The two crucial factors that determine the amount that can be released on equity release schemes are the age of the youngest homeowner & the value of the property.
The minimum age for application is now 55 with companies including Norwich Union, Prudential, Hodge, Stonehaven, New Life Mortgages & Saffron Building Society commencing at this age. As the age of the youngest homeowner is acknowledged as the determining factor for calculation purposes, they must be over 55. Therefore BOTH parties must be over this age to qualify for equity release.
As the age increases, so do the percentage loan-to-values (LTV). In other words at age 55 the maximum LTV currently is 20% e.g. if the property value is £200,000 then £40,000 is the maximum release possible on a lifetime mortgage.
At age 60 the maximum equity release is then 25% and more lenders the become available such as Just Retirement, LV= & Godiva.
However, independent financial advice should always be requested. Companies like Equity Release Supermarket can source the whole of the market to find which equity release schemes provide the best deal for a clients particular circumstances & requirements.
The other major factor in determining the amount of equity release is the property value. This is a contentious issue at present given the current difficult economic climate. Average property prices have fallen approx 15% & this has directly affected equity release applications. This is particularly evident where people are looking to maximise releases to cover repayment of debts such as mortgages.
However, if the valuer surveys the property lower than that applied for then the client will not receive as much as 1st planned. This could result in the release not being sufficient for their purposes & the application cancelled, or they can take the option of accepting a lower release.
This should be explained to the client & their expectations managedof what the potential outcomes of the equity release valuation come result in.
Personal research can be conducted via certain house price websites such as http://www.houseprices.co.uk/.
As the valuer will use properties that have been sold recently as the basis for his research it is always advisable to be one step ahead. By sourcing such websites you can ascertain what the valuer may be using to educate himself on local house prices. He will only use properties that have actually sold within a given time period. This is usually only recently sold properties, due to the recent fall in house prices.
If you have any personal experiences of equity release valuations, please feel free to add a post & aire your views.
http://www.equityreleasesupermarket.co.uk
Tel 0800 783 9652
MG
