Equity Release Latest News

Archive for May, 2012

The Long Awaited Relaunch of SHIP as the ‘Equity Release Council’

Monday, May 28th, 2012

SHIP (Safe Home Income Plans) will relaunch itself as The Equity Release Council and expand membership applications to include equity release advisers, solicitors, surveyors and any other relevant organisations.

 

From now on, all areas regarding equity release advice & products made available to the general public will be covered by this new body. This will aim to ensure consumers are fully protected & aware of equity release mortgages & what they are entering into.

 

There will be a new Equity Release Council website that will front the trade body whereby consumers will be able to identify equity release advisers, the providers, equity release solicitors & other organisations that will abide by their standards.

 

Headed by new appointed chairman Nigel Waterson, the Equity Release Council will help oversee the new direction of the Council. Andrea Rosario’s role moving forward will be involvement in the more daily aspects of the organisation.

 

Additional appointments will be Chris Pond who will head the Board & determine & fulfil the rules that members must abide by. A technical committee will work with all members of the Equity Release Council to assist with moving the equity release market forward & make improvements along the way. This aims to create a more positive attitude towards equity release schemes in general for advisers & alike.

 

Commenting on the newly formed organisation Nigel Waterson said – “This is a really significant day for thousands of older people in the UK. After an extensive engagement process, equity release schemes now have a trade body which represents the entire sector – The Equity Release Council. “

 

“This is excellent news for the industry as by working together we can ensure that government and potential customers understand the benefits that equity release can provide.”

 

Andrea Rozario also commenting – “With equity in people’s homes likely to be at the heart of many people’s retirement planning now and in the future, it is vital the equity release industry, adapts to meet consumer needs.

 

Ms Rozario also added – “The launch of the Equity Release Council provides us with an excellent opportunity not only to make equity release products easier to access for customers but to encourage more product development to meet UK consumers’ changing retirement needs.”

 

Chris Pond’s comments followed – “Equity release could help many people meet their needs in retirement & a better quality of life, meeting the costs of long-term care, giving a helping hand to a younger generation or just clearing debts. But the market for equity release can only grow if the public and policymakers have confidence that the highest standards of consumer protection will be maintained.

“That’s why it’s important that all those engaged in equity release sign up to a code of conduct that meets consumer needs. The Equity Release Council will fulfil a vital role in building on the work of SHIP by extending that commitment throughout the industry.”

 

These changes and strengthening of the equity release market, further underlines the commitment of this lifetime mortgage industry to helping the over 55’s fulfil their retirement years with financial peace of mind.

 

Equity Release Supermarket also underlines their commitment by supporting such movements in the development of greater understanding of equity release plans. Thus, if you have any questions on these equity release matters please call us on 0800 678 5159 or email admin@equityreleasesupermarket.co.uk

 

A Whole New Ball Game Begins with Home Equity Release Schemes

Monday, May 21st, 2012

With interest rates being so low, and investments so sluggish, many people who had retired on a nest egg are starting to struggle. The crisis seems far from over so it might be time to consider other options for “topping up” those savings and the income that they create with a home equity release scheme.

 

Most home equity release plans come in many forms but the most common one now is the lifetime mortgage. This style of equity release mortgage is only available to those over the age of 55, as they include special features exclusively designed for elderly and retired people. This more vulnerable age group now has the protection of the FSA (Financial Services Authority) & the trade body currently undergoing reformation which is SHIP (Safe Home Income Plans).

 

Changing attitudes & beliefs

These property equity release plans are designed to be secured on properties which have had most or the entire existing mortgage paid off. Equity release is essentially a re-mortgage, but with special consideration taken into what stage of life the homeowner is in. The statistics show that retirees are now living longer and have a renewed vigour & enthusiasm that has rekindled that sense of adventure from years gone by.

 

Why? The whole idea and acceptance that we are only here once; so ‘let’s make the most of it’ attitude.

 

Home equity release schemes are a great way of topping-up a retirement pension, as they can be arranged to either provide an additional amount of “income”, by slowly releasing the equity from a home in a controlled manner. Otherwise, they can provide a lump sum of cash which can go top-up an emergency fund, or to provide capital that can be used for a lifestyle purposes such as home improvements, a new car or holidays.

 

New lending approach from equity release companies

The benefits of today’s range of home equity release schemes are that they provide excellent value for money, given that equity release interest rates are the most competitive ever. Interest rates are now available from the likes of AVIVA starting from just 5.57% dependent upon age, property value & equity release scheme taken.

 

This new approach to equity release lending takes more account of how potentially profitable a plan is to them. We have already seen this to some degree with LV= who operate a tiered interest rate structure dependent upon age. Basically, the older the youngest applicant is, the higher the interest rate becomes. The principle behind this is, the younger one is, the longer their life expectancy should be. Consequently, the longer the equity release plan runs for the greater the final balance which results in a greater profit margin for the lender.

 

Makes business sense, or does this? Only time will tell, however from the initial feedback and rates being made available from the Aviva trial program indicates that considerable reductions in interest rates can be made, even with the offer of the free valuation and upto £1000 cashback!

 

What effect does this have on the children?

For those looking for the lowest interest rate on a home equity release mortgage a lower interest rate will save £1000’s over the long term. This will reduce the financial burdening of compound interest from day-to-day with the mortgage arranged so that the additional cost of interest charged is taken from the equity in the home. This means that the burden is shifted to the inheritance estate, or to when the home is sold when the policy holders are in care or downgrade their home. In each of these cases, it is likely that the market will be more buoyant and the home will have more value anyway as hopefully property values will have risen over the duration of the home equity loan period.

 

With savings taking such a beating due to low interest rates and pensions being punished so hard by this crisis, many retired people are struggling with their finances. Sometimes products like home equity release schemes can help and provide some extra comfort and peace of mind. They can top-up the incomes provided through annuities or drawdown pensions, and are usually available on terms which are more flexible and costs effective than those taken out in years gone by.

 

Equity release is an important decision. However, with the help & support of specialists in the field of lifetime mortgage and home reversions plans such as Equity Release Supermarket we can find the best equity release deal for you.

 

No matter your location in the UK or Northern Ireland we have equity release schemes covering these locations. So either pick up the phone & call 0800 678 5159 & speak to one of the equity release team or click here to find your local equity release adviser.

 

These are lifetime mortgages and home reversion plans. To understand their features and risks, ask for a personalised illustration.

Is it Worth Reviewing My Existing Equity Release Mortgage?

Friday, May 4th, 2012

There are many reasons why you should sit down & review your existing equity release mortgage. Like any financial undertaking, products do evolve and change, hopefully for the better over the years, & equity release schemes are no different.

 

Here we look at the reasons for reviewing an older equity release mortgage, understanding the benefits & how to go about ascertaining whether you can remortgage your existing equity release scheme, or possibly staying put with your current provider.

 

Reasons for considering an analysis of your existing equity release plan

Let’s first have a look at the factors for consideration in the transfer, switch or remortgage of your current plan: –

  • Could it be because your existing scheme has now exhausted its maximum lending limits with your current equity release provider?
  • Maybe you now require additional tax free cash due to change in circumstances or a financial emergency has arisen.
  • Simply because you require a more competitive equity release deal than at present as you are concerned about the effect the roll-up & the compounding of interest that is affecting your equity release balance.
  • Finally, there could be better equity release plans available in today’s marketplace that were not available many years ago and you wish to take advantage of this to save your children’s inheritance over the longer term.

 

What has changed since you took out your original plan?

Dependent upon when your original plan was taken out, many lenders are now offering better, more flexible and more secure plans. The main influence though will be the fact that interest rates have dropped so significantly. Having experience of advising on the older Norwich Union equity release plans, I have evidenced the fact that around 10 years ago their rates were in excess of 8%! How times have changed.

 

Not only that, but my team of equity release advisers have similar experience of the older schemes which is invaluable in the decision making process & analytics of whether to transfer your existing lifetime mortgage or not. Having worked for the likes of Norwich Union equity release, Prudential, NatWest, Key Retirement Solutions & Aviva, we have the experience & knowledge to conduct a full analysis of the equity release pros and cons relating to a potential remortgage situation

 

How low have equity release interest rates fallen?

The fact is, if you already have an equity release plan, now is as good a time as any to re-evaluate it and shop around. Although not as low as conventional mortgage rates, equity release interest rates have fallen recently, but mainly due to competition in the equity release market. With their aggressive stance presently Aviva have become the darlings of the lifetime mortgage market with their lowest interest rate of just 5.92%. But it doesn’t just stop there. With a free valuation thrown in & £500 cashback this represents the deal of the century!

 

When considering a remortgage, interest rate alone is not the factor that determines your decision. The costs involved in setting up the plan are essential & these should be minimised in order to make the transition ads costs effective as possible. Therefore, the current Aviva Flexi drawdown lifetime mortgage plan is possibly the one plan that would be a viable proposition to switch over to.

 

What other factors must be considered other than interest rate?

It is important to make sure that any new potential equity release scheme is flexible and can be modified whenever your circumstances change. Equity release schemes must meet immediate needs, but equally, it must also be able to adapt to the future. Many new equity release schemes are much more flexible than their previous counterparts. For instance, drawdown lifetime mortgage schemes are now the most popular form of equity release mortgage currently available. This is opposed to the mainly lump sum mortgages that were available in the past, which were inflexible, could only be reviewed every 5 years & you had to budget on this basis accordingly.

 

When reviewing clients existing equity release mortgages, I may find several better and more suitable products on the equity release market today. However, it is not simply a case of switching lenders. Many existing equity release schemes may have clauses that make it quite binding in the long term and may incur additional charges such as an early repayment charge. This factor could be the sole reason whether to switch equity release lenders or not and deter offsetting any savings made from switching to a new plan.

 

It is important to consider several factors while comparing the existing equity release plan to a new one. Current interest rates, the current value of the property and the amount that needs to be borrowed. A switchover can take up to 60 days, so it becomes important to take into account interest rates over 60 days, setting up costs and the current redemption figure to work out the amount that can actually be borrowed.

 

What action should I take now?…

To review your existing equity release mortgage, you will need to consult an independent equity release adviser who can provide impartial, unbiased and experienced advice on different options that are available. A careful and detailed comparison needs to be made, considering various costs that will be incurred during a switchover, including setting up costs, application fees, solicitors’ fees and advice fees.

 

From significantly lower interest rates, to more flexible terms, switching to a new plan may have several advantages for yourself…and your beneficiaries. As a company who is remortgaged many older equity release mortgages we can speak and practice from experience.

 

For a free equity release analysis of your existing lifetime mortgage, contact the Equity Release Supermarket team on 0800 678 5159 or complete the online contact form today.

 

 
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