Reasons to Consider A Lifetime Mortgage
A lifetime mortgage is a type of loan where the borrower pays interest only on the initial loan principal and any accumulated interest. Once all of that has been paid off, the borrower can either continue to pay monthly payments or convert to a fixed rate or variable rate mortgage. A lifetime mortgage might be right for you if you are looking for a low down payment and want your monthly payments to stay stable over time. There are many benefits associated with this type of mortgage, but also some drawbacks that should be considered before deciding whether or not it’s right for you!
Advantages: Lower monthly payments, lower interest rates. If you stay in your house for the full term of the loan, about 60% of what is owed will be paid off by just paying principal and interest over 25 years or less time period. Plus with a lifetime mortgage there are no prepayment penalties!
Disadvantage: Higher risk if borrower does not intend to keep home long enough to cover total costs of borrowing money (i.e., more like an adjustable rate mortgage). It’s also important to know that even though this is called a “lifetime” mortgage it may need refinancing at some point down the line because once all debt has been repaid, borrowers might want a fixed rate mortgage in order to protect their home equity.
If you’re looking for a way to buy your dream house with as little hassle and big monthly payments, this might be the perfect mortgage for you! It’s important that before deciding on any type of loan it is fully understood what each one entails because they can all have different implications down the line.