Archive for the ‘Advice’ Category
Sunday, January 15th, 2012
The current financial climate is quite simply awful for many people. Particularly, the retired & elderly are really struggling to make ends meet. Many retired people who left their work before the crisis hit have had to watch in horror as a lot of the value they had expected to retire on has been wiped away by stockmarkets & low interest rates with the banks & building societies. Sometimes, what is left in the pension isn’t enough, and their reaction is that they should sell their house in order to ensure a comfortable retirement.
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However, with equity release plans, this might not necessarily be required. Instead of selling the family home, why not release equity to cover the short term finances. We maybe only talking a small sum to tie you over until prospects improve. Therefore, for the sake of selling in a depressed property market, bide your time & think carefully about your options available. Equity release schemes can play an important role here.
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Equity release schemes are form of mortgage that enables people over age 55 to release locked up equity in their main residence. The typical and most commonly thought of equity release schemes are actually called lifetime mortgages. Lifetime mortgages are available to those over 55, and have specific characteristics which reflect this unique stage in life.
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Equity release schemes are like normal mortgages in that they are associated money & a property. However, where most mortgages are used to purchase the property over an extended period of time, equity release mortgages are new mortgages placed on properties which already have or virtually paid off the mortgage. The result is that while the property now has some debt associated with it, the value that is unlocked can be used for large scale projects or purchases, supplement pensions or more commonly home improvements.
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The other difference between an equity release lifetime mortgage and a normal mortgage is that with an equity release mortgage the assumption is that the balance will be paid off when the person who holds the plan sells the asset or as a part of the inheritance estate. This is why the over 55 age restriction on equity release schemes is so important. These financial products are designed to run for the rest of one’s life, so there is no call upon the repayment of the capital until death or moving into long term care.
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Many retired people watched the drop in markets sweep billions from the values of the pension funds, and therefore pushing significant financial pressure inwardly. It is easy to see how the equity release mortgage would be an excellent option for retired people who are struggling either for income or a capital lump sum. Where they were potentially considering having to sell the family home or go back to work, many retired people can supplement their pensions with the value withdrawn via an equity release scheme.
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As lifetime mortgage & home reversion plans are now members of SHIP, you always have the option of repaying the scheme during your lifetime. However, be wary of potential early repayment charges which some gilt related schemes can significantly impose. One way providers can recover their costs is through these means.
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Often people think that equity release is tantamount to putting debts on to the next generation. What is important to keep in mind that with lifetime mortgages the ownership of the property stays in the hands of the plan owner, just like a regular mortgage. In fact, usually the biggest difference between a normal mortgage and an equity release mortgage is that the terms of the equity release plan are more favourable as they consider the age of the owner of the plan, and factor that into the calculations.
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This means that those who inherit the property may also inherit the debt, but they now have the option to decide if they want to keep the property with a normal mortgage, or sell the asset and recover the rest of the equity. These are options which can be passed onward in an estate, making it easier for the family to make decisions which are appropriate for them.
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Selling one’s house is an emotive issue & needs to be discussed with those closest to you. Next step would be to discuss whether equity release schemes are a viable option & this is where Equity Release Supermarket can use their considerable experience & knowledge to help.
For an impartial & free initial consultation call Mark on 0800 678 5159 who can offer words of advice. Alternatively,in confidence email mark@equityreleasesupermarket with any questions you may have.
Tags: equity release, equity release mortgage, equity release schemes, Equity Release Supermarket, Financial adviser, FSA, home reversion, lifetime mortgage, lifetime mortgage schemes, lifetime mortgages, SHIP
Posted in Advice, Equity Release, News | No Comments »
Tuesday, August 2nd, 2011
Confusion reigns at a time in life when stability, financial security & freedom to enjoy the fruits of one’s success should be evident. Yes, we are talking retirement, equity release & the increasingly popular Halifax Retirement Home Plan.
We discuss the options available to those already retired or the up & coming baby boomer generation, as they prepare to assess how they are to manage in today’s financial maelstrom.
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For many, & usually it all boils down to lack of financial planning in earlier life; retirement is none of the aforementioned attributes associated with the longest holiday of your life.
We all go through life thinking retirement seems a distance over the horizon. From getting that first job, raising the children & moving up the ranks in the employment world, our lives move forward apace.
But the inevitable will reach us all one day & without foresight retirement could be the biggest challenge in your lifestyle thus far.
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So how should we prepare & how do we invest in our futures to ensure a retirement of fulfilment?
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The spoken word, ‘hope for the best, prepare for the worst’ must have a ring of truth when it comes to retirement planning. It’s a recipe on the menu that’s always put on the back burner & one on the ‘to-do’ list of things that can wait until tomorrow…YOU CAN’T.
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Looking back at that first job is where the seeds should initially be sown. Whether it’s joining that company pension scheme or making your own provision, a pension should be the life jacket for your retirement.
The old adage of the earlier you start a pension the less you need to pay in later, is gospel & with the tax advantages on offer they still represent one of the best ways to build a pot of gold for the future.
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But there are other options now available which represent a safer alternative & more hands on approach such as real estate.
The buy to let market is currently undergoing transformation in the current economic climate, with rental incomes outstripping savers returns on bank & building society accounts. There is also the potential capital appreciation aspect of owning a property which has been a tried & tested route for many over the longer term.
Property is a tangible asset; you have control over how it looks, you can manipulate it & affect its value. The sole aim of these actions is to build asset value & thereby probably without hindsight, can build yourself a ‘retirement vehicle’.
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So let’s see which vehicle will suit your requirements & enable you to navigate down the retirement highway…
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Firstly, the question that needs to be asked is whether an income or capital lump sum is required? Given the fact that most tax free cash requirements are for capital, the options are then narrowed down to affordability in retirement.
The next important consideration is whether one can support the monthly payments of an interest only mortgage, or are finances so tight that no further monthly payments are required throughout retirement. The answer to this will filter us towards the ultimate decision; that is whether the solution is an interest only lifetime mortgage or a roll-up equity release scheme?
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On the one hand you have an interest only mortgage, where monthly payments are required to be maintained for the rest of your life & results in a continuously stable & level balance during the remaining term.
This is in complete contrast to a roll-up equity release plan, which requires no monthly payments whatsoever, but allows the interest to compound & the balance of the mortgage to get larger.
Let’s have a look the features of each option further.
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Roll-Up equity release scheme
- Classified as a Lifetime mortgage, hence no term is specified
- Schemes are regulated by the FSA & are also members of SHIP
- Equity release schemes start at age 55
- No income required for eligibility
- Maximum release is 55% of the property value (with ill-health)
- Credit history is not a major concern to equity release companies
- No monthly payments required
- Increasing balance as the interest is compounded monthly or annually
- Flexibility of drawdown schemes available to take regular cash releases with guaranteed reserve facilities. This ensures future cash availability with no further costs.
- Interest rates are fixed for life
- Reduced, or no inheritance left for the beneficiaries of the estate
- Executors have upto 12 months in which to repay the lender, usually by sale of the property
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Halifax Retirement Home Plan
- Classified as a Lifetime mortgage, hence no term is specified
- Pensioner mortgage & regulated by the FSA
- Starting age is 65, however with enough pension income, over 55’s are acceptable
- Retirement income alone will determine how much that can be borrowed
- The maximum amount borrowed is capped at 75% of the property valuation
- Credit history is checked & any adverse record could result in a declined application
- Monthly payments must be maintained to avoid repossession
- Mortgage balance remains exactly the same throughout the plan term
- Further advance application required to borrow additional funds & will be credit assessed each time for affordability.
- Option of tracker & fixed rates available, initially for a maximum of 5 years. Therefore, no guarantee of the future costs of the monthly mortgage payments.
- Reduced inheritance, albeit a specific amount which the beneficiaries will know the extent
- Beneficiaries have 18 months in which to sell the property, after death or the mortgagors moving into long term care.
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So the winner is?
There is no actual winner in this pensioner mortgage market.
Both schemes have the advantages & disadvantages depending upon one’s retirement finances.
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However, if a good retirement & disposable income is available & future affordability secured, then certainly the Halifax Retirement Home Plan is justifiable for the applicants & more so for the beneficiaries. Nevertheless, it is vitally important that steps are also taken to protect each party to the interest only retirement mortgage in case one applicant dies as the survivor will still need to maintain the monthly payments. Therefore, life insurance should always be considered on the Halifax Retirement Home Plan.
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Alternatively, for those on lower incomes, less of a disposable income & are not too concerned about their children’s inheritance, then a roll-up equity release mortgage could be their preference. The roll-up equity release schemes have no effect on monthly budget & can never result in repossession based on lack of affordability or missed payments.
These schemes can be classed as a ‘mortgage of last resort’ as once all the alternatives have been considered & eliminated. Equity release roll-up can always be the backup plan. Even more so should one default or struggle with the affordability of an interest only lifetime mortgage such as the Halifax Retirement Home Plan, as equity release schemes can be used to clear the Halifax mortgage.
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The following is an equity release tip – to ensure that equity release can act as a safety net, if you are looking to borrow on a Halifax equity release scheme then always consider & keep within the loan-to-value limits of the equivalent equity release scheme rules. If you do this then you have equity release as a fall back to switch to in the future.
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There are many more tips & advice available on this subject, but as always seek an independent financial advisory service such as Equity Release Supermarket who are qualified & experienced in these two specialist fields.
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For help on deciding which type of equity release is best advice for yourself, please contact the Equity Release Supermarket advisory team on freephone 0800 678 5159 or email mark@equityreleasesupermarket .co.uk
Tags: equity release, Equity release calculator, equity release schemes, Equity Release Supermarket, halifax equity release, Halifax Retirement Home Plan, lifetime mortgages
Posted in Advice, Equity Release, Halifax Retirement Home Plan | No Comments »
Wednesday, June 22nd, 2011
The amount of equity you own is the term used to describe the value of a home less any mortgage or secured pending on it. Equity release allows you to free up this money tied up within your home.
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The equity release process will allow you to receive a tax free, lump sum of capital allowing you to spend it in whatever way that you choose.
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An obvious disadvantage is that you will not be able to hand down all of your property to your offspring. Nevertheless, you do get to live out the remainder of your life in your home, rent free or till you move into elderly care.
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If you are considering an equity release scheme, the best way to get started would be to approach an expert. Some organisations which provide equity release schemes also provide a free consultation, so remember to take advantage of their services. Some research of the advisor would be of benefit as they must be regulated by the FSA (Financial Services Authority) & have an individual registration number with them. The equity release adviser should therefore be found on the FSA website register.
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Ensure they are independent, which means they are free to deal with ANY equity release provider in the market. So ask. Some companies purport to be whole of market, however upon closer analysis they only deal with a handful of companies. You may therefore be missing out on a beneficial feature of an equity release scheme that they do not have available. This could save you £1000′s in the long run & could prove costly if the wrong equity release plan was chosen.
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Your advisor will let you in on all the vital details regarding the procedure. This will be after the equity release adviser has collated all the necessary facts regarding one’s current situation. Guarded with this information, & any soft facts provided such as ‘how important is that you leave part or all of your property to your beneficiaries?’ will be asked. Also income & whether you are in receipt of means tested benefits is important as this will reflect on which equity release schemes are advised upon. The equity release consultant can then document & record this stage of the lifetime mortgage process.
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Once an accurate financial picture has been ascertained & observed the clients objectives, the equity release adviser can then discuss the mortgage options available. These would include an explanation of the various schemes available to suit. Included in this would be roll-up equity release schemes, home reversion plans & interest only lifetime mortgages such as the Halifax Retirement Home Plan or the Stonehaven Interest Select.
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You do not have to give them an instant decision; after all, going for an equity release scheme is a big decision and something which should not be rushed into.
Upon presentation of the equity release advisers recommendations a Key Facts Illustration must be offered to you. This would include a summary of the scheme in principle, costs & charges, future balance & the commission payable by the lifetime mortgage providers. This is quite a comprehensive overview of the scheme & covers the finer details, as well as the main features, such as the no negative equity guarantee & early repayment charges etc.
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Once you have made your decision, all you have to do is simply call your advisor and give them the go ahead. They will have all your paperwork taken care of, contact your solicitor and keep you updated about everything, right to the time that you get your money released.
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A professional & courteous adviser will confirm the funds have been released & offer any after care service in the future; for example when additional funds are required such as on a drawdown equity release scheme.
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As a company Equity Release Supermarket keep contact with its clients to advise on new products & interest rates in the future as it is important to keep abreast of the market as & when more competitive products become available.
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Independent & award winning equity release specialist Equity Release Supermarket offer all the above benefits & quality of service that the testimonials at the bottom of the home page illustrate.
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To discuss your options in the release of equity from your property call freephone 0800 678 5159 today or alternatively complete our contact form & one of our advisers will be in touch
Tags: drawdown equity release, equity release, Equity Release Adviser, equity release schemes, equity release solicitor, home reversion, independent, Independent equity release advice, interest only mortgage, lifetime mortgages, No negative equity guarantee
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Tuesday, April 19th, 2011
Upon researching whether equity release is a suitable option, you may be finding most of the information available in the press or on the internet focuses on the main types of plans available which are Roll-Up Lifetime Mortgages.
There is in fact another type of plan which is less commonly understood and these are called Home Reversion plans.
I think it’s important to consider these plans in more depth. Increasingly home reversions are become more appropriate for those considering taking an equity release plan, particularly if those looking for a simple plan giving a high degree of certainty.
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A home reversion plan involves transferring ownership of all or part of your property to the provider in exchange for a tax free cash lump sum (or you can choose regular payments). Your property is independently valued and from this the provider will work out how much they will pay you for the percentage of the property being sold.
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The amount you’re paid wont be as much as the market value of the property. This is simply because you will be living there rent free for the rest of your life (or until moving out permanently into long term care). As a “rule of thumb” the older you are the more the home reversion provider will pay you for the share sold, that’s because your life expectancy is less. You are still responsible for paying all your bills, insurance and maintaining the property. At the end of the plan the property is sold and if you’ve retained part of it, your share of the proceeds will be paid to your estate.
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When considering a home reversion company, it’s important to choose a provider who is a member of the trade body Safe Home Income Plans. SHIP members offer a guarantee to their customers, the main benefits of this are that you’re allowed to remain in your property for life (provided the property remains your main residence) and you have the right to move plan to another suitable property without any financial penalty. Plus of course you have the safeguard of independent legal advice.
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Home reversions are also regulated by the Financial Services Authority (FSA) which oversees how providers and advisers must deal with you. And finally, because home reversions involve the sale of property a third level of extra consumer protection is given by UK property law, which governs the relationship with the provider and their obligations towards you.
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So what type of people are home reversion schemes most suitable for?
Well it really boils down to your thoughts and concerns. As a guide a reversion might be more appropriate for someone who falls into some or all of the following categories:
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- Customers who want to specifically avoid debt – a home reversion plan is not a mortgage & cannot therefore be repossessed
- Those concerned house prices won’t keep going up – the risk of falling house prices is passed to the provider
- People in good heath and confident that they may live for many more years to come (for example there may be a history of longevity in the family) – generally the longer you live the better value a reversion becomes
- Anyone wanting to the peace of mind of knowing that if they need to in the future, they can access the maximum cash from their remaining equity – some providers will guarantee to always release further funds until 100% of the property is sold
- Clients wanting to guarantee an inheritance for their estate – for example if only 25% of the property is sold, the estate will inherit 75% of its value after costs
- Those wanting to release more cash from their property than they can by using a lifetime mortgage
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Naturally home reversion plans are not for everyone. Generally you will only be eligible to take a reversion plan if you are 65 or older. Ideally, to get the better rates you would need to be over age 70.
As reversions are a long term commitment they should not be considered if you intend to repay the money released at some stage in the future (for example if you’re expecting an inheritance).
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If you are in poor health or expect to have below average life expectancy then you may not get full value from a reversion either. However, we do have access to products now that do offer an impaired life (poor health) facility & therefore can provide an extra lump sum for this reason.
For those unfamiliar with how a reversion works there is understandably a little concern about giving up all or part ownership of your property.
The reality is that the terms and conditions of a reversion (ie the “small print”) are similar to that of equity release and your right to privacy and freedom to live in your own home are not affected.
Usually with a home reversion you are granted a lease for life to live in the property for as long as you wish to. And this important legal arrangement is recorded by HM Land Registry much the same as a leasehold flat or house is. So although you may have sold all or part of the property to the provider it still very much remains your home.
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The decision to release equity from your home using a home reversion plan or a lifetime mortgage is an important one and you will need specialist advice from a Financial Adviser in order to do so. They can talk to you about whether equity release is right for you and if it is what sort of product best suits your particular needs.
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To obtain further information on Home Reversion schemes, please contact an Equity Release Supermarket adviser on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk
Tags: equity release, Equity Release Adviser, FSA, home reversion, home reversion plans, home reversion schemes, impaired life, inheritance protection, lifetime lease, lifetime mortgages, lifetime tenancy, SHIP
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Wednesday, March 2nd, 2011
With the main concern over equity release schemes being the inheritance passed down to beneficiaries, here we discuss the pro’s & con’s of these lifetime roll-up mortgages.
Firstly, we look at the effect on beneficiaries & the sources of these areas of concern. This then leads us onto the equity release calculator with facts & figures showing how these schemes fair for the beneficiaries at the end of the day.
Ok, we’ve have all heard the saying; bad news travels faster than good news & this is synonymous with term ‘equity release’.
Although equity release plans originate back to 1965, the damaging news about them generally dates back to the late 1980′s when ‘home income plans‘ were initially launched.
Linked to an annuity or investment bond & an interest only mortgage, these plans were destined to fail, relying heavily on investment performance in a period of falling property values & rapidly rising interest rates.
The mid 90′s then introduced the much derided shared appreciation mortgages (SAM’s), the focus of most causes for campaigns against equity release including the Trevor MacDonald Tonight programme.
Is it any wonder reputation was soured?
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So what has the equity release industry done about it?
At the time of the SAM’s debacle, SHIP (Safe Home Income Plans) was launched.
Formed from its originators – Ecclesiastical Life, Hodge, Home & Capital Trust and GE Life all members agreed to abide by a strict code of conduct, which still exists to this day.
Soon, new lenders entered the market with household names such as Norwich Union & Northern Rock introducing the first roll-up schemes & bringing a significant boost & trust to the industry.
Although the volume of applications began to blossom around 2003 with 25,000 loans completed, a lack of regulation still overshadowed the equity release sector. The market was still somewhat blighted by its previous misdemeanours.
Thankfully, partial regulation was soon imposed on the industry with lifetime mortgages coming under the auspices of the Financial Services Authority on 31st October 2004. Home reversions joined lifetime mortgage schemes soon after & by 2007 full regulation & confidence was brought back to the sector.
Therefore, the market has evolved & strived to restore pride; a far cry from the negative perceptions of decades previous.
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So what does this all mean for today’s beneficiaries?
The main ‘clean up act’ came with the introduction of SHIP & its rules imposed on the members. The ‘no negative equity guarantee‘ affords the greatest level of protection this industry can offer.
Safe in the knowledge that any amount borrowed by their parents can never escalate to more than the eventual sale price of the property, beneficiaries are at least guaranteed no debt can ever be passed onto themselves.
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A crumb of comfort maybe, but peace of mind for the parents.
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An equity release adviser should always encourage involvement of the heirs to the estate. With their input & assurance, feelings can then be vented either for or against equity release being taken as for many elderly people this is a major financial proposition.
Again qualified advisers should play an important role in explaining the pro’s & cons of lifetime mortgages & convey these issues to all parties concerned.
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What else does the equity release sector afford by way of protection?
Interest rates for home equity release schemes, albeit not the lowest ever, are still historically low. One positive feature of these schemes is the lifetime fixed rate on all loans now.
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So what is the benefit of this?
If you borrowed an amount of capital, with a fixed interest rate for life it enables you to calculate the exact future balance.
This is building further reassurance for potential mortgage applicants.
A client will always be made aware that the equity release balance escalates over the lifetime of the scheme; this is the nature of these plans & should never be entered into unless this has been clearly explained. The effect of the interest compounding annually, approximately doubles the balance every 10-11 years, depending on interest rate charged by the equity release companies.
Sounds daunting? Well, let’s now look at the sums as promised:
One of the lowest interest rates around at present would be the Aviva Lifetime Lump Sum plan, which at the time of writing this article has a fixed lifetime interest rate of 6.65% (6.9% APR) annual.
A male, aged 65 borrowing a lump sum of £25,000 on the Aviva Lifestyle lump sum at a fixed interest rate of 6.65% would know exactly what the future balance will be, even before taking out the equity release scheme. The Key Facts Illustration provided by the equity release adviser will confirm these figures & also the costs & additional features involved.
For instance, given the aforementioned figures at the end of 10 years the mortgage balance would be £47,594 & after 20 years it would be £90,606.
This may seem expensive given only £25,000 was borrowed initially; however there are two factors that could still rule in favour of the a lifetime mortgage scheme.
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One common issue overlooked is the potential for property values to increase. If so, & with 100% ownership of the house still being retained, then the homeowner will fully benefit from any escalation in the house price. This will then offset some of the compounding effect of the interest & mitigate its effect on the estate somewhat. Again, we are looking here at the longer term & no guarantee can be given they will go up; nevertheless historical records show they have indeed.
Consequently, a rule of thumb is never to borrow anymore than required beyond the initial 12 months. Plans are now flexible enough & with drawdown equity release schemes introduced & now being the most popular roll up lifetime mortgage, then the funds can be drip fed over time as & when required.
Additionally, by taking a lower initial amount, results in less interest being charged, thus meaning more inheritance passed onto the beneficiaries.
The second factor affecting the balance accruing & is also the primary cause of roll-up & that is purely down to the fact that NO monthly payments are required. This helps retirees to have access to the some of the equity tied up in their property & at the same time having NO effect on their budget.
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Finally, equity release schemes do have an ever increasing part to play in the retirement planning for the over 55′s. Care must always be taken & should never rushed into without discussion & involvement of third parties. Advice should always be provided by an industry qualified equity release adviser.
Hopefully lessons have now been learned from the past & the industry can move forward, innovate & develop further over time. If so, & in the right circumstances equity release can provide for many, a comfortable & enjoyable retirement.
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If you require furthjer advice on equity release schemes, please call freephone 0800 783 9652 or email mark@equityreleasesupermarket.co.uk
Tags: drawdown equity release, equity release, Equity Release Adviser, Equity release calculator, home income plan, lifetime mortgage schemes, lifetime mortgages, SHIP
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Monday, December 20th, 2010
Should you have already purchased your annuity from your pension scheme, then unless it is indexed linked by inflation you may now be feeling that has lost some of its purchasing power over the years. With inflationary fears currently still persisting, even with the recent downturn in the UK economy, then people are looking at extra ways to enhance their retirement income & lifestyle.
Obviously, once a pension has been purchased then it is fixed for life, so alternative sources of boosting one’s retirement income need to be sourced.
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So how can equity release assist?
Equity release allows you to enjoy the monetary benefits of your assets without having to sell them. This is one of the ways to use the equity locked in your property. Equity release schemes are available only for retired individuals over the age of 55.
There are two types of equity release schemes: Lifetime mortgages and home reversion schemes. Consider the benefits of these two and choose one that suits your requirements. It is prudent to opt for independent financial advice when dealing with equity release schemes.
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Lifetime mortgage schemes: These schemes are designed for property owners. They help in gaining money by mortgaging the property. A major benefit of opting for this scheme is that you still remain the sole owner of your property. Individuals over 55 years of age are eligible for lifetime mortgage schemes.
One type of lifetime mortgage scheme called drawdown equity release could be a solution here. The lender will calculate an overall maximum that can be released & from this the applicant can withdraw this reserve facility in small amounts at times to suit one’s requirements. This could be monthly, half yearly or even annually, but the choice is yours. Therefore, by opting for a drawdown scheme could boost your retirement finances with flexibility.
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Reversion schemes: Contrary to lifetime mortgage schemes, home reversion schemes require you to sell a part or all of your property to enjoy monetary benefits. A lump sum from one of these schemes can be used to purchase an annuity which could therefore supplement any existing pension scheme.
Dependent on the lump sum raised, age & health & options built into the annuity would determine the regular income to be paid by the annuity provider. Always shop around or seek the advice of an independent financial adviser to ensure the maximum possible income is achieved.
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Eligibility
You should be the sole owner of your property prior to mortgaging it. The aforementioned schemes have different age requirements. While lifetime mortgage schemes require an individual to be 55 years of age, home reversion schemes need the individual to be 65 years of age to qualify. Your property will be surveyed and you can qualify for these schemes only if it is worth £60,000 or more.
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Equity Release Supermarket have independent financial advisers that can provide advice on both equity release & how to maximise your retirement income with annuities & pensions.
Contact us on freephone 0800 678 5159 if you wish to discuss whether any of these products can help your retirement financially.
e: mark@equityreleasesupermarket.co.uk
w: http://www.equityreleasesupermarket.co.uk
Tags: drawdown, equity release, equity release schemes, home reversion, home reversion schemes, lifetime mortgage schemes, lifetime mortgages, pension annuity, purchased life annuity
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Sunday, October 17th, 2010
If you are 55 or over and experiencing financial problems then equity release schemes might be the solution for you. To qualify for equity release, you have to own a home and have little or no mortgage. The main aim of equity release schemes is to provide money against the value of your property. One of the main advantages about equity release is that it allows you to continue living in your home.
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Other benefits of all equity release schemes that Equity Release Supermarket recommend are:-
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No Negative equity guarantee
Equity release schemes should always offer a ‘no negative equity guarantee‘. This feature is included at no extra cost by the lender. All equity release plans we recommend are members of SHIP (Safe Home Income Plans) therefore the no negative equity guarantee will always be offered by ourselves.
The guarantee means that your debt can never be greater than the value of your property. Therefore, worst case scenario would be that on eventual sale of the property, if the equity release has surpassed the value of the house, then the lender can only request the sale price of the house, & no more.
This ensures that you can never pass a debt onto your children, which gives much peace of mind to equity release planholders.
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No restriction on how you spend the funds
You have the ability to spend the equity release monies on whatever fulfills your financial requirements.
Today, different types of equity release schemes have been introduced by lenders. Some of these schemes allow you to borrow 100% of the equity in your home which an provide substantial funds to spend your money on.
As the equity release money is tax-free, you can use it in different ways such as:
- Home improvements
- Pay off outstanding debts including mortgages
- Holidays
- Gifts to children
- New car
- Lifestyle changes
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If you want to know how much equity you can release against your home then use Equity Release Supermarket’s online calculator.
Alternatively you can find one of their specialist independent financial advisers who will guide you through the process by clicking here.
Tags: equity release, Equity Release Adviser, Equity release calculator, equity release schemes
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Saturday, October 16th, 2010
Equity release schemes are perfect for elderly people who are looking for ways to generate funds during their retirement.
The less common home reversion equity release schemes allows you to sell a part or your entire property to the reversion company. In return, you can get a guaranteed lifetime lease and tax-free money with no monthly repayments.
You can continue to reside in your property for as long as you want. Home reversion schemes also guarantee an inheritance to your beneficiaries. It is a scheme where you sell a percentage or all of your property to the reversion company while retaining the rights to live rent free in your home for the rest of your life. The equity received can either be paid out as a monthly income, lump sum or a combination of both.
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Some important benefits of home reversion schemes
As a home reversion equity release scheme is not actually a loan, there is no need to pay off any interest. Other equity release schemes such as lifetime mortgages not only charge you interest, but also reduce the inheritance for your beneficiaries which in extreme cases can erode ALL the equity in the property. This means that the interest amount can grow considerably over the years; in some cases it may exceed the value of your property.
This cannot happen with a home reversion scheme unless you select to sell 100% of the property in the first place.
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- Benefit from rise in property values
Unless you have sold your entire property, you can get your share as the property value increases.Therefore, if you have sold 50% of the property value, you will still retain any growth in your share of the remaining 50% of the property.
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- Release more equity compared to lifetime mortgages
With home reversion schemes, you can release more cash than lifetime mortgages allow you to. This can be advantageous should you have no children to leave your estate to. In addition home reversion schemes can have an impaired life facility built into the scheme. Therefore, if your health is poor or have an impaired life condition should as high blood pressure or you have suffered a heart attack, stroke or cancer then the home reversion company can give you a higher lump sum than otherwise have been. This would be due to the fact that they do not anticipate your life expectancy to be as high as the average & thus have actuarily decided they can afford to offer a greater lump sum.
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To request further information on home reversion schemes & a home reversion quote, please contact the Equity Release Supermarket team on 0800 783 9652.
Tags: home reversion, home reversion schemes, impaired life, No negative equity guarantee
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Thursday, October 14th, 2010
Signs that the equity release market is beginning to spark into life again, can be evidenced by the re-emergence of a former lender in the market.
more2life have joined forces with annuity specialist Partnership assurance to re-launch their impaired life roll-up lifetime mortgage plan.
Incorporating an impaired life facility & protected equity guarantee, the more2life equity release plan can be seen to be opening a niche market for itself. The impaired life facility means that depending on health & lifestyle, a higher than normal tax free lump sum can be achieved, should serious health issues be present.
The more2life equity release plan has been designed with three scenario’s in mind: -
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- Enhanced plus – industry leading maximum release, impaired life product
- Enhanced protected – impaired life plan with ‘protected equity guarantee’
- Protected plan – older applicants looking for a ‘protected equity guarantee’
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Pitching the enhanced plus plan at the maximum release end of the market means that should the applicant qualify on medical grounds, they would have the highest equity release lump sum currently available. This would even surpass the current Aviva Lump Sum Max product, although this would be at the expense of a higher interest rate with more2life.
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The following percentages are the maximum releases available on the Enhanced Plus: -
Age 55 23%
Age 60 28%
Age 65 33%
Age 70 38%
Age 80 48%
Age 90+ 54%
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For example, an applicant aged 65 with a property valuation of £250,000 & meeting the underwriting criteria, can release a maximum of £82,500 on the enhanced plus plan.
The interest rate for this product will be 7.49% monthly.
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The second product – ‘enhanced protected plan‘ is also based on health & lifestyle grounds & again can provide an enhanced lump sum. However, to qualify for this equity release scheme the health situation will not be a serious as the enhanced plus. The interest rate for this plan is lower at 6.99% monthly.
Another feature of this plan is the ‘protected equity guarantee’ which is included & guarantees a percentage of the property for the children/beneficiaries on the eventual sale of the property.
The guarantee works as follows: -
Should the overall facility available be £80,000, yet only £40,000 is taken, then 50% of the final sale value will be protected on sale.
This can be an essential tool for applicants who wish to ensure that a guaranteed inheritance is passed onto their children.
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The final option is the ‘protected plan’ which has no impaired life facility , but does include the protected equity guarantee. The interest rate is the same as the enhanced protected at 6.99% monthly.
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In summary, depending on whether the maximum lump sum is being sourced, or one is looking to take equity release but still guaranteeing an inheritance for their children, then one of the three more2life equity release schemes can benefit.
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If any of these more2life plans would be of interest to you, please ring the Equity Release Supermarket team on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk
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To request a quote on the more2life enhanced plans please click here.
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Tags: equity release, equity release schemes, impaired life, inheritance protection, lifetime mortgages, maximum lump sum, more2life, protected equity guarantee, Roll up lifetime mortgage
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Wednesday, October 13th, 2010
If you want to improve your lifestyle or repay outstanding debts and do not have enough cash then consider the potential of an equity release scheme. Homeowners who are over 55 and have little or no mortgage can release money against the value of their home. Due to different needs, different equity release schemes have been introduced.
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Lifetime mortgages and home reversion plans are two popular types of equity release schemes.
Lifetime mortgages are further divided into two subtypes:
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Roll-up lifetime mortgages – This equity release scheme is preferred by many people because they do not have to pay any interest. Instead the interest is added to the original balance & compounded year-on-year for the rest of one’s life.
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Interest-only lifetime mortgages – If you do not want your debt to build up then an interest-only lifetime mortgage can be the perfect option for you. Unlike other equity release schemes, this scheme allows you to pay off the monthly interest to the lender. By opting for the interest-only option, you can preserve more money for the future.The balance of the interest only mortgage scheme will therefore remain level for the rest of the term of the mortgage. Such schemes available include the exclusive deal Equity Release Supermarket have available with the Halifax.
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The Halifax Retirement Home Plan is available to those having already retired with a good disposable income with which they can service the monthly payments. The Halifax Retirement Home Plan is not available via the Halifax branch network as only lifetime mortgage advisers with the appropriate licence can advise on this product.
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Whether you choose a roll-up or an interest-only mortgage you can release the equity tied up in your property to provide the tax free lump sum you require.
You can use the tax-free money to spend as you wish including buying a new car, a second home or to go on a luxury cruise; the list is endless.
If you have decided to opt for equity release schemes then it is recommended that you receive advice from an equity release adviser who will guide you to the best equity release plan & guide you through the equity release process.
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To find a local Equity Release Supermarket financial adviser near to you click here.
Tags: equity release, Equity Release Adviser, equity release schemes, Halifax Retirement Home Plan, interest only mortgage, lifetime mortgage schemes, lifetime mortgages
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