Some 85% of homeowners don't realise they are free to pay down some or all of the interest on a lifetime mortgage, according to new research.
In a survey of 128 lifetime qualified advisers by specialist lender Stonehaven, 94% said most of their clients who had equity release explained to them were surprised by how flexible it can be.
Stonehaven said that the majority of its customers choose to pay off at least a portion of the interest during the loan, which saves money in the long-run and negates the erosive effects of compound interest.
Paying interest in full can save consumers thousands of pounds, it said.
If a homeowner takes out £50,000 on a lifetime mortgage and pays back £50 a month, they could save over £17,146 in interest over 24 years.
Stonehaven was the first provider to introduce flexible payment options when it launched in 2006.
Lifetime mortgages are now being used for a range of reasons, including clearing interest-only mortgages, retirement and inheritance tax planning, or helping children or grandchildren get on the property ladder.
Stonehaven managing director Georgina Smith said: “The lifetime mortgage market is growing and older homeowners are increasingly aware of this flexible and innovative option.
“Lifetime mortgages are an effective solution for a growing number of over-55s who want to enhance their lifestyle or release the equity in their homes to help their children.
"Others are looking for a flexible option to bridge the retirement income gap and help them continue the lifestyle they have been accustomed to while they were working.
“The reasons for over-55s choosing lifetime mortgages has changed over the years and our products have naturally evolved to suit these emerging needs."
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