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Drawdown Lifetime Mortgages Offer the Key to Buying a New Static Caravan or Motorhome

Sunday, December 15th, 2013

Buying a Static Caravan with a lifetime mortgageOne the great advantages of Equity Release or Lifetime Mortgages is the ability to raise extra cash to enjoy in your retirement. Although a recent study showed that up to 42% of Lifetime Mortgages are taken out to pay off loans and mortgages, almost 30% are being used to enjoy holidays.

 

Equity Release Experience Counts

As an equity release specialist, I personally have had clients who have spent money raised to visit family and friends in the Far East, usually travelling in comfort as 1st class passengers on their long-haul flights. Some have taken the occasional Mediterranean cruise or a trip with the family to Florida. All these expenditures may seem extravagant. However, as a more down to earth extravagance has been the number of clients who have raised money to spend on something a little more permanent and closer to home – a Static Caravan.

 

The issues with purchasing a static caravan

Before anyone purchases a static caravan they must undertake research as to the implications & costs involved. With the cost of caravans and site fees often approaching £3,000 per annum, they have until now been out of the reach of many potential buyers, but things are changing.

Many people who own or looking to purchase a static caravan tend to be of retirement age & it’s now dawning on many who previously couldn’t afford, that they now have a financial opportunity to purchase the caravan of their dreams.

 

Case Study

I can refer to one particular couple, who until retirement had been able to afford to stay at a particular holiday site on the East Coast. With a reduced income and a smaller than expected pension they realised that they would no longer be able to do this. They missed being with their son and his wife and their grandchildren on what had been a regular holiday, an increasingly rare time when all the family was together.

 

A finance meeting with all the family took place to discuss how they were to fund the purchase of the static caravan, which was to cost, including fees a little over £25,000. Following a review of their current financial situation and understanding their objectives, I was able to make an equity release recommendation. To enable them to fund the purchase of the static caravan, it was decided that a drawdown lifetime mortgage would suit them best. This would allow them to borrow the initial £25,000 lump sum required and by creating a cash reserve, it would additionally provide access to more cash in the future to pay for annual maintenance and site fees.

 

The family who were present & involved by request at the meeting were all in agreement. During the meeting I would understand the lifestyle benefits the drawdown lifetime mortgage advice would create. For instance, he grandchildren would be able to stay for extended holidays, which pleased everyone and their children could see the advantage to themselves of sharing a place at the coast to get away for a few days. (free of charge of course!)

 

The on-going and future benefits were interesting. Not only did they spend more and more time at the caravan, away from the stresses of town life, but they found they increased their circle of friends, joining in social events arranged at the park and in the locality. This is something that many forget about the virtues of equity release schemes; how equity release can change one’s life.

 

They also had the opportunity to holiday with friends and former work colleagues which added to the sense of being part of a community, and they also found there was an element of camaraderie amongst owners as each owner kept a watchful eye on their neighbours caravan and there was always someone willing to inform them about the area and it’s facilities. Such as, where to get the ‘best cup of tea’.

 

In a similar situation, one item on their ‘bucket list’ for clients in the Peterborough area was to continue to take regular holidays in retirement. With the increased cost of holiday insurance due to health reasons and the problem of putting their two ageing dogs into kennels, holidaying abroad was becoming too expensive and impractical so they decided to buy a motor home and travel,  as and when they wanted.  They too were able to do so by taking a release of equity from their home to fund the purchase of their own static caravan.

 

Summary

In essence, equity release schemes come in various guises. Both lifetime mortgage and home reversion plans are designed to ultimately provide the tax free cash to effect life changing events. This can be for both lifestyle changes and life changing purposes.

 

As an Equity Release Supermarket adviser, I feel privileged to be able to offer this service to people over the age of 55.

Should you have an interest in purchasing a mobile home or static caravan and need assistance or advice then please contact Equity Release Supermarket on 0800 678 5159 or email admin@equityreleasesupermarket.co.uk

 

The How’s & Why’s Leading Upto Retirement Equity Release

Friday, December 24th, 2010

Equity 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!

 

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.

 

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.

 

There are two main types of equity release schemes – lifetime mortgages and home reversion plans. Of these this article concentrates on lifetime mortgage schemes

 

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.

 

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.

 

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.

 

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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