Lump Sum Lifetime Mortgage
You release a lump sum in cash from your property with no requirement to make regular monthly payments although with some plans you are able to do this. The lump sum, plus accrued interest, is repaid when your property is sold. Normally this is when you die, move into long-term care or permanently leave the property.
Drawdown Lifetime Mortgage
Rather than receiving your cash as a lump sum you have the option to release it as and when you need it. These plans are considered the most cost effective as you are only charged interest on the money that you release.
Interest-payment Lifetime Mortgages
Interest-payment lifetime mortgages work in the same way as a lifetime mortgage, with the added flexibility that you can make one-off or regular payments of up to 10% off the capital owing (not the interest).
With some plans you can pay a percentage of the interest and have the remainder rolled up, or only pay the interest for a chosen term.
A monthly income is required to meet the interest payments on this type of equity release plan, and eligibility is subject to credit status for interest-only mortgages.