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Archive for December, 2010
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Friday, December 31st, 2010Equity release schemes – enjoy your life after retirement
Saturday, December 25th, 2010Do you need to unlock money from your property?
If yes, then equity release schemes could be the ideal solution for you. The best thing about these schemes is that they allow you to stay in your home even afterward you have released the equity.
Unlike other loans, the money which you receive through equity release is tax-free in nature & means that you can spend the cash in whichever way you want. Another difference between loans & equity release schemes are that loans have monthly repayments to make. With an equity release scheme you have NO monthly payments whatsoever.
Finally, a loan will always have a fixed term over which the loan must be repaid. However, equity release schemes has no repayment period from the outset as it only needs repayment once the property is sold.
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How to qualify for equity release schemes?
Today, there are various financial institutions which provide equity release schemes. If you want to opt for equity release then you have to meet the criteria. First of all, you have to be over 55 with no maximum age and you must own a home which is worth £60,000 or more. The property should be mortgage free, or with a mortgage balance that can be easily repaid with the release of equity from the property. Therefore, the balance should be below the borrowing threshold that the equity release schemes provide.
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Types of equity release schemes
To fulfill many financial requirements, two different kinds of equity release schemes have been introduced onto the market. This includes lifetime mortgages and home reversion plans. Nowadays, many homeowners prefer lifetime mortgages because the repayment is done after the death of the applicants. Home reversion plans allow you to sell all or a part of your property, but have the advantage of guaranteeing an inheritance for your beneficiaries.
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How equity release schemes are regulated
The Financial Services Authority (FSA) takes care of various regulations related to equity release companies & schemes. Additionally, the equity release adviser should also be regulated by the FSA & can be checked on the FSA register which is on the FSA website. Moreover, within the equity release industry a trade body has been formed named SHIP (Safe Home Income Plan) & was formed in 1991. This SHIP organisation regulates all the equity release schemes offered by different financial institutions in the UK & liaises with the government on regulation changes & amendments to the equity release marketplace.
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If you have any equity release questions relating to whether equity release can benefit you then please call our friendly adviser team on 0800 678 5159.
Alternatively email mark@equityreleasesupermarket.co.uk
The how’s & why’s leading upto retirement equity release
Friday, December 24th, 2010Equity release schemes can be beneficial for those retired individuals who suit the old adage where ‘asset rich but cash poor‘ features in so many circumstances.
Throughout one’s life we have many financial demands to fulfil including buying that first house, holidays, bringing up the children & financing through school then university. There’s the ongoing home improvements, weddings & christenings & then the when you think its time to look after no 1, there’s the grandchildren!
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It would seem that personal finances never get chance to take a breather!
However, this is all well & good whilst in continuous employment, as these expenditures can be funded out of regular income.
But how can one maintain these ongoing costs once retirement is reached? Many people do not realise or make enough financial provision via pensions or alternative retirement funding schemes as to how much money will be required to fund the remainder of their years. Afterall retirement is effectively the longest holiday of your life.
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We all know how much we spend on a short break holiday; consider how much this is likely to cost should this holiday last 20 years!
Average life expectancy has increased significantly over the last few decades, so as we live longer the greater the financial pension fund that is required. So can one really expect to be able to meet the financial needs of forthcoming retirement years? If so how can one fulfil this?
With lenders being few & far between in their numbers post retirement, how does one meet the potential shortfall that will inevitably exist for most of state pension age?
Well for the typical retiree, who has experience all the aforementioned lifestyle issues then equity release potentially could lead you into a financially secure future.
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There are two main types of equity release schemes – lifetime mortgages and home reversion plans. Of these this article concentrates on lifetime mortgage schemes
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Lifetime mortgages
Lifetime mortgages are special kinds of mortgage plans that are beneficial to individuals who are over 55 (for joint applicants, both should be more than 55 years of age). This is the most popular form of equity release & accounts for almost 90% of all equity release plans taken out. The reason is their flexibility & the fact the property will always remain 100% in your own name. This is important for many people whom have worked hard to build up towards their greatest asset, their home.
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With a lifetime mortgage, you get a secured loan which you can either take as an initial lump sum or ad-hoc withdrawals in the future whenever they are required. Interest accumulated on the loan will be rolled up over your lifetime until death or moving into long term care. At that point the property is sold off by the executors of the estate which they have between 6-12 months to complete this process of paying the redemption figure back to the equity release company.
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Advantages
Lifetime mortgages do not require you to make any monthly payments unlike other mortgage schemes. You can spend your money the way you want & be flexible in the withdrawal of the tax free cash. This is facilitated by the equity release drawdown plan that enables you to take cash lump sums from a reserve facility as & when its required.
The main advantage of drawdown is that you are only charged interest on the amount actually taken. Hence, whilst money is still sat in reserve with the equity release lender, you are not charged interest on this portion. This removes the necessity to take a large initial lump sum & have it languishing in the bank or building society at an interest rate that is lower than that being charged by the equity release plan itself.
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If any of the issues above feel of relevance to you, feel free to give the Equity Release Supermarket team a call to discuss the ways in which equity release could may be assist your retirement.
t: 0800 678 5159
e: mark@equityreleasesupermarket.co.uk
w: http://www.equityreleasesupermarket.co.uk
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Equity release – what are the advantages over regular home loans?
Thursday, December 23rd, 2010Equity release schemes allow aged homeowners to get some amount of cash against the value of their property. If you are facing financial problems and your pension is not enough then equity release is a perfect solution for you. By opting for equity release, you can convert the value of your property into cash.
The amount which you can get for your property will be based on your age, the current market value of your home minus outstanding debts.
To qualify for equity release schemes, you have to fulfill certain requirements such as:
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• The youngest homeowner should be over 55
• The value of the property must be £60,000 or more
• You should have no or very little in the way of outstanding loans on the property
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If you have decided to go for equity release then you must consider the types such as home reversion plans and lifetime mortgages. Under both schemes, you can release some amount of money and continue living in the property for the rest of your life.
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Additional benefits of home equity release schemes
Once you have applied for equity release then you can either get a lump sum of money or regular income. The best thing about this money is that it is tax-free. There are many people who buy a second home, a car, repay outstanding debts or go on holiday. Improve your retirement and live frugally with equity release schemes.
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Ring 0800 678 5159 today to receive your free initial consultation from an equity release expert.
Equity release schemes – fulfi…
Wednesday, December 22nd, 2010Equity release schemes – fulfil all your financial requirements – http://bit.ly/fFcRkt via @Shareaholic
Home reversion equity release schemes – what are they?
Wednesday, December 22nd, 2010Home reversion equity release schemes allow you to sell a part of or your entire property to a lender. In return, the home reversion company will provide you with a monthly or lump sum cash amount or a combination of both.
Although the interest is not paid on the loan you take, the home reversion company will take a percentage of the value of your property when it is eventually sold. This percentage will often depend on numerous factors including – your age, the cost of your property and its condition.
The older you are, the more money you will be able to receive. Additionally, should you have a history of poor health then certain home reversion providers can potentially offer you a greater lump sum, or alternatively a lower percentage sale of your property.
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How do home reversion equity release schemes work?
With home reversion equity release schemes, you sell part of or the entire property to the lender and become a tenant with a lifetime tenacy guarantee. You will still be responsible for your property, its maintenance and bills. Although you become a tenant, you get the rights to reside in your property with your partner under a lifetime lease. Unlike normal residential tenants, there is no rent to pay for the rest of your life.
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The difference between lifetime mortgages and home reversion
Under a lifetime mortgage scheme you retain the complete ownership of your property. On the other hand, with a home reversion scheme you can sell anything up to 100% of your property to the home reversion company.
A major benefit of home reversion schemes is that you can guarantee the percentage of the final sale value of the property at the end of the day. A lifetime mortgage has no guarantee as there is no knowledge of how long the plan will roll-up for, which at the end of the day could result in NO inheritance for the children.
There are also some interest only lifetime mortgage schemes such as the Halifax Retirement Home Plan that enable you to repay the interest but not the capital to the building society or bank. This greatly helps you to calculate how much inheritance will be left as long as the monthly payments are an affordable option.
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If you wish to discuss whether a lifetime mortgage or home reversion scheme is right for you contact the Equity Release Supermarket team on 0800 678 5159.
Equity release schemes – fulfil all your financial requirements
Tuesday, December 21st, 2010If you want to release some money against the value of your property then equity release schemes can be ideal options for you. At present, many people after retirement opt for equity release to improve their income or make lifestyle purchases. Here we look at the features & minimum specifications of these schemes.
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What qualifications are required for equity release?
As equity release schemes are specially designed for retired individuals, you must be over 55 years of age to apply. It is necessary to own a home which is generally worth more than £60,000. This is the minimum acceptable property valuation on any equity release plan in the marketplace & is offered by New Life Mortgages.
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All equity release schemes, prior to inception will require the mortgage or any other secured loan upon it to be repaid either before, or at completion. Therefore, it is essential that the mortgage is low or at least below the maximum equity release possible. Thus, if a high mortgage balance exists it may not be possible to complete an equity release scheme. This means that you should have very little or no mortgage at all to enjoy the benefits of equity release schemes.
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What benefits are offered by equity release schemes?
One of the best things about these schemes is that they will offer tax-free cash. This means that you can spend the money in different ways. For instance, you can buy a new car, a new home, pay off outstanding debts or go on holiday.
Unlike bank loans, equity release schemes allow you to stay in your home with no monthly repayments and also enjoy the cash. Today, various equity release loans have been introduced, so you can choose the one which suits your needs. However, as always we suggest that you always receive independent financial advice to ensure that the correct scheme is recommended to suit your requirements.
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To ensure you receive upto date advice on the best deals & current offers available ring the Equity Release Supermarket team on freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk with your query.
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Not happy with your pension? Can equity release schemes help?
Monday, December 20th, 2010Should 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.
Guide to equity release schemes
Friday, December 17th, 2010Equity release schemes are designed to financially secure retired individuals standard of living in their golden years. Any individual who is over 55 years of age and owns a home can reap the benefits of these schemes. Equity release schemes allow the owner to acquire tax free cash for their assets. The reason behind the rapid growth of equity release schemes is the unique features and benefits they offer to the user.
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A few features are listed below:
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The only loan where the user does not have to think of repayment
Equity release schemes do not force you to repay the loan. These schemes let you enjoy the amount you receive from your assets for life. The payment of the loan is done by the executor of the scheme after death or moving into long term care. It is also the executor of the scheme that will be responsible for the sale of the property & dependent upon which scheme was selected at the outset, will determined what timescales repayment of the mortgage needs to be repaid back to the providers.
This period can be anywhere between 6-12 months from the deceased passing away. This will be in accordance per the mutually agreed terms and conditions of the mortgage agreement.
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Things you should know about equity release
The very first thing one should know about this scheme is that you must be be the owner of the property & it must be your main residence. One cannot let the property and use it to gain cash from an equity release scheme. If you are the owner and are planning to opt for this scheme then see to it that your property is in good condition too.
During the application process the property will be valued & surveyed so that the value can be ascertained. This figure will form the basis of the mortgage offer & lending conditions. If the lender feels the property requires any maintenance, they can stipulate that any essential repairs are carried out BEFORE the cash is released. This will be decided on a case by case basis & can also vary between the equity release lenders.
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That you lose the rights on your property is the biggest myth. On lifetime mortgage schemes the person still owns the property and has full rights over it.
Given my 10 years experience of advising on equity release, I have only ever known 2 cases ever be declined; one for subsidence which still could have been put right & the other was a house in total disrepair. Nevertheless, upon re-application with Godiva, this case was subsequently accepted!
Therefore, there is not a single rule across the range of equity release companies & therefore it can be your experienced equity release adviser that can make the difference between getting accepted or declined.
For this reason you should always seek the services of an experienced independent equity release adviser such as Equity Release Supermarket who have over 50 years combined equity release service.
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Call freephone 0800 678 5159 today & talk with no obligation to your friendly equity release advisor.
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Equity release – important questions answered
Thursday, December 16th, 2010Before entering into for equity release, you need to be well versed with this financial product. Below are answers to some common questions that might make your task easier such as what is equity release.
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What is equity release?
Equity release schemes help retired individuals to raise money from their property. Firstly, the term ‘equity’ describes the net value of your property. This is calculated by taking the current sale value of the property & deducting any mortgage or secured loans upon it.
The money raised is this equity tied up in the property. This money can either be withdrawn as a lump sum or in monthly instalments, the popular of which is primarily the former. A main feature of these equity release schemes is that you do not have to move out of your house and allows you to live your life in peace and financial comfort.
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What are the uses of equity release plans?
The tax free lump sum released is yours to spend as you wish. The equity release companies do not place any restrictions on how the money is spent. You can make use of the released cash to supplement your retirement income and clear debts including mortgages, loans, credit cards, hire purchase & catalogues.
Apart from this, you could also use the money to go on holidays, redesign your home, purchase new car or increasingly an popular reason which is to help children invest in bricks & mortar or get on the property ladder for the first time.
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What are the types of schemes available?
Equity release schemes broadly fall into two categories – lifetime mortgages and home reversion plans.
With lifetime mortgages, you get a secured loan on the property. You do not have to make any monthly interest payments. Instead, the interest gets rolled up and is paid off when the property is sold. This would be on death of the last survivor or moving into long term care. Therefore, you can continue to live in your home for the rest of your life or until the time you move into a retirement or care home. The main difference between the roll-up lifetime mortgage scheme & the home reversion is that with the former, the property remains 100% in the name of the property owner.
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With home reversion plans, you can sell a part or all of your property to the lender in return for a lump sum. The home reversion providers will therefore take partial ownership of your property to the extent of the percentage sold.
A lifetime tenancy is created so you can live rent free in the property for the remainder of your life. This are great equity release solutions for those who wish to guarantee an inheritance for their children & beneficiaries.
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Why is life expectancy important?
The type of scheme chosen by you will depend on how long you are likely to stay in your house. The older you are, the more tax free cash you can raise.
With a lifetime mortgage scheme, the longer you live the greater the final balance will be. This is due to the roll-up & compounding effect of the interest on a year on year basis. Therefore, there you cannot predict how much equity will be left at the end of the day as you do not know long the plan will roll-up for.
On the 0 hand the advantage of home reversion schemes are that you can guarantee an inheritance for your beneficiaries. The reason for this is due to the fact that if a percentage of the property is sold, then the remaining percentage is yours to keep. Consequently, the estate will retain this percentage of the final sale value of the property & can guarantee an inheritance to pass down.
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Not sure which scheme is best for your circumstances? Why not call the Equity Release Supermarket team on freephone 0800 678 5159 or email mark@equityreleasesupermarket.
We look forward to hearing from you.
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Author
Mark Gregory CeMap CeRER
