inheritance
Loan repaid from estate
Reduces inheritance
An LIO mortgage is often more suitable for borrowers who have the income to cover monthly interest payments and want to avoid the compound interest that builds up with equity release.
Eligibility criteria can vary by lender, but generally you’ll need to meet the following requirements:
Lenders may also take into account your age, health, and plans for the future when assessing your application. Unlike standard mortgages, where you typically repay over a fixed term, the open-ended nature of LIO products means lenders focus more on your ability to meet the ongoing monthly interest.
The amount you can borrow depends on your income, the value of your home, and your age. Lenders usually offer between 25% and 60% of the property’s value, although this can vary.
Your monthly repayments will be based solely on the interest rate applied to the loan, meaning they will remain stable unless the rate is variable.
It’s worth noting that because you’re not repaying the capital, the original loan amount will remain the same until the property is sold.
As with any financial product, there are advantages and limitations to consider.
Choosing a later life mortgage is a significant decision, and it’s important to consider your personal and financial circumstances.
At Friends Capital, we help simplify the process for you. Here’s a typical journey when applying for a later life interest-only mortgage:
Our advisers are on hand to guide you every step of the way and answer any questions.
While Later Life Interest-Only Products may suit many people, it’s wise to consider all available options. You might also explore:
We always recommend speaking with a regulated mortgage adviser before making any decisions.
At Friends Capital, we specialise in supporting clients across all stages of life. Our team of FCA-regulated advisers offers:
Whether you're exploring your options or ready to apply, we’re here to help you make the most informed decision.
Get in touch today to speak to one of our advisers about Later Life Interest-Only Products mortgage options and find the right solution for your future.