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Do I Qualify For The Halifax Retirement Home Plan?

Sunday, August 1st, 2010

A unique, yet largely unknown equity release product - the Halifax Retirement Home Plan is increasingly being recognised as the answer to a financially secure retirement for the over 60’s.

Here we explain the process which leads to identifying whether you  qualify for the Halifax Retirement Home Plan.

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Unavailable through the Halifax branch network, this lifetime mortgage can only be recommended by suitably qualified lifetime mortgage advisers such as Equity Release Supermarket.

Using their experience & knowledge, they are required discuss your objectives & using their independent financial status, can research the whole of the mortgage market to find the best deal for you.

Initially, the adviser will gather all relevant information necessary to understand your current situation including: -

  • applicants - age & income
  • liabilities including mortgage, loans & credit cards
  • mortgage requirements - amount &  type of product
  • credit history

This information will enable the adviser to calculate whether you will qualify for the mortgage required.

Prior to this he will provide a key facts illustration (KFI) which outlines the particular product you are looking to apply for & explains its costs & features.

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The basis of qualification initially is the Halifax Retirement Home Plan calculator, which  acts as a guide as to whether the case qualifies on an affordability level.

This will take into account total incomes including: -

  • State pensions
  • Occupational & private pensions
  • Rental income
  • Pension credit
  • Disability living allowance (60%)
  • Carers allowance (60%)

At the same time it will also need any outstanding monthly liabilities including: -

  • Mortgage & other secured loans
  • Personal loans & hire purchase agreements
  • Credit cards

Using this data & assuming a credit worthiness commensurate with the applicants previous repayment history, the Halifax Retirement Home Plan calculator will advise a recommended mortgage figure.

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As this product is only available to people already retired, the Halifax Retirement Home Plan will not take into account employed or self employed incomes.

The scheme is not designed for people under age 65 & having earned income.

*However, the Halifax Retirement Home Plan does have flexibility on these issues, so always check eligibility first with Equity Release Supermarket on 0800 783 9652.

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Subject to the calculator confirming sufficient capital can be raised, then the next steps can be taken…

This would involve the Equity Release Supermarket adviser completing a ‘decision in principle’ with Halifax. This is a means of ‘dipping your toe’ in the water to ascertain whether in principle the application can be acceptable to the Halifax.

Details required are name, address, income, existing liabilities, mortgage amount & the product required e.g. tracker or fixed rate?

Upon submission of this information Halifax will assess this & credit score & complete a credit check on the applicant(s).

An online decision will be made by Halifax as to whether a full application can then be completed.

If successful, then conversion from decision in principle to full application can be made.

From there the payment of any fees are made with the valuation & solicitors then being instructed by Halifax & the case can continue to successful completion.

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All processing is now undertaken on the new Halifax online mortgage application system, which provides instant feedback on case criteria. This has improved processing times.

Completion times for the Halifax Retirement Home Plan are now ranging from application to receipt of funds of between 3-4 weeks.

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If you have any further questions regarding eligibility on this or other equity release schemes, please contact Mark on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk

For additional information on the Halifax Retirement Home Plan & rates available visit http://www.equityreleasesupermarket.co.uk

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Are Mortgages Available in Retirement & What Income Is Acceptable To Lenders?

Wednesday, June 30th, 2010

It is becoming more common for people reaching state retirement age to still have a mortgage running into retirement.

Even more so, there is a growing demand for extra mortgage lending once they are in retirement.

Here we discuss what retirement mortgage options are available, acceptable income sources & where to look for independent advice on these matters.

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There can be many reasons for having a mortgage beyond state retirement age; namely poor performing low cost endowments, previous unemployment or even long term health issues.

A mortgage that runs into retirement can have major issues with both affordability & term to its repayment date. Most lenders will require repayment on a mortgage by age 75.

We will now look at ensuring all available income is being claimed. Once researched, we can then discuss which of these are eligible for inclusion in mortgage affordability calculations.

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So what options are available on reaching retirement itself?

Well this will depend on affordability & how the financial management of the mortgage itself can continue. The main issue with regards to affordability of an interest only mortgage at retirement is how much retirement provision has been made & maximising any other available sources of income.

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What Type of Retirement Incomes Should I be Receiving?

Having reached state retirement age the state pension will become available. However, the level of this is dependent upon national insurance contributions paid over one’s working life. The current basic state pension is £97.65pw & on its own would not be sufficient to support an interest only mortgage payment alone. State Earnings Related Pension Scheme (SERPS) & any entitlement to the graduated state pension can possibly boost the state pension somewhat, but not substantially.

State pensions are a source of income that can be utilised towards a mortgage in retirement.

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Company pension scheme members can benefit greatly with additional pension income that could be index-linked yearly & be calculated dependent upon the number of year’s service.

There is also evidence that personal pension plans can also boosting retirement income. Increasing importance is being placed in this area on seeking independent financial advice. Due to falling annuity rates it is more important to shop around & optimise your pension fund. Annuity providers can now enhance your pension income if poor health issues exist.

Both company & personal pensions are a source of income that can be utilised towards a mortgage in retirement.

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With the recent economic downturn we have unfortunately seen the reduction in bank & building society interest rates. This has affected investors, once reliant on good interest payments, which would supplement their lifestyle. Again ensure you shop around to obtain a higher interest with your savings is more important than ever. Tax payers should make use of their annual cash ISA allowance of £5100 & non-taxpayers should ensure that Inland Revenue form ‘R85′ is completed in order they can obtain their interest paid gross.

Savings interest can be a source of income that can be utilised towards a mortgage in retirement.

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It is also important to check whether any means tested benefits are available from the Department of Work & Pensions.  Dependent upon age there may be eligibility for certain benefits such as pension credit & savings pension credit.

Income levels below £132.60pw for a single person & £202.40pw (2010-2011) jointly could allow a claim for pension credit to be made. Also, check any entitlement to council tax benefit availability, which even though it cannot help mortgage payments directly, it can lower the monthly outgoings.

If there are disability issues then depending on the condition, disability living allowance (DLA), attendance or even carers allowance may be available.

Lenders have different rules on means tested benefits - to see which qualify for a mortgage in retirement contact Equity Release Supermarket on 0800 783 9652

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Maintaining employment through or into retirement does obviously alleviate some of the financial issues. However, experience has shown that there are difficulties in gaining employment.

Nevertheless, it is increasingly apparent that people are now looking to continue working into retirement & provide extra cash to support retirement lifestyle. If part time work can be found then it can not only assist the budget, but also the soul. People in retirement are feeling & looking younger & with more activity in retirement their average life expectancy is rising as social constraints are removed.

Employment income will only help people with existing mortgages going into retirement, but not anyone trying to obtain a mortgage in retirement. Lenders will only accept employment income if a new mortgage is to be repaid before state retirement age.

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Secondary investment properties can provide a form of rental income which can be used towards paying a mortgage in retirement. However, if any existing buy to let mortgage is in operation this will need to be declared & considered as part of the application.

As long as a tenancy agreement is in existence then this will be considered by the lender.

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Although not a specific means of retirement income, equity release schemes can also be considered a means of retirement support. The flexibility of drawdown equity release schemes now incorporates the use of drawdown facilities which are essential in supplementing a flexible lifestyle.

These drawdown equity release schemes provide an initial tax free capital lump sum, with an additional reserve facility that can be gradually withdrawn over future years.

Equity release lenders such as Just Retirement permit additional withdrawals in small amounts of £2,000 a time, which helps retirement planning & provides financial security for the future.

Another method of providing income from equity release is through a Home Income Plan. These equity release plans involve a combination of two products; a Home Reversion scheme & a lifetime annuity. The home reversion company purchases a percentage of the property in return for a tax free cash lump sum. The lump sum can then used to purchase the annuity which can then generate the lifetime pension income required.

Both these equity release schemes will not assist in obtaining a mortgage in retirement. However, in their own right they can provide alternative capital or income in retirement with no monthly payments.

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As you can see there are various income sources which mortgage lenders can consider.

With recent restriction on lending criteria, it is more important than ever to obtain independent financial advice on this specialist area of retirement mortgage finance.

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For further information & advice on mortgages in retirement, please click here for details of interest only mortgages currently available.

Alternatively please contact Mark Gregory on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk

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Has Halifax’s Retirement Home Plan Been Overlooked As An Equity Release Alternative?

Friday, December 11th, 2009

At a time when the equity release market is downsizing with the withdrawal of many lenders, alternative funding sources need to be recognised to help widen the options available.

It is in the generic mortgage market that some unique & flexible mortgage products can be sourced that offer an alternative to the traditional roll-up lifetime mortgage; it is one of these that I write about.

Upon gathering client details & ascertaining a generous disposable income, sometimes it can be evidenced that monthly payments can be afforded into retirement.

However, there is a common misconception that someone in retirement cannot have a mortgage.

This is incorrect.

Providing income multiples can justify the borrowing requirements, then research can be sought that would provide recommendations of suitable mortgage products.

However, providers that can lend into retirement have varying criteria with regards to age & the term permitted & here advice & a knowledge of the market comes into the domain of an experienced independent financial adviser.

The options available would be dependent on budget, but also on attitudes as to how much inheritance is to be left at the end of the day.

Should it be imperitive that the maximum inheritance remain, then a capital & repayment mortgage should be advised.

Conversely, if this is not a major issue then an interest only mortgage can be recommended which will maintain the balance at the same level throughout the term of the mortgage.

Some of the major lenders such as Abbey & Alliance & Leicester do have a maximum age of 75, by which time the mortgage must be repaid. A few will lend to age 85 such as Leeds Building Society which does give more time for the mortgage to run, however, this may only be suitable for capital & repayment mortgages, not interest only mortgages.

Therefore, should you be looking for equity release in retirement, have surplus monthly disposable income, wish to ensure an inheritance for your beneficiaries & want the mortgage on an open-ended basis then look no further than the Halifax.

It may come as a surprise that such a product may be available with a mainstream lender, however it has become more evident how this product can fulfill in-retirement needs.

The Halifax Retirement Home Plan can release cash over a maximum 40 year term, which for someone already near to, or actually in retirement, should be sufficient!

They will only permit this product upto 75% of the property value, however this is not usually not an issue due to the amount of equity in retirees properties. Finally, dependent on whether a mortgage currently exists, we can also obtain for you a free valuation & free legal fees.

They will also allow the product to use the mainstream Halifax interest rates such as their 2 year base rate tracker at 2.79%, which for a £50,000 interest only mortgage would equate to a payment of only £116 per month.

Obviously, consideration must be given to future potential changes that may affect the mortgage, such as the death a mortgagor which would reduce the household income & in turn affordability of the mortgage. However, this can be catered for with a life insurance policy which would repay the mortgage should either party die.

Alternatively, it should be borne in mind that if the level of borrowing is kept to within current equity release lending limits, then if one party did die, the surviving party could repay the mortgage with an equity release plan. This would resolve any affordability issues, as no monthly payments would be required thereafter.

Having completed several of these products recently, I can vouch for the speed of transacting this deal - 4 weeks, which compared to an equity release application is quicker too.

Therefore, rather than just assuming equity release is the only solution, ensure you receive advice from an independent financial adviser - which Equity Release Supermarket can provide.

For further information & eligibility for the Halifax Retirement Plan please contact Mark Gregory on 0800 783 9652 or alternatively email mark@equityreleasesupermarket.co.uk

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