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Posts Tagged ‘Home Reversion Schemes’

How Does Equity Release Work?

Wednesday, March 27th, 2013

Equity release schemes have risen in the popularity stakes over the past 12 months. With regular articles in the tabloids, and increasing government awareness, lifetime mortgages have certainly raised the bar. But how does equity release actually work in the whole scheme of things, and why has it become such topical subject matter for those looking for a comfortable lifestyle in retirement?

 

Equity release workings

Primarily equity release is available to home owners where the youngest person on the deeds is at least aged 55. Equity release works by allowing eligible people to raise tax free cash from the equity tied up in their home. The amount that can be released is based on an age-related ascending percentage of the value of the home. In other words, the older you are, the more you can raise!

 

For example a single person in good health, aged 65, with a property value of £250,000 could raise a maximum of 30% of the property value. This would mean a maximum equity release of upto £75,000 with Aviva.

Even better, is the fact there are now impaired life schemes that offer ‘enhanced’ rates to people who are not as fit and healthy as they used to be and these schemes increase the percentage that can be drawn.

Therefore, if the same person was a smoker with high blood pressure, having diabetes & a history of heart attacks could now release upto £115,500 on the Partnership enhanced lifetime mortgage scheme.

 

Popular uses for equity release

The money raised from any equity release scheme can be used for any legal purpose from clearing credit card balances and existing mortgages, to helping children or grandchildren with deposits to climb onto the property ladder. However, many would be treating themselves to some lifestyle indulgences such as a new car, world cruise or home improvements.

 

Today’s equity release schemes

The modern format of Equity Release started in the mid 1990s with Hodge Lifetime (part of Julian Hodge Bank), Norwich Union (now Aviva) & Northern Rock (now Papilio UK) with a simple roll up lifetime mortgage.

 

Today there are three basic equity release schemes:-

 

1)      Roll up Lifetime Mortgage

This type of scheme has a few variations but basically the borrower takes an initial tax free lump sum, makes no monthly payments and the accrued interest is added to the loan and compounds annually.

 

The main variation to this is the “drawdown lifetime mortgage“ scheme. This is where only the immediately required amount is drawn down and a reserve cash facility is then offered with the remainder. No interest is accrued on this drawdown facility until it is taken in the future. The advantage here by taking it in smaller amounts is that interest is compounded at a much slower rate, than if it had be taken all at once.

 

Another variation of a roll up plan is offered through Hodge Lifetime on a roll-up basis. Hodge’s flexible repayment plan has an option to repay up to 10% of the original amount borrowed annually without any early repayment charges. Hodge also offer a unique ‘downsizing protection’ option whereby after five years, if the property is then sold and the owner moves & downsizes house, then no early repayment charges apply.  A great solution for many who cannot sell now, but may do so in the future.

 

 

2)      Interest Only Lifetime Mortgage Plans

There are two lenders currently offering this type of interest only scheme – Stonehaven and more2Life. Both schemes are fairly simple whereby a lump sum is withdrawn and the monthly interest is paid in order to maintain the balance outstanding level throughout the term.

 

This method has proved appealing to parents who are keen to minimise any inheritance reduction for their children. In recent times, since the withdrawal of the Halifax Retirement Home Plan lifetime interest only mortgages have become increasingly popular. Both these Equity Release Interest Only schemes have the added safety feature that should the monthly payments become too much (one applicant dying and their pension income reducing) then it can revert to a roll up equity release plan, where no payments are required thereafter.

 

3)      The Home Reversion Plan

This is now the least popular type of equity release mortgage. Nevertheless, it can prove to be the best advice in certain scenarios. The workings are that the homeowner(s) must have a minimum age of 65. They have the option of selling part, or all of their property to the reversion provider and then lives in that property, usually rent free, for the rest of their life. In truth, this is usually only appropriate when there are no beneficiaries to the estate, or they wish to leave a guaranteed percentage of the final value of the house to their children.

 

Home reversion schemes only account for less than 5% of the market these days. The market has seen a few withdrawals from the market by lenders such as Aviva and Retirement Plus. The three remaining home reversion providers are Hodge Lifetime, New Life & Bridgewater.

 

About the author

The author of this article is Barry Adnams, who is a senior equity release adviser at Equity Release Supermarket.

Barry is aware of what a monumental decision taking equity release can be. He is a traditional adviser that would always advocate a home meeting with family involvement. Barry offers an initial cost free ‘face to face’ appointment and likes to include as many family members as possible to be present to discuss whether taking equity release is the right option, or not.

 

If you want to benefit from the experience Barry has to offer and understand how equity release works further, then please contact Barry Adnams at Equity Release Supermarket, on 07989 281108 for a free initial consultation. Alternatively please email barry@equityreleasesupermarket.co.uk.

Equity Release – The Only Way is Ethics

Sunday, October 21st, 2012

With news that equity release schemes are becoming more of a mainstream mortgage for the over 55’s, we look at how the equity release market is regulating the protection of its consumers.

 

We have all heard the stories of how equity release schemes are bad for you and the local gossip columnists berating the expense of these plans. However, the equity release industry has come a long way since the original equity release plans were offered in 1965 when the average house price was approximately £4,000!

 

Why was regulation introduced?

It was the earlier version of equity release schemes that started creating a stir. Back in 1988 a new type of plan was introduced called a ‘home income plan’. They relied on using two financial instruments – an annuity or investment bond to provide an income, which in turn paid an interest only mortgage that raised the initial capital. The annuity income would have been sufficient to not only pay the mortgage but also provide additional funds to supplement the applicant’s income.

 

In 1988, the principles of the scheme were sound. However, there was no account taken of how future interest rates may change after a years of economic stability. Therefore when interest rates rose steeply in 1990 and property prices fell significantly, there were unfortunate cases of people experiencing negative equity. Additionally, as a consequence of higher interest rates, the annuity income became insufficient to cover the monthly mortgage payments, thereby wiping out the residual personal income also. These home income plans were subsequently banned.

 

The launch of SHIP

Such disastrous events were the catalyst for greater regulation of these equity release type products and led to providers in this market forming a coalition. This was heralded as SHIP (Safe Home Income Plans) and was introduced in 1991 to protect the holders of such schemes and their beneficiaries.

 

Further bad news

However, the problems were not answered immediately. During the mid 1990’s we had certain banks – Barclays and Bank of Scotland introducing SAM’s (Shared Appreciation Mortgages). These schemes worked on the basis that the mortgagee released an amount of equity in return for a proportion of the house value. No monthly payments of interest were required. However, the banks took not just the current value, but also a percentage of the future value.

You may recall that the mid to late 1990’s house prices thereafter soared. The bias was obviously in the banks favour (no changes there) to the tune of approximately three to one in their favour in any property escalation.

These schemes were consequently withdrawn and we are still hearing stories in the news today about people who took out SAM’s & have no redress financially from the FSA.

 

Step forward the FSA

Sooner, rather than later the Financial Services Authority stepped in to regulate the market & by 2004 the Government had brought forth legislation protecting lifetime mortgage customers. The protection didn’t just stop with the schemes; financial advisers now came under the auspices of the FSA and had to meet certain criteria to be able to provide equity release advice.

The FSA then introduced the Financial Ombudsman Service and put the FSA Compensation scheme in place to recompense people who had been mis-sold. Previously, applicants only had the courts as protection and taking on the banks could prove an expensive exercise.

By 2007, Home Reversion schemes were also governed by the FSA leading to stricter controls on all types of equity release schemes.

 

By this time some of the major equity release companies such as Norwich Union (now Aviva) and Northern Rock had joined SHIP. Equity release schemes started going through innovation with drawdown equity release plans becoming popular and being released initially by Prudential, Just Retirement & Hodge Lifetime. With mixed attitudes towards beneficiary’s inheritance, we had the introduction of interest only lifetime mortgages from Stonehaven which allowed some, or all of the interest charged being paid off.

So, not only has the market emphasis changed towards regulation, but also the products themselves have seen massive changed in concept and design.

 

Further peace of mind – legals

So far we have talked about how the FSA has helped regulate the market and the equity release companies themselves designing better products, but what about the equity release process itself?

 

The legal aspects of equity release have now been indoctrinated within the SHIP rules. It is here that extra layers of protection have been provided by the equity release solicitors and provide the final checks of the equity application process. From checking the identity of the applicants, establishing genuine reasons for the raising of capital, particularly when gifting to family and ensuring legal title & conveyancing thereof, solicitors have an important role to play.

 

Under SHIP rules, two solicitors must be involved – one for the applicant & the second on behalf of the lender. This is to ensure there is no conflict of interest and protect both the lender & equity release customer. The applicant’s solicitor must also sign a SHIP certificate to state he is satisfied that all aspects of the equity release have been brought to their attention, implications & that the rules of ‘caveat emptor’ persist. Until the SHIP certificate is signed then no equity release application can complete.

 

SHIP update

Further rebranding of SHIP was felt necessary as the market grew and a louder voice was felt necessary for the equity release market as a whole. After much debate it was proposed that ‘The Equity Release Council’ would provide the new voice of the industry. SHIP has now moved on and hopefully the feeling and attitude to all things equity release. It has travelled much distance since 1965 and overcome some dark days along the way.

 

Nevertheless, this is a new dawn for the equity release industry. With greater trust, greater demand and greater product innovation still to come the future is looking bright for the protection of its customers.

 

If you are considering equity release and need assistance on receiving the best equity release advice call the team on 0800 678 5159.

 

Home Reversion Can Still Play a Part in the Whole Equity Release Scheme of Things

Saturday, April 7th, 2012

Home reversion schemes have literally had their nose pushed out of the equity release market upon entering the year 2012. There has been a significant rise in the popularity of lifetime mortgage plans; including drawdown equity release schemes, enhanced equity release schemes & interest only lifetime mortgages.

Figures produced by SHIP (Safe Home Income Plans) show that home reversion plans now only account for 2% of the whole equity release sales. Drawdown lifetime mortgages popularity has captured 62% of applications & conventional lump sum equity release sales amount to 36%.

It is clearly evident to see the sincere lack of home reversion applications. Here we look at the mis-conceptions surrounding home reversion schemes & why they must still be considered in the overall equity release scheme of things!

 

First let’s look at the home reversion plan basics..

The home reversion scheme requires the property owner to sell part or all of their property in return for a tax free lump sum. The lump sum offered by the reversion company will always be at a discount to the percentage sold. The reason for this is that the applicants can remain living in the property for the rest of their lives, rent free. Significantly, it could be some time before the home reversion lender receives their money.

No interest element is attached to home reversion schemes. Unlike lifetime mortgages, home reversion offers guarantees as to the percentage of the property that will pass to the beneficiaries at the end of the day. This stems from the initial decision made as to how much of the property’s title is transferred to the lender. For example, if 55% of the property is sold in exchange for a lump sum, then this will still guarantee 45% of the eventual sale proceeds will pass to the beneficiaries. This is a major advantage of home reversion schemes over lifetime mortgages & provides peace of mind.

 

So why the lethargy surrounding home reversion plans?

Perhaps one of the major stigmas attached is the fact that you will not own your property 100%. The reversion provider will co-own the property with you, thus having a greater say in its maintenance & future planning of the home. They will have the right to inspect the house at regular intervals to ensure it is maintained adequately, thus protecting their security. Any major home improvements will also need their permissions in case you were thinking of extensions or knocking down walls!

Another consideration would be upon moving home or wanting to sell. At this point an equity release calculation would need to be undertaken to establish how much equity you own based on current value upon transfer across to the new abode. Therefore independent valuations would need to be conducted to ascertain current market value. This could prove difficult in today’s market with a lack of sales & depressed housing market.

The one danger of home reversion plans is upon early death. Home reversion would prove expensive should you die or move into care in the earlier years of inception. Effectively, you have given up a large portion of your home based on average life expectancy. If you fail to reach this date, then home reversion could prove a poor decision. On the flip side, if longevity is in your family genes, then home reversion could be a great decision. Oh the virtues of a crystal ball!

Nevertheless, this aspect of the housing doldrums could actually have a positive accent as to why a home reversion plan could be more advantageous than a lifetime mortgage scheme.  By taking out a home reversion scheme in anticipation that property values will remain static could prove beneficial. Afterall you are guaranteed that at the end of the day some equity will remain as you have a percentage of the property value guaranteed.

Compare this to lifetime mortgage schemes where the roll-up of interest compounds yearly & will continue escalating until the plan expires. In this situation, should property values remain static, then with a continuously rising mortgage balance & static house prices, will lead to the eventual erosion of the equity. This could be so much so, that NO equity remains at the end of the day with a lifetime mortgage.

 

So why should you consider a home reversion scheme?

As you can see the home reversion plan offers a sense of assurance which is not possible with many other equity release schemes. With the progress in medical science, the human body is capable of living much longer. Age therefore plays a major role in this equity release plan with a minimum starting age of 65. Indeed, the older one gets before taking out a home reversion scheme the better the terms that will be offered by the lender. The resultant effect of this is the older the homeowner, the more is paid as a capital lump sum.

 

Some of the negative issues surrounding home reversion schemes have been addressed by the providers – Bridgewater, New Life Mortgages & Hodge Lifetime. Particularly Bridgewater have considered many of these issues & allayed such fears by building in a series of plan options. Similar to drawdown lifetime mortgages, Bridgewater offer a flexible equity release plan which allows you to sell less than 100% of the home & still provide the guarantee of future withdrawals in the future.

 

Another home reversion plan flexible feature could be a ‘secured escalating release’ option which allows you to release a lump sum of cash now, together with a future income over a number of years. This is achieved with the use of annuities.

Finally, some home reversion plans could also offer protection on early death, so always make the necessary enquiries before entering into a long term financial commitment.

 

Home reversion redemption

The home reversion company will eventually receive their money by selling the property when the occupier has died or moved into long term care. Additionally, this type of home equity scheme offers the property owner the ability to change properties. This is a requirement of SHIP (Safe Home Income Plan).

Always take the assistance of an independent financial advisor so that they can help estimate the value of your property and help you decide on the scheme best suited to your requirements. Equity release is very beneficial for retired individuals who do not have a steady flow of income or require a capital lump sum for lifestyle improvements. One of the products that could succeed with these bequests could be the home reversion scheme as it offers stability, guarantees for your children and allows you to enjoy a worry free, rent free retirement.

 

For home reversion advice contact the specialists at Equity Release Supermarket on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Why Now Might Prove to Be a Good Time to Take Out an Equity Release Plan: Given the Competitiveness of the Market

Monday, March 12th, 2012

Equity release schemes and equity release remortgage deals allow you to extract the equity tied up within the bricks & mortar of your home. The tax free cash is withdrawn usually by a lump sum or in the form of monthly income. This is a type of loan is for property owners over the age of 55 and is one of the best ways for such people & property owners to borrow money. Equity release plans typically do not need to be paid back until the sale of the home, or the borrower has died or gone into long term care.

 

Why have equity release schemes become so popular?

Homeowners opt for equity release plans for many reasons & their uses have extended beyond their original concept. Gone is the original ideology that equity release schemes would pay for pensioners essential living demands. Instead the flexibility & uses of equity release schemes have diversified into areas such as inheritance tax planning, moving home & many more besides.

They may have grandchildren entering university, and education tuition fees to pay; they may want to travel the world to meet distant relatives or loved ones; purchase a new car that maybe more economically friendly & cost saving; they may have a child that is soon to wed & needs a deposit for that first step on the property ladder; or they may want to consolidate their debts such as mortgage, loan & credit cards in order to free up & release some disposable income. These are all wonderful & purposeful reasons to choose an equity release mortgage. At the end of the day you just want to retire and relax  throughout the longest holiday of your life.

 

How to Compare Equity Release Deals

There are various providers and independent specialists and a variety of equity release remortgage deals available on the market. In the tough economic times, there are few property owners that would not benefit from an equity release deal; however many homeowners are unaware that they have a solution to their problems with an equity release loan. It is important for the retirees to understand how these UK equity release plans work and how to shop around and compare all lifetime mortgages & home reversion schemes to find the best deal available on the market.

The most convenient means to compare equity release deals is on the World Wide Web or more commonly termed – the Internet. There are many equity release providers and schemes that operate home equity loans. These include schemes such as roll-up lifetime mortgages that allow you to extract an initial lump sum with the interest being charged, & compounded onto the previous year’s balance. The flexible & now more popular scheme is the drawdown lifetime mortgage that allows you to take a smaller initial lump sum that is agreed upon at commencement of the loan and then further amounts as you wish. There are advantages and disadvantages to each.

When you compare equity release, you should work with a company that offers advice and guidance and one that has the contacts in the industry to present you with the best deals available on the market. Equity Release Supermarket has a comparison table that identifies the best interest rates, cashback deals & free valuations for you. Click here to visit the compare deals table.

 

All Equity Release Supermarket financial advisers are independent & FSA trained and accredited and it is essential that the deal that you opt for meets the FSA standards and SHIP regulations. This will ensure that you have a deal that is safe and fair.

 

Why Now Might Prove to Be a Good Time to Take Out an Equity Release Policy

A combination of the current crop of exclusives has provided a cheaper route to market for many new equity release applications. However, this is not the only reason for the equity release industry being more confident these days.

A recent spate of rate reductions for the 3 major equity release companies has resulted in some of the lowest interest rates for the past 5 years. Aviva’s recent reduction on its Lifetime Flexible drawdown plan has scuppered plans for Just Retirement to be the market leader. In fact Just Retirement has now thrown in the towel in its quest to become the cheapest lifetime drawdown scheme currently available & is now targeting other areas for domination.

 

 

The current exclusive Aviva equity release offered by Equity Release Supermarket is as follows: –

Product              –        Aviva Lifestyle Flexi Plan

Interest rate      –        5.92% fixed for life

Offers                 –        Free Valuation  PLUS £500 cashback on completion

 

If you wish to take advantage of this Aviva deal then request a quote  or contact the Equity Release Supermarket team on 0800 678 5159 where one of our advisers will be happy to assist.

 

Need To Learn More About Equity Release Schemes?

Tuesday, October 18th, 2011

An increase in the standard of living & more recently inflation levels has caused a shortfall in pension provision. This is now affecting all those people who are on the verge of, or now in retirement. So for those retirees who are on fixed incomes, how can they allay their fears of personal budget shortfalls?

Well consider equity release schemes as an effective solution to this problem. If you are looking for some more information, this guide will help you understand the lifetime mortgage schemes available.

 

What is an equity release scheme?

Equity release schemes allow you to release equity tied up within your home. These schemes are very popular amongst individuals who are entering, or now into the retirement phase of life. Thus, retirees can therefore overcome any shortfall in their income by utilising the tied up tax free cash within the value of their home. Equity release schemes provide pensioners with a steady flow of income thereby helping them to maintain and improve their quality of life. Additionally, in recognition of the demand for irregular tax free cash, drawdown equity release schemes can now provide flexibility.

 

Equity release is used to cover financial products that release home equity. However, they need not require any monthly payments & therefore do not affect retirement budget. It is very important to keep in mind that equity release schemes can only be considered for people who are above 55 years of age. For home reversion schemes this minimum age is increased to age 65 in lieu of the manner these schemes operate.

 

Lifetime mortgage plans are becoming increasingly popular amongst retired individuals. They provide a lump sum amount based on a combination of the age of the youngest homeowner & the property value.

The younger this age is, the lower the loan-to-value.

In contrast for those more elderly can release a percentage of the property upto 54%.

 

A few other benefits of SHIP (Safe Home Income Plans) equity release schemes are:

  • Improved standard of living
  • Portable mortgage to another property
  • A fixed rate of interest for life
  • No monthly payment or instalments required
  • No negative equity guarantee

 

Equity release is an ideal option when it comes to securing your future. If you find the process confusing, it is highly important to consult an equity release advisor such as Equity Release Supermarket. With access to market leading deals & special interest rates they can research the whole of the equity release market to find the best equity release deal available.

 

If you require advice on which equity release is suitable for you, contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Not Happy With Your Pension? Can Equity Release Schemes Help?

Monday, December 20th, 2010

Should you have already purchased your annuity from your pension scheme, then unless it is indexed linked by inflation you may now be feeling that has lost some of its purchasing power over the years. With inflationary fears currently still persisting, even with the recent downturn in the UK economy, then people are looking at extra ways to enhance their retirement income & lifestyle.

Obviously, once a pension has been purchased then it is fixed for life, so alternative sources of boosting one’s retirement income need to be sourced.

 

So how can equity release assist?

Equity release allows you to enjoy the monetary benefits of your assets without having to sell them. This is one of the ways to use the equity locked in your property. Equity release schemes are available only for retired individuals over the age of 55.

There are two types of equity release schemes: Lifetime mortgages and home reversion schemes. Consider the benefits of these two and choose one that suits your requirements. It is prudent to opt for independent financial advice when dealing with equity release schemes.

 

Lifetime mortgage schemes: These schemes are designed for property owners. They help in gaining money by mortgaging the property. A major benefit of opting for this scheme is that you still remain the sole owner of your property. Individuals over 55 years of age are eligible for lifetime mortgage schemes.

One type of lifetime mortgage scheme called drawdown equity release could be a solution here. The lender will calculate an overall maximum that can be released & from this the applicant can withdraw this reserve facility in small amounts at times to suit one’s requirements. This could be monthly, half yearly or even annually, but the choice is yours. Therefore, by opting for a drawdown scheme could boost your retirement finances with flexibility.

 

Reversion schemes: Contrary to lifetime mortgage schemes, home reversion schemes require you to sell a part or all of your property to enjoy monetary benefits. A lump sum from one of these schemes can be used to purchase an annuity which could therefore supplement any existing pension scheme.

Dependent on the lump sum raised, age & health & options built into the annuity would determine the regular income to be paid by the annuity provider. Always shop around or seek the advice of an independent financial adviser to ensure the maximum possible income is achieved.

 

Eligibility

You should be the sole owner of your property prior to mortgaging it. The aforementioned schemes have different age requirements. While lifetime mortgage schemes require an individual to be 55 years of age, home reversion schemes need the individual to be 65 years of age to qualify. Your property will be surveyed and you can qualify for these schemes only if it is worth £60,000 or more.

 

Equity Release Supermarket have independent financial advisers that can provide advice on both equity release & how to maximise your retirement income with annuities & pensions.

Contact us on freephone 0800 678 5159 if you wish to discuss whether any of these products can help your retirement financially.

e: mark@equityreleasesupermarket.co.uk

w: http://www.equityreleasesupermarket.co.uk

 

Equity Release Schemes – Five Important Benefits

Tuesday, November 9th, 2010

Equity release schemes are one option available to enjoy the fruits of retirement in a way many would never have envisaged.

Some people are still unaware of equity release schemes and their numerous benefits; here we aim to address those issues.

 

Maintain standard of living

Immediately upon retirement, there is an evident drop in income. Unfortunately expenses do not.

You may think that saved money during your working life will be adequate for you to live comfortably. Rising inflation & lack of confidence in pension plans might make this difficult.
There are other options to consider & one of these maybe to downsizing to a smaller home. Other options available prior to considering equity release would be using any savings, asking relatives for financial assistance, claim any benefits due or if you have a good disposable income there is still the option of an interest only mortgage. The Halifax Retirement Home Plan can assist here.

If you look into equity release schemes, you will notice that you do not have to sell your property. Therefore, you can remain at the property for the rest of your life.
Applying for equity release, enables you to obtain some of the cash value of your property and with a roll-up lifetime mortgage you still remain the owner. This way, you can maintain your standard of living and can avoid the hassle of moving into another house.

 

Fulfil your needs

Additional cash can help retired individuals to fulfil basic needs as well as allowing them to pursue leisure activities. You may want to clear some debts, go on a long holiday, buy a new house or simply develop new hobbies. Equity release schemes can help you with these things.

 

The age factor
Age is an important factor when buying an equity release scheme. Your age is directly related to the amount of cash you can get. The older you are, the more you can get. Lifetime mortgage schemes start at age 55 with a maximum release of 20% & run beyond age 90 releasing over 50%.

Home reversion schemes start at age 65 & again go past age 90 with the maximum release being the sale of 100% of your property to the home reversion provider.

 

No limitations on spending

A good thing about equity release schemes is that you can spend the money the way you want to and there are no restrictions. We would only advocate initially taking an amount which you are likely to require in the first 12 months. The reason for this is that drawdown equity release schemes allow you to take the equity release cash in stages rather than all at once. This ensures that you pay less interest in the long run as you only pay interest on the actual amount you have withdrawn.

 

Tax-free cash

The cash you receive from the scheme is free of income tax. However, if any funds are placed on deposit then you could pay tax on any interest gained.

 

To find out whether equity release is suitable for you why not have a free initial consultation with one of our qualified equity release advisers. Call now on freephone 0800 678 5159.

 

Alternatively, email admin@equityreleasesupermarket.co.uk

Website – http://www.equityreleasesupermarket.co.uk

Equity Release – The Top Three Advantages Of Home Reversion Plans

Saturday, October 16th, 2010

Equity release schemes are perfect for elderly people who are looking for ways to generate funds during their retirement.

The less common home reversion equity release schemes allows you to sell a part or your entire property to the reversion company. In return, you can get a guaranteed lifetime lease and tax-free money with no monthly repayments.

 

You can continue to reside in your property for as long as you want. Home reversion schemes also guarantee an inheritance to your beneficiaries. It is a scheme where you sell a percentage or all of your property to the reversion company while retaining the rights to live rent free in your home for the rest of your life. The equity received can either be paid out as a monthly income, lump sum or a combination of both.

 

Some important benefits of home reversion schemes

No monthly payments

As a home reversion equity release scheme is not actually a loan, there is no need to pay off any interest. Other equity release schemes such as lifetime mortgages not only charge you interest, but also reduce the inheritance for your beneficiaries which in extreme cases can erode ALL the equity in the property. This means that the interest amount can grow considerably over the years; in some cases it may exceed the value of your property.

This cannot happen with a home reversion scheme unless you select to sell 100% of the property in the first place.

 

Benefit from rise in property values

Unless you have sold your entire property, you can get your share as the property value increases. Therefore, if you have sold 50% of the property value, you will still retain any growth in your share of the remaining 50% of the property.

 

Release more equity compared to lifetime mortgages

With home reversion schemes, you can release more cash than lifetime mortgages allow you to. This can be advantageous should you have no children to leave your estate to. In addition home reversion schemes can have an impaired life facility built into the scheme. Therefore, if your health is poor or have an impaired life condition should as high blood pressure or you have suffered a heart attack, stroke or cancer then the home reversion company can give you a higher lump sum than otherwise have been. This would be due to the fact that they do not anticipate your life expectancy to be as high as the average & thus have actuarily decided they can afford to offer a greater lump sum.

 

To request further information on home reversion schemes & a home reversion quote, please contact the Equity Release Supermarket team on 0800 678 5159.

 

Home Reversion Plans

Friday, October 8th, 2010

Equity release schemes are the generic term encompassing all plans including lifetime mortgages & home reversion plans. They are potentially suitable for homeowners who preferably do not have a mortgage and have an income or lump sum requirement. If you are retired and want some money to enjoy your retirement then equity release is the best solution for you. By opting for equity release, you can unlock some amount of money against the value of your property without moving.

One of the best things about equity release is that it provides tax-free cash which can be used in various ways. This means that you can a buy a new car, go on holidays or pay of outstanding debts; more commonly credit cards & loans. There are different equity release schemes available in the market. One of the most preferred schemes is known as a home reversion plan.

 

What is a home reversion plan?

These schemes do not start until age 65, however I feel they only really offer preferential terms once the age of 70 has been attained. Under these schemes, you can sell a part or the whole of your property in return for a cash lump sum of money. Once you have opted for this scheme then your home or a part of it will belong to the reversion company. One of the two main advantages of home reversion schemes is that home reversion schemes allow you to live in your home for the rest of your life. The reversion company will grant you a lifetime tenancy which means you can live there rent free for the rest of your life. Additionally, because you are selling a percentage of the value of the house, then you are also guaranteeing the final percentage of the property that will pass to your beneficiaries. This is NOT the case with a lifetime mortgage scheme.

 

Advantages offered by home reversion plans

Once you receive money under a home reversion plan there is no need to worry about the repayments. This is because the lenders will get their share of the property value after your death & once the property is sold. Under this scheme, you can sell only a part of your property and keep the rest for your family or beneficiaries. This way, you can also benefit from the increasing value of the proportion of your part of the property. Home reversion schemes also tend to be cheaper in set up costs. The only fees with the major home reversion companies tend to be valuation & legal costs. Occasionally, Equity Release Supermarket do obtain free valuations as they do currently with Hodge Lifetime. Therefore, there would be no initial fees to pay on application & ALL costs would then be deducted on completion.

 

To obtain your guide to Home Reversion schemes, please contact the Equity Release Supermarket team on 0800 678 5159 or click here to register.

 

Equity Release Is A Relief To Your Retirement Problems

Tuesday, September 14th, 2010

Many individuals still are still taking financial issues into their retirement. We are all aware of the issues that have dogged the pensions industry over the last decade or two. With the decline in final salary schemes & corresponding members of such schemes, retirement that ensures a safe and constant source of income is a worrying concern.

To solve such pension shortfalls & the financial problems in retirement this causes, equity release schemes have been introduced.

 

Some facts about equity release schemes

Before opting for equity release, you need to know some important facts about it.

 

Payments received

You are paid by the equity release lender for the property you mortgage. This money can be paid as a lump-sum amount or as a monthly income. The type of payment to be received depends on the applicants choice. Monthly payments are the constant income that works exactly like a monthly salary. A lump sum payment is when you can retain the complete value of your property at one time. This type of payment can help you to invest in another property, maybe a holiday home for yourself or a deposit on a new  property for your children. People who use an equity release scheme as an additional form of income choose to receive the payment as a regular lump-sum amount.

 

Repayment of loans

Roll-up equity release schemes have a unique benefit. They allows you to maintain the complete ownership of your property for your lifetime. You can enjoy complete rights over your property even after mortgaging it without worrying about the repayment at all. Interest is added annually to the actual amount till the loan is repaid.

On the other hand, a home reversion scheme allows you to sell your property and then receive the money. In this case, you do not have to pay anything in return later on. The loan should be paid within a period of 6-12 months.

 

Should you require further advice or quotations on lifetime mortgage or home reversion schemes please contact Mark Gregory on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

 
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