Compound Interest Modeling

How rolled-up interest shapes your property equity

Lifetime mortgage interest compounds monthly without mandatory monthly repayments. This model details exact debt doubling timelines across standard UK market rates.

11.6 yrs

Debt doubling time at 6.0% MER

10% max

Annual voluntary repayment limit

Borrowing Structures

Lump sum borrowing versus gradual drawdown

Single Advance

Immediate lump sum compounding

Taking the maximum available capital on day one means interest immediately calculates against the full balance. Over a ten-year horizon at typical market rates, the total debt grows significantly faster as interest accrues on prior interest charges.

Drawdown Facility

Phased borrowing reduces total cost

A drawdown lifetime mortgage establishes a cash reserve facility while only drawing down smaller amounts as needed. Interest accrues solely on the funds actually released, substantially lowering overall cumulative debt over identical repayment timelines.

Underwriting Thresholds

Maximum equity release percentages by age

20% - 22%

Age 55 baseline release limit

28% - 32%

Age 65 standard tier

40% - 45%

Age 75 higher tier

50%+

Age 85 maximum LTV ceiling

Review Plan Types

Explore lifetime mortgage product structures

Compare drawdown plans, inheritance protection guarantees, and Equity Release Council safeguards in our comprehensive guide.