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Archive for December, 2009

Three Reasons Why You Can Still Benefit From A Last Minute Prudential Equity Release Application

Wednesday, December 30th, 2009

As you may be aware Prudential have announced their imminent withdrawal from the equity release market…& time is fast running out. With this in mind we briefly look at their unique scheme features & what effect this loss will have on the equity release  market as a whole.

Prudential have two equity release schemes; lump sum  & increasing cash reserve plan . Within these plans the features are found: –

  • An increasing cash reserve facility which provides a reserve that increases yearly by 1% of the original property value, upto age 84.
  • An equity guarantee that guarantees a certain percentage of your property’s value at the start of your plan, will still pass on to your beneficiaries.
  • Unlikelihood of ANY early repayment charges being applied if the plan is taken out with the current Bank of England base rate at 0.5%

 

Although, certain remaining equity release schemes  can provide a no negative equity guarantee, none of them can offer the remaining two. Therefore, if you have a future requirement whereby you wish for a drawdown plan  that offers a larger long term cash facility then the Prudential Increasing cash reserve plan could be an option.

 

Additionally, if you have a shorter term borrowing requirement, (possibly unsuccessful sale of property in the current climate) the Prudential equity release plan, with its unlikely NO early repayment charge scenario also could be an option. So, if these features are of interest & you are considering releasing equity from your property, what are the deadlines for last minute applications?

 

  • Last date for quote requests is 31st December 2009
  • Last date for applications which must be supported by a quote is 15th January 2009
  • All applications must be completed by 31st March 2009

 

For last minute queries & illustrations please ring immediately on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Has Halifax’s Retirement Home Plan Seriously Been Overlooked As An Equity Release Alternative?

Friday, December 11th, 2009

At a time when the equity release market is downsizing with the withdrawal of many lenders, alternative funding sources need to be recognised to help widen the options available. It is in the generic mortgage market that some unique & flexible mortgage products can be sourced that offer an alternative to the traditional roll-up lifetime mortgage; it is one of these that I write about.

 

Upon gathering client details & ascertaining a generous disposable income, sometimes it can be evidenced that monthly payments can be afforded into retirement. However, there is a common misconception that someone in retirement cannot have a mortgage.

 

This is incorrect.

 

Providing income multiples can justify the borrowing requirements, then research can be sought that would provide recommendations of suitable mortgage products. However, providers that can lend into retirement have varying criteria with regards to age & the term permitted & here advice & a knowledge of the market comes into the domain of an experienced independent financial adviser.

 

The options available would be dependent on budget, but also on attitudes as to how much inheritance is to be left at the end of the day. Should it be imperative that the maximum inheritance remain, then a capital & repayment mortgage should be advised. Conversely, if this is not a major issue then an interest only mortgage can be recommended which will maintain the balance at the same level throughout the term of the mortgage.

 

Some of the major lenders such as Abbey & Alliance & Leicester do have a maximum age of 75, by which time the mortgage must be repaid. A few will lend to age 85 such as Leeds Building Society which does give more time for the mortgage to run, however, this may only be suitable for capital & repayment mortgages, not interest only mortgages.

 

Therefore, should you be looking for equity release in retirement, have surplus monthly disposable income, wish to ensure an inheritance for your beneficiaries & want the mortgage on an open-ended basis then look no further than the Halifax. It may come as a surprise that such a product may be available with a mainstream lender, however it has become more evident how this product can fulfill in-retirement needs.

 

The Halifax Retirement Home Plan can release cash over a maximum 40 year term, which for someone already near to, or actually in retirement, should be sufficient! They will only permit this product upto 75% of the property value, however this is not usually not an issue due to the amount of equity in retirees properties. Finally, dependent on whether a mortgage currently exists, we can also obtain for you a free valuation & free legal fees.

 

They will also allow the product to use the mainstream Halifax interest rates such as their 2 year base rate tracker at 2.79%, which for a £50,000 interest only mortgage would equate to a payment of only £116 per month. Obviously, consideration must be given to future potential changes that may affect the mortgage, such as the death a mortgagor which would reduce the household income & in turn affordability of the mortgage. However, this can be catered for with a life insurance policy which would repay the mortgage should either party die.

 

Alternatively, it should be borne in mind that if the level of borrowing is kept to within current equity release lending limits, then if one party did die, the surviving party could repay the mortgage with an equity release plan. This would resolve any affordability issues, as no monthly payments would be required thereafter.

 

Having completed several of these products recently, I can vouch for the speed of transacting this deal – 4 weeks, which compared to an equity release application is quicker too. Therefore, rather than just assuming equity release is the only solution, ensure you receive advice from an independent financial adviser – which Equity Release Supermarket can provide.

 

For further information & eligibility for the Halifax Retirement Home Plan please contact Mark Gregory on 0800 678 5159 or alternatively email mark@equityreleasesupermarket.co.uk

 

 

 
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