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Posts Tagged ‘Home Reversion Scheme’

Different Lifetime Mortgage Options Available With Equity Release

Thursday, April 28th, 2011

Are you looking to secure your life post retirement?

Do you want to lead a life free from tension and financial worries?

 

If the answer is yes, opting for an equity release scheme could be the right decision.

As different people have different financial requirements, recent equity release schemes have been designed and developed to cater to your needs. These schemes include home reversion schemes and lifetime mortgages. Roll-up lifetime mortgages are much preferred by many people these days as they enable you to retain 100% of the property value & are more flexible in the long run.

 

Features of lifetime mortgages

Lifetime mortgages are especially relevant for those homeowners who are entering retirement. With such a plan, retired homeowners can release equity from their property in the form of a secured loan on their property. The repayment of a loan under this plan takes place after the homeowner has moved into long-term care or after the last applicant has passed away.

 

Once either event has occured then the beneficiaries usually have 12 months in which to repay the debt to the equity release lender. This is most likely from the sale of the property. However, this can be repaid by the children taking ownership of the house & raising their own finance in which to repay the equity release company. For instance if the property was used for rental purposes than a buy-to-let mortgage could be applied for to cover the equity release debt.

 

After opting for a lifetime mortgage, homeowners can continue to live in their residence for the rest of their lives. This is also applicable even when the equity release balance exceeds the value of the property. This is where the no negative equity guarantee applies & provides protection for the heirs. Therefore, inheritants are given assurance that the no debt is incurred by them from the decision made by their parents.

As the equity released is completely tax free, applicants can use the money for any purpose they want. Due to all these benefits, more and more retired homeowners opt for equity release to secure their future.

 

Call 0800 678 5159 for further information or an equity release quote

 

A Brief Insight Into Equity Release

Friday, March 4th, 2011

Equity release is a type of mortgage which is secured on your property and helps you to access money attached to it. The value of your property minus any secured loans placed upon it is termed as equity. You are able to withdraw this amount to assist you financially in later years.

 

What is equity release all about?

A clichéd reason given for releasing equity is mainly ‘debt consolidation’. During 2011, debt consolidation is proving to be the most popular reason for releasing equity from one’s property.

Debt consolidation involves settling mortgages, loans, credit cards & any other unsecured finance which the individual is finding difficult to maintain. Once these debts are repaid, your monthly expenditure is reduced thus giving you extra income to enjoy. Other reasons for releasing equity could be to buy a new car, holidays or generally making your lifestyle more satisfactory during retirement.

 

The equity release plans do not have a fixed term therefore they run for the rest of your own or your partner’s life. If there is any money left, it is passed onto your nominees as suggested in your will. This scheme is only meant for people who have retired and are over 55 years of age.

 

There are two types of equity release scheme. The lifetime mortgage scheme is recommended for people who are retired. A loan is given to the borrowers on their house. Interest is then added annually to the loan, which is then repaid by selling the property when the borrower dies or when they move out into long term care.

The second option is a home reversion scheme & refers to selling the whole or part of your property to the reversion provider. This means that it the property itself is actually shared or even fully belongs to someone else. The borrowers can continue to live in their house for as long as they wish & not have to worry about any rental payments.

 

To ascertain which equity release scheme is suitable for yourself, contact the Equity Release Supermarket team on 0800 678 5159 or visit our market leading website at EquityReleaseSupermarket.co.uk

 

Equity Release – Some Facts You Must Know

Thursday, October 28th, 2010

Equity release is a scheme meant for senior citizens. There are still some misrepresentations on these schemes due to lack of customer knowledge & product awareness. However, there are now informative equity release website’s such as Equity Release Supermarket who provide information & interest rates on the equity release schemes available.

 

Equity release schemes were introduced to secure individuals financially after retirement. Here are the answers to some of the most commonly asked questions:

 

Who owns your property?

The key benefit of an equity release scheme is that you still own your property. You are still the decision maker for it.

 

Is there any tax charged?

No tax is charged on the money you receive via an equity release scheme. The tax might be charged on the investment of this money. For instance, if you invest equity release money in a deposit account for further income or receipt of interest, then tax is charged.

 

Criteria to qualify for equity release

Your property is surveyed for eligibility. The current minimum value for eligibility is £70,000. A property worth less than this amount cannot be mortgaged for equity release purposes. Coming to the eligibility of an individual, you need to be of at least 55 years of age to qualify for a lifetime mortgage scheme. A minimum age of 65 is required for a home reversion scheme.

An equity release scheme is one of the better financial tools meant for senior citizens. Every retired individual could potentially take advantage. You can opt for such a scheme even if you are financially secure. It can be used for investments or just to indulge in leisure activities. If you want to enjoy your retirement, consider equity release schemes & you can find the information you require by visiting the website of equity release supermarket.

 

Equity Release – Some Of Your Doubts Clarified

Wednesday, October 27th, 2010

There are still many doubts in people’s mind regarding equity release. Many people stay away from such schemes because they believe that they are not eligible to opt for one or fear of the unknown. There are some who think that they have to sell their property or that they will lose the ownership. To clear some of these doubts, read on.

 

Who is eligible?

Equity release is a scheme to benefit older people. The minimum age of a person to qualify for a lifetime mortgage is 55. To qualify for a home reversion scheme, a person should be 65. A person cannot qualify for equity release if they have a property valued below £70,000.

 

What about property ownership?

After opting for equity release schemes, you will still be the owner of your property. Equity release gives you the value for your property without you losing ownership. With lifetime mortgage schemes, you have complete ownership. On the contrary, with a home reversion equity release scheme you are required to sell all or a part of your property.

 

 

When is this loan repaid?

The loan is repaid after selling your property. This property is mortgaged with the lender and hence is sold after your death or having to move into long term care. The money has to be repaid between six to 12 months, dependent upon the equity release lender. The interest is continued to be added to the loan until the property is eventually sold.

Initially, your property will be surveyed and then valued accordingly. This figure will determine how much can be borrowed initially, or if a drawdown scheme how much of an overall cash facility will be provided by the equity release company.

This scheme is meant for senior citizens to enjoy life to the full without depending on anyone.

 

To speak to one of thye Equity Release Supermarket specialists call 0800 678 5159

 

Equity Release Schemes – Frequently Asked Questions

Sunday, October 17th, 2010

Making a plan for retirement can be tricky and challenging. There are a number of things to consider and certain questions regarding eligibility that always crop up.

Equity release schemes can be confusing and hence one should always opt for independent financial advice from companies like Equity Release Supermarket.

Occasionally there can be doubts about one’s eligibility that can often deter people from enquiring about equity release schemes. However, if one has any doubts the help is close at hand.

Mentioned below are some frequently questions Equity Release Supermarket get asked regarding equity release schemes.

 

What are the eligibility criteria to qualify for equity release schemes?

Equity release is a scheme that was designed to benefit retired individuals. Therefore, the minimum age requirement for an individual to be able to opt for a the most popular option which is the lifetime mortgage scheme, is 55.

On the other hand, the second option which is the home reversion scheme, requires an individual to be at least 65 to qualify.

The property value upon which the equity release scheme is to be based upon should be valued over £70,000.

 

Who takes ownership of your property?

Well that would depend on which type of equity release scheme you decide to opt for.

With a lifetime mortgage you always remain 100% the sole owner of your property. This type of equity release scheme gives you the value for your property without you losing ownership.

Home reversion schemes require you to sell a part or all of your property to gain the benefits. Therefore dependent upon how much of the property you sell to the reversion company, will determine how much ownership you actual retain. For instance if you sold 60% of the property value, then you will still retain 40% ownership for yourself & ultimately your beneficiaries.

 

Do you have to pay for the loan?

Equity release schemes differ to residential mortgages as you have NO monthly payments to make. Your property is mortgaged with the equity release company & your loan is repaid by selling the property once you have passed away or moved into residential care.

The money has to be repaid by your beneficiaries or executors within 6 to 12 months, dependent upon the equity release scheme taken out. The interest is continually applied on the property until the loan is eventually repaid.

 

If you feel that you need advice on which equity release scheme is suitable for your situation, please ring the freephone number 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Does Low Income Concern You? Opt For Equity Release

Tuesday, October 12th, 2010

More often than not, we see retired individuals depending on someone or other in their old age. If you are retiring soon, it is advisable for you consider equity release as an option. It not only ensures that you can enjoy the benefits of the equity in your home, but also gives you a peace of mind and much needed relaxation in old age. This scheme has been designed for retired individuals so that they can enjoy their independence.

 

Things to consider before opting for equity release

If you are opting for equity release, you must own the property which you intend to put up for mortgaging. The minimum age requirement for a lifetime mortgage scheme is 55, while the requirement for a home reversion scheme is 65.

Once you opt for equity release, your property will need to be surveyed and an estimate valuation will be made. The minimum market value for an equity release scheme is about £70,000. If the final market valuation of your property is below this amount, you are not eligible for equity release.

 

Types of equity release schemes

Lifetime mortgage schemes and home reversion schemes are the two main types of equity release schemes.

Home reversion schemes involve the selling of some or all of your property. The greater the market value of the property, the more benefit you can enjoy. On the other hand, a lifetime mortgage scheme does not require you to sell your property and this is the major advantage.

 

Equity Release Schemes – Which Is The Best Scheme For You?

Tuesday, October 5th, 2010

Equity release schemes enable you to convert the equity from your property into a usable cash amount. These schemes are proving helpful for many older homeowners. Some of these equity release schemes function by offering you a regular extra amount of income or a lump sum amount, or sometimes both.

While equity release schemes may look attractive, they can be complicated and difficult to understand. Thus, before opting for an equity release scheme, it is better to get legal and financial advice from industry professionals.

Two types of equity release schemes exist – home reversion and lifetime mortgages.

 

Home reversion schemes

A home reversion equity release scheme allows you to sell a part (or a percentage) of your property to generate the required funds. The amount of equity you get from the equity release scheme will be lower than the market value of your property. This is due to the fact you are able to live rent free for the rest of your life in your property. After you pass away, the reversion company will sell your property and get their share of the money from the sales proceedings.

Home reversion schemes are only available from the age of 65.

 

Lifetime mortgages

Lifetime mortgages let you borrow the money without any need for monthly repayment. Similar to a home reversion scheme, lifetime mortgage equity release schemes allow you to stay in your property. The amount of equity remaining will completely depend on the final value of your property and your age. The money that you borrow can either be paid to you in instalments, a lump sum amount or both.

With this equity release scheme, the lender does not own your property. The amount that you borrow must be paid off when you sell or move out of your property, or when you die.

Lifetime mortgage schemes commence at the earlier age of 55 with a maximum release available of 19% of the property value.

 

For advice on which scheme would be best for you, please contact the Equity Release Supermarket team on 0800 678 5159.

 

Some Of The Best Benefits of Equity Release Schemes

Thursday, September 16th, 2010

Equity release schemes are becoming a great way to release the cash benefits from the value of your home. You can enjoy the benefits of having built such equity, while still maintaining ownership of your property.

You have two ways to benefit from equity release schemes. The first method is called a lifetime mortgage which involves taking a secured loan on your property and the second type of equity release is the home reversion scheme. This involves selling of a portion of your property to get valuable funds.

 

People who want to guarantee leaving a percentage of their property to their children or other beneficiaries will prefer the home reversion scheme. The reason for this is that having sold a percentage of the value of the house to the home reversion company, the homeowner will still retain the remaining fixed percentage in their name also. They are issued with a lifetime tenancy which means they have the right to remain at the property for the rest of their life, rent free. This percentage they own will continue until the house is eventually sold.

For example, if the homeowner sold 60% of the value of the property to the home reversion company, they themselves would retain the remaining 40%. Therefore, upon eventual sale of the property, the beneficiaries would sill receive 40% of the final sale value of the home, guaranteed. This way they can easily retain their most valuable assets. Other reasons for opting for the home reversion scheme is that if one has no beneficiaries & even no significant heirs to leave their inheritance to, may wish to sell 100% of the value of their property in order to take the maximum possible whilst they are still alive. This may seem excessive, but rather than leaving their estate to people who they feel should not benefit, they can enjoy the fruits of their working life & the resulting equity they have built.

 

Features of equity release schemes

Staying in your home
One of the biggest advantages of equity release schemes is that you can stay in your own home while enjoying financial benefits from it. Selling your old property and moving to a new, unfamiliar area can be emotionally as well as physically trying. One may not want to separate from friends and other family members who might be staying close to them. You may still need that additional room to entertain family & friends & when the grandchildren stay over in that extra bedroom you have currently, that may not be there if you downsize.

There are also the costs involved in moving such as solicitors fees, removal costs, stamp duty & the emotional price of up-rooting from somewhere that you have spent the majority of your life bringing up your children & other family issues. Equity Release can help you maintain your independence & the right to remain in the family home.

 

Live a life of luxury
People who take equity release schemes are able to fulfil their dreams & retire & relax. Some might go for holidays to foreign and exotic locations, while others may purchase a brand new car or carry out home improvements including redecoration of their home. This can be jobs that have been put of during their working lives for financial reasons, or even modifications to the property due to disability reasons. Also, upgrading the home with equity release including improvements such as new double glazing, loft & cavity wall insulation can assist on saving on your fuel bills. Therefore, some investment in the property can alleviate finances elsewhere thus paying dividends. For some people, it is simply pleasurable spending money on their family by way of gifting to the children now, rather than later and seeing them enjoy bringing up their grandchildren without the financial constraints that today’s society is imposing currently.

 

Guaranteed returns
Almost all equity release schemes offer the benefit of having guarantees throughout your life. This can be the guaranteed interest rates for life on the lifetime mortgage scheme. There is also the no negative equity guarantee that the lifetime mortgage schemes also have, ensuring that any equity release scheme is adhering to Safe Home Income Plan (SHIP) regulations. This no negative equity guarantee ensures that the beneficiaries cannot ever incur any debt over & above the property value once the equity release scheme mortgage holders have died or moved into long term care.
Before going ahead with getting an equity release scheme, you should seek professional and impartial advice from the Equity Release Supermarket experts and read all documents carefully before signing.

Contact the team now on freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

All You Should Know About Equity Release

Sunday, August 22nd, 2010

Equity release is a concept which is often misunderstood. It is a common myth that you lose your property if you opt for this scheme. This is not the case.

Equity release is the equity tied up in your property that you can now release. This facility lets you still enjoy the ownership rights by mortgaging your assets. Equity release schemes give you 100% ownership of your property till you die.

 

What are the different types of equity release?

There are two types of equity release schemes:

  • Lifetime mortgage: A lifetime mortgage scheme lets you retain complete ownership of your assets. An individual who takes the loan has no responsible any monthly payments. The loan is eventually repaid by the legal heirs after the holder moves into care or eventually dies. Hence, the reason why this is known as a lifetime mortgage scheme.
  • Home Reversion scheme: You need to sell part or all of your property to the reversion provider for this scheme to work.

 

There are three reasons how the size of the release can be affected: –

  • The greater the percentage of the property sold, the greater the size of the release
  • The older the equity release applicant, the higher the amount that can be raised
  • If their is an element of ill-health, then the home reversion provider can release a larger than normal cash lump sum

 

Types of payment

There are two types of method of receipt of the cash payment you get in an equity release scheme; a lump sum and a monthly income payment. You can opt for one of these payments dependent on your needs.

A lump sum amount can be used for capital expenditures, while monthly payments can be chosen by those who need a regular income in retirement.

The most important benefit of equity release is that it gives you tax-free money. The only thing you need to remember is that you can mortgage the property which you own.

The minimum age to be eligible for these schemes is 55 years for a lifetime mortgage and 65 for the reversion scheme.

 

To obtain advice on which is the right equity release scheme for you please ring the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

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.

 

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.

 

 

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.

 

 

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.

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.

 

 

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.

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 678 5159

 

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.

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.

 

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.

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.

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 678 5159 or email mark@equityreleasesupermarket.co.uk

 

 
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