Optional Payment Lifetime Mortgage
Give your clients more certainty and fewer surprises with an Optional Payment Lifetime Mortgage.
What is an Optional Payment Lifetime Mortgage?
An Optional Payment Lifetime Mortgage is a lifetime mortgage that allows your clients to pay some, or all, of the monthly interest. It’s a loan secured against their home to give them a tax-free cash sum, or smaller amounts that they can take as and when they need in the future.
Monthly interest payments are collected by Direct Debit, and your client can choose a fixed amount between £25 and the full monthly interest.
Your clients do have the freedom to stop making monthly interest payments at any time, however if they stop, the interest is then added to the amount they owe each month. After payments stop, the loan will convert to a full interest roll-up basis, and they will then be able to benefit from making ERC-free Optional Partial Repayments.
By making monthly interest payments, this could help your clients reduce the overall borrowing costs of the lifetime mortgage.
Our Optional Payment Lifetime Mortgage is for clients who:
- Aged 55 or over
- Living in or buying their own home, with a small or no mortgage
- Living in England, Wales or mainland Scotland, and own a home worth a minimum of £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties
- Clients who want to pay off the monthly interest via Direct Debit
- Clients who have discussed the benefits and risks of a lifetime mortgage with their family and friends and they know:
- There may be cheaper ways to borrow money
- The impact on any inheritance
- Any unpaid interest is added to the amount they owe each month, which means the loan and outstanding interest grow quickly
- Repaying the loan early is likely to cause a significant early repayment charge
- Releasing more from the full loan amount later may cost more or less depending on the current interest rate at the time
For clients who are receiving a reduced interest rate
Whilst they're making monthly interest payments, if within the first 15 years they miss more than six payments or choose to stop making monthly interest payments, any reduced rates will end and their interest rate will increase. If payments are made for the first 15 years, any reduced rates will apply for the rest of their lifetime mortgage, even if payments then stop.
They will also have the choice to make monthly interest payments on any future additional borrowing (if applicable), and we may also a offer a reduced interest rate on the additional borrowing.
How can it help?
- Could help your clients achieve their retirement ambitions. Some clients may use a lifetime mortgage for:
- Repaying outstanding interest-only mortgages
- Home improvements
- Helping family - children and grandchildren
- Clients will gain a reduced interest rate whilst they are making monthly interest payments. This may also apply to any additional borrowing that is taken if your client chooses to make monthly interest payments1.
1For clients who take out an Optional Payment Lifetime Mortgage from 10 August 2026 we’ve introduced a reduction to the interest rate whilst they are making monthly interest payments. The reduced interest rate applies to customers who received their KFI from this date onwards.
Our Optional Payment Lifetime Mortgage is for clients who want to borrow at least £10,000
Optional Payment Lifetime Mortgage Product Summary PDF size: 934KB
You can use our lifetime mortgage calculator with your client to see how much they can release and show them the impact of interest and house price growth.
Property eligibility
To apply for our Optional Payment Lifetime Mortgages your client needs to meet our minimum eligibility criteria. Your client must be able to answer yes to the following questions:
- Is their property made of traditional masonry construction, in a good state of repair, free of any tenancy restrictions, and is it in England, Wales or mainland Scotland?
- Is their home valued at minimum of £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties
Below is a list of some of the main reasons why the client’s application might have been declined based on their property:
- The lease is too short yet the purpose of loan is to pay for a lease extension and this wasn't selected
- Their property is a bedsit
- Their flat is part freehold
- Their property has agricultural ties
- Age restricted properties
For more details please see the Later Life Mortgage Suitability Criteria PDFsize: 321KB
Applicant criteria
To apply for our Optional Payment Lifetime Mortgage your client needs to meet our minimum eligibility criteria. Your client must be able to answer yes to the following questions:
- Are they aged 55 or over?
- Are they living in (or buying) their home and have either a small or no mortgage?
- Do they want to borrow a minimum of £10,000?
Below is a list of some of the main reasons why your client's application might have been declined based on our applicant criteria:
- Undischarged bankruptcy
- Applicant doesn't have indefinite rights to reside in the property
- The applicant has Charging Orders registered against them
- Property is held in Trust
For more details please see the Later Life Mortgage Suitability Criteria PDFsize: 321KB
Reduced interest rate
For clients who take out an Optional Payment Lifetime Mortgage from 10 August 2026 we’ve introduced a reduction to the interest rate whilst they are making monthly interest payments. The reduced interest rate applies to customers who received their KFI from this date onwards.
Key documents
Lifetime Mortgage calculator
Our Lifetime Mortgage calculator helps financial advisers to:
- Show your clients how much they may be able to release from their home.
- Demonstrate examples for both taking the maximum available as an initial advance or taking a smaller initial amount where the remainder can be drawn on in the future.
- Illustrate the effect of our inheritance protection option on the total loan amount available.
- Explore the impact of house price inflation.
- Highlight how the interest on their loan increases over time.
- Create a summary of your client's choices and possible results.
The calculator results are examples only. A lifetime mortgage is a loan secured on your client’s home. It will reduce the value of your client's estate but servicing the interest can slow or stop the growth of the loan over time and may affect their entitlement to means tested state benefits. On our Payment Term Lifetime Mortgage, you’ll need to reach out to your dedicated Business Development Manager to discuss your clients affordability assessment.
Quoting and online services
Available Portals
Quotes for our Lifetime Mortgages products are available through the listed portals.
24/7 Apply/Request reoffers
To generate a KFI, make a new application, amend an existing one or request a reoffer.
Pre-application property enquiries
In these situations we'll need some more information to assess your client's application. Please provide the full property address and as much information as possible.
Large loan request
If the total borrowing requirement is over £300,000 or the property value is over £1 million, you will need to make a large loan enquiry below.
Energy Saver Cashback offer
Helping your clients
We’ll provide 10% cashback on the total cost of qualifying energy efficiency home improvements, up to £1,000 on an initial advance or £200 on a drawdown.
