The answer to this could very much depend on your requirements not only now…but also in the future.
With a combination of a fall in property prices & equity release lenders reducing their loan-to-values, the amounts being raised through equity release has significantly dropped.
So is now the right time?
Well, the current positives for equity release schemes are the lower interest rates currently available. As a consequence the ‘roll-up’ effect over the remaining years has less impact, which results in greater residual estate for the beneficiaries or potentially the availability of further funds in the future for the applicant.
Equity release schemes are more flexible by nature now. Drawdown schemes have now become the most popular form of equity withdrawal, offering the facility of smaller initial lump sum & further funds in the future. Providers are also innovating with the advent of the new interest only equity release schemes from Stonehaven.
So all would seem rosey it seems?
Nevertheless, there are issues currently which are being experienced in the equity release market. Predominantly these are to do with valuations.
Average property values have now fallen in excess of 15% & this has affected the maximum releases on roll-up lifetime mortgage & home reversion schemes.
Particularly affected are clients who are looking to pay off mortgages & credit card & associated debts that may require the maximum advance.
Online equity release calculators are a valuable asset here & assist in solving the most common question asked. However this is only a guide.
Experience has shown that although research can be conducted on potential current property values by utilising property websites, it is down to the individual surveyor to determine the final figure.
This valuation then determines the amount that can be raised via equity release. It is then down to the lenders loan-to-value figures to calculate the mortgage offer to the client.
Consequently, if the valuation is significantly lower, it will also lower the amount that can be released on the equity release application. In certain situations this may be insufficient for the purposes intended & hence the application cannot proceed further, resulting in possible non-refund of the valuation fee.
This cannot be good news.
To limit the loss of potential set up fees, certain equity release schemes offer a free valuation. Also, given the fact that lenders such as Saffron are prepared to offer this & current have one of the highest loan-to-values makes their proposition worth considering.
Obviously, it is imperative that Independent financial advice is sought as with over 20 lenders in the market, professional advice could save £1000′s in the long term.
In essence the people not adversely affected by the current market upheaval would be those taking lower initial amounts & not those stretching for the maximum releases.
For further information on deals available visit equity release supermarkets informative website – http://www.equityreleasesupermarket.co.uk
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