Equity Release Latest News

Posts Tagged ‘Aviva Drawdown Equity Release’

The Importance of Annual Equity Release Reviews

Thursday, October 23rd, 2014

 

Feefo 100% Trust equity release reviews

 

It’s always a thrill to call my clients when their equity release application finally completes. That’s the time when they’ll receive their equity release proceeds and have the necessary funds to meet their objectives, such as home improvements, new car, helping their family or simply repaying debts. Although the application process has now completed, it’s actually the start of what should be a long relationship between the client and myself.

 

How Equity Release Supermarket can assist…

 

Here at Equity Release Supermarket we pride ourselves on the quality of our whole service proposition. Therefore, following completion of any application we always invite our customers to provide feedback as a measure of how their equity release has been handled. An equity release application can take on average between 6-8 weeks and during that time there are many steps we manage on behalf of our clients to make sure it’s transpires as smooth and as quickly as possible.

 

Our feedback request starts at the first stage of the equity release process which is where we provide the independent equity release advice governed by the regulation of the Financial Conduct Authority and following the Equity Release Council’s code of conduct. Thereafter, we ask for feedback regarding our administration team who process the cases and manage liaison between the client & solicitor & the lender. This aspect is of paramount importance to us as this governs the speed & efficiency of the whole application.

 

Feefo Equity Release Reviews

Feefo 100% Trusted Merchant

Our genuine online Feefo reviews illustrate our dedication to servicing equity release customers and its testament to the fact Equity Release Supermarket received the prestigious Feefo 100% Trusted Merchant Award for 2013. In fact during 2014 we are still on track for 100% positive Feefo reviews from our clients. By visiting the www.equityreleasesupermarket.co.uk website & clicking on the Feefo logo you can read how our customers view our excellent service & shows how our advisers will go that extra yard in order to provide their clients with our excellent customer service proposition.

 

As an example, one such review I received recently was as follows: –

‘I was really impressed how quickly Mark Rumney sorted things out for me and even though he was going on holiday this did not stop him. He made sure that everything was in place for me before he went, even well into the evening. So thank you Mark and I would definitely recommend your services.’

 

Continually Innovating – Equity Release

 

Today’s equity release schemes are very flexible, and clients circumstances can change, therefore I like to call clients annually to touch base, remind them of their options and review their situation. During the annual review I like to: –

 

  • Remind clients of the ability to make voluntary interest payments
  • Check whether any new products may be more suitable
  • Check whether interest rates have reduced and are still competitive
  • Check that interest only lifetime mortgage schemes are still affordable

 

Let’s look at each of these in turn…

 

Voluntary Interest Payments:

Both Aviva & Hodge Lifetime have equity release schemes which allow you to make voluntary interest payments of up to 10% of the original loan amount, once schemes have been in place for 12 months. This can dramatically reduce the outstanding balance at the end of the term, so it’s important we remind our clients of this and explain the mechanics of how they make ad-hoc payments to their lender.

 

New products:

New providers and products are often launched which may prove more suitable, although you need specialist advice when considering switching schemes. I offer a free initial consultation to complete a switch plan analysis in order to determine whether it is best advice to switch equity release plans.

 

For example, Pure Retirement launched a drawdown lifetime mortgage plan in 2014, which tends to offer the highest reserve on the market, with the possibility of receiving £1,100 in cashback that can cover all the remaining set up costs. This may therefore appeal to customers of older equity release schemes, as they can possibly switch to a lower rate at the same time as have a new cash reserve facility for future use.

 

We are also starting to come across former Halifax Retirement Home Plan mortgage customers where Halifax/Scottish Widows have declined further borrowings due to the new MMR rules on affordability. Fortunately, we have assisted some of these retirees with the new ‘interest servicing’ products from the likes of Stonehaven, More2life & the Hodge Retirement Mortgage. All these plans could be made available following a full equity release review, where if appropriate we can find a scheme that allows further funds to be made available.

 

Lower Interest Rates:

There are legacy equity release schemes out there from companies that formerly offered lifetime mortgages. These companies, however have since stopped offering new lifetime mortgage or home reversion plans. These equity release companies can include Norwich Union (now Aviva), Prudential, NatWest Equity Release, Portman etc.

 

Another legacy equity release scheme we commonly come across is Papilio UK Equity Release (formerly Northern Rock), where many existing customers could benefit from new equity release plans that offer lower interest rates. There are ex-Northern Rock customers that are being charged over 7% with Papilio UK. The Aviva Flexi Lifetime Mortgage Plan can currently offer equity release interest rates as low at 5.63% (5.83% representative APR). By switching equity release schemes I have saved my clients £1000’s in compound interest over the longer term. A good deal for them & their beneficiaries!

 

Check ongoing affordability

Some of my clients have taken out a lifetime interest only mortgage with either Stonehaven or More2Life. They’ve chosen to pay a fixed monthly payment for the duration of the plan. However, both plans offer the flexibility of being able to stop payments at any time and let the interest roll up. Similarly, with the Hodge Retirement Mortgage you’re also able to switch to rolled up interest when the younger borrower reaches aged 80. These are things that should always be discussed at annual reviews.

 

Overall, the annual review call that I make to clients can be really worthwhile. It’s always nice hearing how they’ve spent and enjoyed their money. It’s usually another common time when they ask me to call one of their friends and family who’d also benefit from my specialist advice, as their friends and family have seen how equity release has changed their lives.

 

Other areas where I receive many calls from existing clients, which impact the need for further equity release advice, can include:

 

  • Moving House
  • Death of one borrower
  • Additional borrowing

 

Looking at these in turn…

 

Moving House:

Most equity release schemes are flexible and allow you to move at any time. However, advice is needed with regards to value of you property you can move into. You’re also able to repay most schemes early but this could be subject to a variable, or fixed, early repayment charge.

 

Death of a borrower:

It’s obviously a distressing time when you lose a loved one. I often receive calls from the survivor asking what options they have or what happens next. I’m able to answer their queries and explain the simple process of informing the lender. The main query is whether the survivor can remain in the family home, where the answer is usually yes.

 

Additional Borrowing:

Most lifetime mortgage schemes are set up with an automatic drawdown facility where you can contact the lender when you need funds from an agreed reserve at outset. However, once this is exhausted, or if you’ve got an older scheme without a reserve facility, I often get telephone calls to check eligibility for additional borrowing. Here we can help & contact the lender to check whether further funds could be made available from the equity release company.

 

Summary

Remember, equity release schemes are designed as lifetime mortgage contracts and therefore you need to review your situation regularly. I pride myself in offering this unique bespoke service and many of my customers can vouch for the benefits.

 

Should you feel you may benefit from an equity release review of your existing plan, please contact me – Mark Rumney DipPFS CeMAP on: –

 

m: 07957 974826 or

e: markrumney@equityreleasesupermarket.co.uk

Revealed – How the Bank of Mum & Dad use Equity Release to Fund 1st Time Buyers

Saturday, July 5th, 2014

Bank of Mum & Dad

 

It has recently come to my attention, having watched my own daughter attempt to buy her 1st property, how difficult it has become for 1st time buyers to fulfil their dreams of becoming a homeowner.

 

It also occurred to me that EQUITY RELEASE could in fact play a significant role in assisting the “Bank of Mum and Dad” and others in providing funds to enable these dreams to come true.

 

First some FACTS:

  • The average age for 1st time buyers is now 29
  • 2/3rds of 1st time buyers now turn to the Bank of Mum and Dad (BoMAD) for help
  • 30 years ago 12% of income was needed for a deposit on a property. Today this is staggering 82%!
  • The cost of an average house in the UK is 10 times bigger than the average salary rising to 14 times in London
  • In all but 2 regions in the UK, prices are 7 or more times the average salary for that area (Office of National Statistics)
  • More than 3.3 million 20-34 year olds were still living with their parents in 2013

 

Although these figures clearly indicate it is becoming almost impossible for 1st time buyers to get on the property ladder, help could be at hand – YES, from the “Bank of Mum and Dad”

 

Parents are an obvious first point of call. However with rising living costs, low interest rates and diminishing savings pots, it has become increasingly more difficult for mum and dad to find surplus funds to gift to their children, grandchildren or loved ones, to assist in fulfilling the dream of property ownership.

 

However, there could be a way to take an early inheritance from parents now in order to benefit 1st time buyers when the money is needed the most!

 

A special type of retirement mortgage commonly known as Equity Release could potentially unlock cash tied up in a parent’s property. This can enable mum & dad to generate sufficient funds to gift as a deposit on a property purchase for their loved ones.

 

What is equity release?

Equity release schemes are available in two formats – home reversion & the more popular lifetime mortgage. Both of these equity release schemes enable people who own their main residence to release a percentage of its value in return for a tax-free cash lump sum. These two types of equity release mortgages then run for the rest of your life & only repaid once upon death or moving into long term care.

 

The equity release scheme known as a lifetime mortgage has proven the most popular due to its flexibility. This has been strengthened this year with providers such as Hodge Lifetime & Aviva both providing an option to repay upto 10% of the original capital borrowed each year. Therefore, control over its final balance, or even repayment of the whole scheme over the longer term could represent a serious possibility, for either parents to pay, or the children themselves!

 

Lifetime mortgages are available to those aged 55+, with a minimum property value of £60,000. The amount that can be borrowed is not always based on affordability, but on factors such as age & property value. Effectively, the older you are, the greater amount of equity you can release.

 

Following a release of the equity, the lifetime mortgage company places a first legal charge on the property. This is exactly the same as any conventional mortgage and 100% legal ownership is still retained by the client providing peace of mind.

 

Typically, someone age 60 could release equity of between 18-25.5% of the value of the property, dependent on the lender concerned. These equity release funds can be spent on anything you like, however a sensible & cautious approach is always advised. Therefore, parents looking to assist their children onto the property ladder, a lifetime mortgage could prove an effective mortgage vehicle to achieve this goal.

 

Which equity release schemes can help 1st time buyers?

Equity release schemes have become a lot more flexible and innovative these days. You can choose to make NO repayments and have the interest added to the loan which is known as a roll-up lifetime mortgage. The amount borrowed plus any interest accrued is repaid upon sale of the property. This would happen on death (last death if joint plan) or having to go into long term permanent care. Thought must be given here should there be more than one beneficiary. With an increasing balance & possibly reducing net equity figure, consideration must be afforded to any remaining beneficiaries as to what they may potentially receive at the end of the day?

 

However, there are new repayment versions of equity release schemes that have proven even more popular with parents looking to securely gift money to their children to help with a property purchase.

 

Interest only lifetime mortgages from Stonehaven & more2life will allow the repayment of just the interest only element. By repaying interest charged each month prevents the loan from increasing and thus remains level for the rest of the mortgagor’s life. This is a great idea when there is more than one child involved. The problem has always been how to separate the gift now, from the overall inheritance at the end of the day if more than one child is involved?

 

The solution is having an interest only lifetime mortgage. By knowing in advance what the balance will be, this loan amount can be deducted from that child’s share of the inheritance at the end of the day. This would be even fairer for the other siblings, should that child also pay the monthly premiums on behalf of the Bank of Mum & Dad!

 

NEW -Voluntary partial repayment plans

Equity Release Supermarket now has access to specialist equity release schemes where there is the option to repay up to 10% of the original capital released each year without any early repayment charges. These equity release schemes through Aviva & Hodge Lifetime have proved popular for those not just looking to repay the interest, but also the opportunity to repay the equity release scheme in full over approximately 16-17 years. These voluntary partial repayment equity release schemes are proving to be the next generation of the equity release market.

 

How is the Bank of Mum & Dad protected?

All the equity release schemes we recommend are members of the Equity Release Council, which means that there are certain guarantees built into them for consumer protection. As a minimum the Equity Release Council will ensure the following guarantees are included:-

  • The schemes are portable and can be transferred to another qualifying property should you wish to move in the future
  • There is a no-negative equity guarantee which means a debt cannot be left to your estate even if the value of the property becomes less than the balance of the loan outstanding
  • You can live in your house for as long as you wish and with a lifetime mortgage you retain full ownership
  • They can be repaid at any time, subject to potential early repayment charges

 

Benefits of using Equity Release

Contrary to directly gifting your property to your children, by using equity release to gift instead, would avoid any Capital Gains Tax as the main residence is retained by the client. There could still be a potential Inheritance Tax liability, but only if the client died within 7 years of the gift.

 

The lifetime mortgage would be a deductible liability against the client’s estate, reducing the value being taxed and although interest would have to be paid on the loan; this could still prove beneficial to both the client and those receiving the gift. Always consult a tax expert on these matters in conjunction with your independent equity release adviser.

 

Of course let’s not forget the best part of this!

 

The potential to fulfil the dreams of our loved ones in an age where quite frankly, property purchase is almost becoming nothing more than just a dream for some. The joys of parenthood!

 

Next Steps…

I would be delighted to offer a FREE initial consultation to discuss any of the above matters relating to how equity release can help your children step onto the property ladder.

 

Please call me on 07788 605620 or 0203 7517228 or email cathy@equityreleasesupermarket.co.uk

Aviva Announce News of the First Sub 6% Equity Release Interest Rate for over 5 years!

Tuesday, February 7th, 2012

Aviva today announce an exclusive 5.92%pa interest rate to Equity Release Supermarket on its Lifestyle Flexi plan.

News had it that 2012 was going to be a breakthrough year for the Equity Release Market. Today this statement was confirmed.

The first sub 6% annual interest rate for over 5 years will have a major impact on the equity release market & confidence in general.

Ironically enough, this followed news earlier in the day from Just Retirement that it had just reduced its own rate in reaction to Aviva’s a week earlier. The new Just Retirement rate of 6.15% pa was considered extremely competitive until Aviva gatecrashed their party later on in the day.

Today’s groundbreaking news on the Aviva Lifestyle Flexi plan has come hot on the heals of my previous news items of 27th January  & 30th January in announcing earlier Aviva and LV= rate reductions.

 

So why is there such an equity release interest rate war currently?

We need to look at the market as whole, the recent economic factors & how these companies are funded.

Both Aviva & Just Retirement are big annuity providers & companies with the backing of annuities have been able to ride the storm, ever since the credit crunch began a few years ago. You may be aware that most equity release companies with bank funding such as Saffron, Coventry Building Society & Hodge Lifetime to some degree, have dropped out of the market. Longer term funding has been an issue for them.

 

However, this doesn’t answer the whole story, so lets look a bit deeper…

We have mentioned the credit crunch. It is evident first hand from our Equity Release Supermarket data that a significant element of equity release loans are for financial, rather than lifestyle factors. This means there is a greater emphasis on ‘need’ rather than ‘wants’.

Retirees in general are finding retirement a financial struggle in trying to make ends meet. Overall attitude towards retirement & their legacies has also changed over the years with a more ‘live for today’ motto. With drawdown equity release plans becoming increasingly popular, this lends true to our analysis.

People are taking just enough for today to clear debts, help the kids & have a small amount behind them to provide that ‘cushion’ that provides them with a feel good factor.

 

 

The Aviva Lifestyle Flexi Deal in Finer Detail

Market leading fixed interest rate of 5.92%
£500 cashback on completion
FREE valuation upto £1 million
Drawdown equity release scheme
Earliest age for application of 55 years
Minimum £10,000 initial loan
Minimum property valuation of £75,000

 

In addition to the great news on their lowest interest rate for years, now is as good time as any to take out an Aviva Equity Release Plan. With both a £500 cashback & free valuation offer, the net set up costs for an equity release application are now minimal. With Equity Release Supermarket’s advice fee being lower than its major competitors, then now is the time to seriously considering taking out an equity release plan with Equity Release Supermarket, if you have strong intentions to do so anyway.

 

Early Repayment Advantages with Aviva

With GILT rates at a current all time low, it would also favour equity release lenders who use gilts to govern their early repayment charges. Aviva use an individual government gilt to measure whether a future early repayment charge will apply. The yield of this gilt is noted on the day the equity release plan starts. Upon redemption, the yield is noted at that point & gauged to see whether it has it increased or fallen during that period.

 

Should the gilt yield have increased or stayed the same then NO penalty will apply. Aviva will even permit a reduction of 0.12 basis points before even applying a penalty. Therefore, with gilt rates currently being so low, there is less likelihood of the yields falling today than ever previously. However, this cannot be guaranteed & if you are considering early repayment then please speak to our team of advisers first.

With a national team of equity release advisers who can provide both face-to-face & phone based financial advice, we are only a telephone call away from offering you a market leading equity release deal.

If you would like to take advantage of a free initial consultation regarding the Aviva or any other equity release mortgage, please call the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

The following links provide further equity release information: –

Request an Aviva quote  | Request a Just Retirement quote  | Find a local adviser |

Equity Release Calculator

 

 
Ask us a question

captcha