Interest Only Lifetime Mortgage vs Roll Up
The choice between an interest only lifetime mortgage and a roll-up lifetime mortgage comes down to one question: do you want to pay the interest now, or let it build up? With interest only, you pay each month and the balance stays flat. With roll-up, you pay nothing and the balance grows through compounding.
The numbers show the gap clearly. On a £100,000 loan at 6%, paying the interest costs £500 a month, or £6,000 a year, and the balance is still £100,000 after ten years. Rolling up costs nothing a month, but the balance reaches about £179,000 after ten years and about £239,000 after fifteen.
Interest only suits people with reliable retirement income who want to protect their children's inheritance. Roll-up suits people who need the money but cannot afford a monthly payment, or who prioritise cash flow today over equity tomorrow. Many products now offer a middle path: voluntary payments up to a set percentage each year without penalty.
- Interest only: pay monthly, balance stays flat.
- Roll-up: pay nothing, balance compounds and grows fast.
- Some products allow voluntary partial payments as a middle path.
Try the free calculator to work out your own figures in seconds.