Posts Tagged ‘interest only lifetime mortgage’
Sunday, May 5th, 2013
May 2013 will be remembered as the wake-up call for customers with interest only mortgages. After all the talk about time bombs ticking down to zero, the FCA (Financial Conduct Authority) has now issued a regulatory warning, advising that action should be taken, and also how.
The interest only mortgage has been sold in bucket-loads for reasons a plenty. Ideally, an interest only mortgage should always have some form of repayment vehicle which is confirmed to the mortgage lender at inception. This could be in the form of a low cost endowment, personal pension plan, regular savings ISA, stock and shares, investment bonds or even sale of 2nd home such as buy-to-let or holiday home. The only way of guaranteeing repayment of a mortgage is by choosing the capital & interest repayment mortgage route.
However, the relaxation of lending rules during the pre-credit crunch era meant that these mortgages where only interest is repaid were all too often taken due to being the cheaper option. It soon became apparent that these mortgages were not necessarily taken for the right reasons. Not only that, where repayment vehicles were set up using pre-determined growth rates, these have fallen way short of their target growth rate.
These statistics have been confirmed by the FCA, who stated that almost half of the 2.6 million customers with a UK interest only mortgage won’t be able to clear their mortgage by the end of its term. In fact the average only interest mortgage balance will be approximately £72,000 by its eventual settlement date. These interest only mortgagors will somehow need to find this repayment amount, or end up having to sell their home and downsizing.
How Can Interest Only Lifetime Mortgages help?
This will depend upon at what stage of the mortgage term any retrospective action is to be taken. The best situation would be if remedial action could be effected during the interest only mortgage term itself. This would mean assessing the amount to be repaid & the time remaining for repayment of the original capital amount. Using a suitable interest only mortgage calculator, you can check to see how much you should be repaying in order to meet the mortgage outstanding. This will illustrate the size of the problem and what strategy is vital moving forward.
However, this is all & well if the situation can be nipped in the bud with many years remaining. Unfortunately, there are many mortgagors where the FCA interest only mortgage review has come too late. These are the people who have now reached retirement and realisation has sunk in that they still have no means to repay their mortgage. Mortgage lenders are reigning in these mortgages, many with no remorse.
Nevertheless, there is a small crumb of comfort for some as the FCA statistics do show that 85% of interest only mortgage cases maturing up to 2016 will have a 39% loan-to-value, or less. We also know from their data that over 48% people are over age 55 at this point. Fortunately for them there is a mortgage solution in the form of another type of interest only mortgage. Here is where the equity release industry can come to their aid.
Interest Only Solutions
An interest only lifetime mortgage works on the same principle as the interest only mortgage. The difference comes in the term, as the interest only lifetime mortgage will never need repaying until the last person has died or moved into long term care. Therefore, if affordability into retirement is not an issue, then committing to a life of interest only payments could prove a solution. Given the size of the interest only epidemic due to inflict itself upon the UK mortgage population this form of lifetime interest only mortgage could prove salvation for many who wish to keep their home.
The enormity of the situation could therefore be of benefit to the interest only lifetime mortgage providers such as Stonehaven, more2life and Hodge Lifetime. Where the applicants are aged over 55 and the loan-to-value criteria fits, then one of these equity release providers may be able to assist. With interest rates now closer to conventional mortgage rates than ever before, the differential in pricing is not that far apart.
In particular, where the discipline of monthly repayments are required, then the Stonehaven Interest Select Lite provides a solution whose interest rate begins at 5.99% (6.40% APR). The Stonehaven range of plans eventually rise upto 6.81% (7.3% APR) with the Interest Select Max, but offer a higher maximum lump sum.
As an alternative, if a more flexible repayment approach is preferred and the youngest applicant is 60 or over, then the Hodge Lifetime Plans may suit. The Hodge Lifetime flexible repayment option allows upto 10% of the original capital borrowed. Repayments can only start after 12 months have elapsed and a maximum of two payments are allowed each year thereafter. This effectively could provide an even better solution to interest only short fallers, as should the full 10%pa be repaid off the mortgage balance, then this would prove to be a new type of equity release scheme – a capital & repayment lifetime mortgage!
If you are one of the thousands of interest only mortgage customers with your mortgage company demanding repayment, then contact the Equity Release Supermarket team on 0800 678 5159 today or complete our contact request form.
Tags: capital & repayment mortgage, capital and interest mortgage, FCA, financial conduct authority, Hodge Flexible Repayment Plan, Hodge Lifetime, interest only lifetime mortgage, interest only mortgage, interest only mortgage calculator, lifetime interest only mortgage, lifetime mortgage, lifetime mortgages, more2life, Stonehaven, Stonehaven equity release, Stonehaven interest select, Stonehaven Interest Select lite
Posted in Interest only Lifetime Mortgages, Interest Only Mortgage, Latest News | Comments Off
Tuesday, April 23rd, 2013
Self-certification mortgages are mortgages that are available without a formal income check. Self cert mortgages can be a good option for self-employed or independent professionals who would otherwise have a hard time finding a mortgage lender. Self-certification mortgages are also now available within the retirement sector, in conjunction with the right equity release advice.
In fact, lifetime mortgages and pensioner mortgages where the repayment vehicle is the sale of the property are all essentially self-certification mortgages as they do not depend on the income of the applicant. The lending criteria for these pensioner mortgages are mainly the age of the applicant and the property valuation.
For instance, Stonehaven’s Interest Select Plan is an interest only lifetime mortgage. Clients can borrow a tax free lump sum against the value of their property. Interest can be repaid in full every month, and the principle amount of the loan is repaid when the property is sold. In fact, Stonehaven equity release will allow you to set up a partial repayment facility, if the full amount of interest is out of your budget range. Therefore, rather than all the interest being repaid, a contribution towards this amount is paid.
Therefore, rather than the balance remaining level for the duration of the lifetime interest only mortgage, there will be an element of roll-up interest, albeit significantly lower than if no repayments were made at all. This scenario is ideal for candidates who are risk averse and wish to control the future balance of these pensioner mortgages for their children’s inheritance.
Being a lifetime mortgage, there is no fixed term and the loan will continue indefinitely, which will be until sale of the property, which is usually on death or moving into long term care.
Self Cert 2013 Lending Criteria
The lending criteria for this loan are based on the age of the youngest applicant and the value of the property. Plans start at age 55 with a minimum property valuation to qualify of £70,000. The property can now be situated in England, Wales & mainland Scotland.
As long as applicants can make the minimum monthly repayment of £25, there is no question of requesting income. Stonehaven’s Interest Select plan can therefore be safely categorised as a self cert mortgage. Once the mortgage is set up however, the premiums cannot be amended, other than to stop interest payments completely and convert to a roll-up lifetime mortgage plan. This feature can be used as a safety net in case the mortgage becomes unaffordable in the future & effectively prevents a situation whereby normally repossession would ensue. Repossession for none payment of premiums cannot therefore occur with the Stonehaven Interest Select Plan.
Another feature that appeals in today’s economic climate is that of adverse credit or poor credit rating. These lifetime interest only mortgages have leniency towards this. They will permit arrears and defaults. Additionally, they will accept CCJ’s (County Court Judgements) upto a certain level as long as they are repaid from the proceeds and were for understandable reasons.
Like most equity release schemes, Stonehaven base the lending on a loan-to-value principle. Stonehaven have four tiers of loan-to-values and each comes with its own interest rate. In essence the more you borrow against the value of your house the higher the interest rate becomes. Conversely, the older you are the greater the amount that can be borrowed, hence it is important you receive independent equity release advice to assess which tiered rate of interest applies and is best for you.
For instance a male aged 65 with a property value of £250,000 could release the following with Stonehaven: -
| Product Name |
Maximum Borrowing
|
Interest Rate
|
Loan-to-Value
|
| Interest Select Lite |
£52,500
|
5.99%
|
21%
|
| Interest Select |
£60,000
|
6.08%
|
24%
|
| Interest Select Plus |
£67,500
|
6.17%
|
27%
|
| Interest Select Max |
£72,500
|
6.81%
|
29%
|
Who else provides self cert lifetime mortgages on an interest only basis?
Other pensioner mortgages are becoming increasingly available such as the more2Life Interest Choice Plan. This is another self-certification mortgages whereby no income checks are made by the lender. The mortgage is only repaid once the property is sold, which is when the client dies or moves into permanent care, or decides to make an early sale for any other reason.
Self-certification mortgages are not very common in the regular residential mortgage sector as lenders are reluctant and wary of lending without formal income checks under FCA (Financial Conduct Authority) regulations. Interest rates are often higher and the loan to value ratio may be lower than traditional mortgages. However, they have been designed with security in mind, something which interest only mortgages of the past haven’t been.
Many pensioner mortgages which rely on the property sale for repayment are essentially self-certification mortgages as they don’t carry out income checks for approval. For these mortgages the main relevant criteria are the age of the applicant which helps determine the expected term of the loan and the property valuation which helps determine the loan to value ratio.
For a full assessment of eligibility criteria with the range of interest only lifetime mortgages that Equity Release Supermarket have available, please call Freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk.
Further information on the range of self cert interest only lifetime mortgages can be found on our Compare Equity Release Deals page.
Tags: adverse credit, ccj's, county court judgements, equity release, equity release mortgage, equity release plan, equity release schemes, financial conduct authority, interest only lifetime mortgage, interest only mortgage, lifetime interest only mortgage, lifetime mortgage, lifetime mortgage interest only, lifetime mortgages, loan-to-value, more2life, more2Life Interest Choice Plan, pensioner mortgages, Roll-up lifetime mortgage plan, self cert, self certification, Stonehaven, Stonehaven equity release, Stonehaven interest select, Stonehaven Interest Select lite
Posted in Interest only Lifetime Mortgages, Interest Only Mortgage, Retirement Mortgage, Stonehaven Equity Release | Comments Off
Thursday, March 28th, 2013
It’s been a long time coming, as the song goes but Scotland is at last catching up with the rest of the UK when it comes to the uptake of equity release schemes.
The reason the Scottish equity release market has not grown as quickly in the past as the rest of the UK is that a lot of Scottish homeowners have very close family ties and traditions and want to leave their property and estate as inheritance for their families and have been happy in the past to either down size or make do.
One of the common objections to equity release in Scotland was the loss of inheritance for the family. However, with the new range of equity release mortgages this loss of potential inheritance can be resigned to the past.
In the last year alone, many changes have taken place within the equity release market. All equity release schemes Equity Release Supermarket recommend still have the ‘SHIP’ standard – a ‘no-negative equity guarantee’ built into them. SHIP has now come under the auspices of the Equity Release Council in maintaining this important protection feature.
Latest equity release schemes
In addition to the no negative equity guarantee, new innovative plans have been introduced with options such as the Inheritance Protection Guarantee, where a percentage of the property value can be ring fenced to protect the family inheritance. This provides peace of mind in protecting a fixed final amount of the property value to be left as an inheritance for the family at the end of the day.
Hodge Lifetime have recently brought out a roll-up lifetime mortgage plan where they will allow up to 10% of the capital borrowed to be repaid each year by cheque, again a way to protect the loan from the effects of the roll up of interest. Not only can the interest be repaid, but additionally a proportion of the capital by paying the maximum 10%pa in repayments. Effectively this renders the Hodge Lifetime scheme a capital & repayment equity release mortgage!
Stonehaven have also moved into Scotland with an interest only lifetime mortgage. The Stonehaven Interest Select plans operate on an interest only basis with a balance that remains constant throughout the mortgage term. This continues so as long as the monthly payments are made, resulting in a loan that will never be more than the initial amount at the start of the plan.
These Stonehaven equity release schemes in Scotland are eventually repaid from the sale of the property. The interest rates are currently the lowest we have seen from Stonehaven since they started over 6 years ago at just 5.99%.
Scottish interest only mortgage enquiries
From the number of interest only lifetime mortgage enquiries Equity Release Supermarket now receive in Scotland, many people have also noticed this, and taken advantage of these low interest rates which are then fixed for life. Providing security, not only for inheritance purposes, but also in fixed lifetime monthly payments is something that the over 55’s in Scotland are looking for.
Equity release plans are not only weathering the economic downturn, they are offering a much needed lifeline to homeowners in this time of austerity. It may not be the best option for everyone in Scotland and by seeking independent financial advice it is important you also consider any alternatives beforehand.
Nevertheless, if you are sitting with a lot of equity in your home and you are over 55 years of age why deny yourself a good lifestyle in retirement, when unlocking some of the equity in the home could help make life a lot more comfortable for you, or your loved ones.
In this growing equity release market with new providers and new plans coming along it is more important than ever to get the correct advice from a specialist dealing in equity release such as the Equity Release Supermarket.
If you wish to find out more about any of the plans mentioned then do not hesitate in making contact with the author of this article – Nigel Hall who would be more than happy to help.
To request a free initial consultation on the range of equity release schemes available in Scotland call Nigel Hall on 07553 408010 or email nigel@equityreleasesupermarket.co.uk
Tags: equity release, Equity Release Adviser, equity release schemes, Equity release Scotland, Equity Release Supermarket, Hodge Lifetime, interest only lifetime mortgage, interest only mortgage, lifetime mortgage, lifetime mortgages, no negative equity guarantee, SHIP, Stonehaven, Stonehaven equity release, Stonehaven interest select
Posted in Equity Release, Hodge Lifetime, Interest only Lifetime Mortgages, Stonehaven Equity Release | No Comments »
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.
Tags: Barry Adnams, drawdown equity release, drawdown lifetime mortgage, equity release, Equity Release Adviser, equity release mortgage, equity release schemes, Equity Release Supermarket, Halifax Retirement Home Plan, Hodge Lifetime, home reversion, Home reversion plans, Home Reversion schemes, interest only lifetime mortgage, lifetime mortgage, lifetime mortgage schemes, more2life, Retirement Plus, roll-up equity release, roll-up lifetime mortgages, Stonehaven equity release
Posted in Drawdown LifetIme Mortgage, Equity Release, Interest only Lifetime Mortgages, Stonehaven Equity Release | No Comments »
Thursday, March 14th, 2013
Suddenly you’re approaching retirement and you’re left wondering – ‘where did the years go?’
Realisation is dawning on you all too clearly that from hereon in you will be reliant on a fixed income, your savings may start diminishing and your future anticipated costs are anything but guaranteed!
The question therefore is how do you protect yourself & family from those unforeseen costs that might suddenly arise? Well, there’s good news and bad news, and also a possible solution….so please read on.
Firstly, the good news.
The population of England and Wales is living longer than before and the most common age at death in 2010 was 85 for men and 89 for women, compared to 77 and 84 respectively in 1980. Thirty years ago there were 2,280 centenarians, today the figure is 11,610. Indeed this trend is set to continue and we are entering the age of the super centenarian (110). That’s the good news!
Now, for the bad news.
The basic state pension is currently £107.45 per week increased each April by the highest of either the average growth in wages, the Consumer Price Index or 2.5%. Yes, the new flat rate of pension of £144 per week will be payable from April 2017, but not for those already drawing the state pension.
And what happens to a surviving spouse or partner when they are widowed? Just the basic state pension and possibly the bereavement allowance up to £106 per week for the first year depending upon National Insurance contributions and the age of your spouse on death. Added to this is possibly a reduced private or occupational pension for the surviving spouse (usually the widow) if you are lucky enough to have contributed to a pension plan during your working lives.
So how will you cope with the cost of home improvements, car repairs, increasing utility bills, let alone any care costs? And how do you provide for the financial security of your spouse after you have gone? A widow could easily have in excess of a decade to support herself on a reduced income.
The Possible Solution.
This article might have given you the impression that my job is to go around depressing people, but in reality my job is to ensure that my clients are fully aware of how they can use their major asset – their home, as a form of insurance against future financial difficulties.
Most people are familiar with a mortgage. A Lifetime Mortgage applies the same principles, however instead of running for a fixed term, will actually run for the rest of your life. It therefore allows you to borrow until the remaining owner dies or goes permanently in to care.
Types of Lifetime Mortgage
The most common equity release plan is on the roll-up lifetime mortgage basis, whereby NO monthly interest payments are required and the full repayment of the mortgage is made from the sale of the home on the last survivor’s death.
However, with the latest innovation in the equity release market, more lenders will now allow you to pay off the full, or even partial monthly interest payments if you want to keep the eventual loan lower than would otherwise have been on a roll-up basis. The interest only lifetime mortgage provides a flexible option to carry into retirement and can now be obtained on a drawdown basis with more2life.
All these Lifetime Mortgages are portable if you want to move house in the future and, if leaving an inheritance is important to you, you can protect a percentage of the eventual sale proceeds of your home. All these lifetime mortgages provide a guarantee that you would never leave a debt to anyone by way of ALL lenders providing a ‘no negative equity guarantee’.
The Drawdown Lifetime Mortgage
The major attraction with a Lifetime Mortgage is the “drawdown” option. This feature will provide you with a lifetime borrowing limit but does not commit you to borrowing the whole facility immediately. The drawdown lifetime mortgage was therefore borne with flexibility in mind.
Before drawdown schemes became available from the likes of Prudential, Just Retirement & Hodge Lifetime, customers only had the lump sum option. Given this cash amount needed was to last them at least 3-5 years, many decided to opt for a larger amount than would otherwise have been necessary. Languishing in a bank account & receiving less interest than paying on the equity release scheme was not best advice. Hence, the introduction of the drawdown equity release plan enabling retirees to take a lower initial sum, but taking extra funds in the future whenever they required.
As an example, a husband and wife aged 78 and 72 with a property valued at £250,000 could have a maximum loan limit of £52,500 but only start with the minimum loan of £10,000.
Interest would only accrue on the initial £10,000 loan and the balance of £42,500 would be readily accessible if they needed it and could be taken in stages. This is an excellent way of providing security for future unforeseen expenditure and would be available for the surviving spouse to use should he or she be alone and on a reduced income.
In should be noted that certain equity release companies cannot guarantee the drawdown reserve facility for life. Companies such as Aviva do retain the right to withdraw the drawdown facility under certain major events which would render them unable to fulfil their drawdown requirements. However, there are still companies available that will guarantee the reserve facility. By opting for the guarantee, you may pay a slightly higher interest rate, nevertheless you may feel more secure knowing these funds are available for a minimum of 15 years ahead. With living in such uncertain times, this could be a blessing.
This ”Lifetime Mortgage Drawdown” option, which only commits you to borrowing a minimum of £10,000, is sensible insurance for the future and if you would like to discuss the matter in more detail then please do contact myself – Mike Vicary on 07795 195302 or email mike@equityreleasesupermarket.co.uk
Tags: Aviva, bereavement allowance, centenarians, drawdown, drawdown basis, drawdown equity release, drawdown lifetime mortgage, drawdown schemes, equity release, equity release plans, equity release schemes, fixed income, Hodge Lifetime, interest only lifetime mortgage, Just Retirement, lifetime mortgage, lump sum, more2life, Prudential, roll-up lifetime mortgage basis
Posted in Drawdown LifetIme Mortgage, Equity Release | No Comments »
Wednesday, March 13th, 2013
 The improved confidence in the equity release sector has been borne by the industry providing accessibility to flexible and competitive products. Additionally, by introducing clarity, regulation and new online tools such as equity release UK calculators, customers can now partake in their own means of research to obtain information. These factors combined have seen a market spike in equity release enquiries, with an unsurpassed level of interest than ever before.
This openness about equity release has allayed many fears. The negative influences of the past have been quashed when lifetime mortgage schemes & home reversion plans weren’t clearly understood by all. Although these products were fully regulated, they had never been embraced as a source of genuine retirement provision for the over 55’s.
Granted further innovation has been effected in recent times by companies such as Hodge Lifetime with their flexible repayment option, but it has only taken until then for confidence to take hold. Additionally, Stonehaven have gone against the grain with its range of interest only lifetime mortgage plans but this has been some time in the making.
This has all come about by the equity release lenders playing a leading part.
However, recognition must go to the various equity release brokers who have introduced their own means of building confidence in the equity release process. The brokerage sector has also adapted by devising tools and applications to help customers understand different products and find out how they would work in their personal circumstances. One of the most significant of these applications is the equity release calculator. Let’s look at equity release UK calculators and how they have made things much easier for the customer.
Until a few years ago, that is before the advent of free and instant equity release UK calculators, customers who wanted to find out the maximum amount they could potentially release given their age(s) and property valuation, had to literally go from door to door to each provider for an answer. This was an awfully tedious process simply to obtain the answer to a very basic question.
But then some providers and independent companies like Equity Release Supermarket started to offer the online equity release calculator. The idea was simple – users had to enter some basic information, including age and property value, so that the calculator could go through different equity release plans to find out the maximum potential release for the given age and valuation.
This not only made it much easier for customers to understand how equity release plans could work for their particular situation, but also benefitted providers by making the process easier and attracting more customers. At the same time, companies like Equity Release Supermarket that offer independent advice could inform customers quickly and efficiently through this simple free online service. Confidence was starting to return.
With the latest technology, retirees can now browse on their laptops, Ipad’s, Iphone’s, androids, Mac’s or the trusted desktop PC within the comfort of their own home and gather all the information they need at their fingertips. With the biggest growth area of the internet being the ‘silver surfers’ what better way to encourage online growth for the over 55’s and at the same time save hours and cost on the telephone.
Today, equity release UK calculators are commonly available, and most providers and advice companies have their own calculator on their website. However, beware of those who purport to provide a calculation, but merely gather personal data for marketing purposes. A true online equity release or lifetime mortgage calculator won’t need to hide any maximum calculation results for their own gain.
Upfront and personal, as they say, should be the key to a quality equity release calculator!
Taking the calculations one step further are some independent equity release information companies, for instance CompareEquityRelease.com who now offer not only the standard terms, but also a calculation free of charge, based on an impaired life. This means that should any potential applicant suffer from any qualifying illnesses, then a greater maximum lump sum could be expected. The enhanced lifetime mortgage calculator has therefore also evolved.
Furthermore, with the introduction of the interest only lifetime mortgage deals, new interest only lifetime mortgage calculators have been developed. Therefore, people looking to repay some or all of the interest charged can now benefit for the latest tools on the market to ascertain how much these schemes could possible lend. Technology evidently has had its part to play in the development of breeding confidence within the equity release market.
These new breed of equity release advice centres do seem to offer free, transparent and user friendly equity release UK calculators that show an unbiased & independent picture of the maximum equity release amount you could release from your property, healthy or otherwise.
To calculate the maximum equity release currently available based on your own personal situation click here or call 0800 678 5159 to speak to an independent equity release adviser.
Tags: CompareEquityRelease.com, enhanced lifetime mortgage calculator, equity release, Equity Release Adviser, equity release calculation, Equity release calculator, equity release calculator UK, equity release plans, Equity Release Supermarket, equity release UK calculators, Hodge Lifetime, home reversion, interest only lifetime mortgage, interest only lifetime mortgage calculators, interest only lifetime mortgage deals, silver surfers, Stonehaven
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Tuesday, February 26th, 2013
With growing interest in the Hodge Lifetime Flexible Mortgage, Equity Release Supermarket are pleased to announce a new FREE valuation deal for this market leading equity release product.
For all new applications from 26th February 2013, Equity Release Supermarket can offer customers taking out a new Hodge Lifetime Mortgage plan a FREE valuation on properties worth upto £350,000. For properties above the £350,000 limit will just need to cover the differential valuation cost.
Hodge Lifetime has taken the lifetime mortgage market by storm with its forward thinking products catering for the changing needs of the over 60′s retired population.
The introduction of the Flexible Lifetime Mortgage Plan in 2012, saw two new features arrive that had never set foot in an industry previously devoured of new ideas & future planning tools.
Details of these features are as follows: -
- Downsizing Protection Option – allows anyone holding a Hodge Lifetime Plan to repay their lifetime mortgage with NO early repayment charges, providing they move house & downsize at the same time after 5 years of starting the plan. Also favourably for anyone that downsizes WITHIN 5 years - Hodge Lifetime will only charge a penalty on a decreasing basis of 5%,4%,3%,2% & 1% over the first 5 years of the plan term. These rates are the best the equity release industry has to offer currently & helps those who have no intentions of moving now, but may do so in the future for various reasons.
- Flexible Repayment Option – first came the roll-up lifetime mortgage, then interest only lifetime mortgages where the interest could be repaid – now the Hodge Lifetime Flexible repayment option. Hodge now offer the facility to repay upto 10% of the original capital borrowed each year with NO penalty. Therefore, if you’re looking to cap the build up of interest with ad-hoc repayments, or even wish to reduce the equity release mortgage balance, then you can now do so. The repayments can be made anytime you like after the initial period of 12 months from the start date of the plan.
Hodge now have a range of lifetime mortgage plans that can be taken on a single lump sum or drawdown equity release basis with flexibility being key to their portfolio of products. With interest rates starting from 5.74% monthly (6.20% APR) and fixed for life, the present time is the best time the equity release market has ever seen for interest rates.
If you are looking for an equity release scheme whereby you can afford to make repayments of capital &/or interest in order to protect you children’s inheritance, then the Hodge Flexible Lifetime Mortgage scheme should be of interest.
For further information or to request a Hodge quotation, please visit our dedicated Hodge Lifetime deals page by clicking here.
Alternatively, you can speak to one of our Hodge specialists at Equity Release Supermarket by calling our equity release advice line on 0800 678 5159.
Tags: downsizing repayment option, drawdown lifetime mortgage, early repayment charges, equity release plan, equity release quotation, Equity Release Supermarket, flexible lifetime mortgage, flexible repayment option, Hodge Lifetime, Hodge Lifetime Flexible Drawdown Plan, interest only lifetime mortgage, lifetime mortgage, NO early repayment charges, roll-up lifetime mortgages
Posted in Equity Release, Latest Deals, Latest News | No Comments »
Friday, February 15th, 2013
Are you one of those lifetime mortgage borrowers who were originally with Northern Rock but, since March 2012, have seen the ownership of your mortgage transferred to Papilio UK Equity Release Mortgages Ltd, a subsidiary of J P Morgan?
If so, do you realise that you are probably paying interest at more than 1.3% higher than rates charged by some other lifetime mortgage lenders? And Papilio UK Equity Release no longer allows you to take further loans from the equity in your home, an option Northern Rock originally considered!
If so, you could make considerable savings by the simple process of remortgaging to another regulated lifetime mortgage lender. With equity release schemes now in the prime of their life, now has never been a better time anyway to consider an equity release remortgage.
For example, assuming you remortgaged an equity release balance of £50,000 onto a fixed rate of 5.60% instead of the 6.99% currently charged by Papilio UK, after 10 years you could save yourselves, and your beneficiaries approximately £12,000 in interest charges.
Competitiveness & Flexibility of New Plans
Depending upon the value of your home, many new lenders will allow you access to further loans either immediately, or by providing a cash reserve to draw upon at your discretion. Drawdown lifetime mortgages now account for the majority of equity release schemes taken out and provide best advice for those retirees that only need a smaller upfront lump sum, but may require additional cash in the future.
Modern day lifetime mortgage schemes have surpassed the rigid plans of old. Since Northern Rock (aka Papilio) withdrew providing equity release mortgages the market has seen diversification unseen before. With the advent of interest only lifetime mortgage schemes, we have experience of people actually switching from old roll-up lifetime mortgage plans. Where they feel the balance has reached a point whereby they no longer want it to increase any further, they can switch to an interest only lifetime mortgage. This option may never have been available in the past.
A free initial comparison offer
Should you have a Papilio UK equity release mortgage then you will undoubtedly be paying over the odds on your interest rate. Many people contact us who hold an existing Northern Rock mortgage and ask for the Papilio UK equity release mortgages ltd telephone number to contact them. Equity Release Supermarket has advisers that are experienced in analysing whether it would be in one’s interest to switch equity release schemes.
As acknowledged specialists, Equity Release Supermarket has given objective advice to increasing numbers of applicants seeking to remortgage from Papilio UK and we have guided them painlessly through the remortgage process.
The switch analysis will take into account the set up costs of the proposed new equity release mortgage. These costs can be lower than anticipated, especially as J P Morgan/Papilio equity release have indicated in the past that they will waive early repayment charges.
Allied to the current practice of many lenders offering free valuations and paying “cashbacks” of upto £1000, then equity release companies such as Aviva can offer a new safe haven for your mortgage. By providing a smooth transition in the equity release application process you can seamlessly transfer you Papilio (Northern Rock) equity release plan to a more competitive rate benefitting yourself & beneficiaries in the long run. Aviva are currently offering rates to Equity Release Supermarket customers starting at 5.57% annual.
If you want to join those who have successfully made the transition then please do contact Mike Vicary of Equity Release Supermarket, on 07795 195302 for a free initial consultation.
Tags: Aviva, drawdown lifetime mortgage, equity release, Equity release interest rates, equity release mortgage, equity release plan, equity release schemes, Equity Release Supermarket, interest only lifetime mortgage, lifetime mortgage, lifetime mortgage schemes, papilio contact, papilio equity release, papilio UK equity release, Papilio UK Equity Release Mortgages, roll-up lifetime mortgages
Posted in Equity Release, Remortgage Equity Release | No Comments »
Sunday, February 10th, 2013
With lifetime mortgage schemes becoming increasingly commonplace and new borrowers on the increase, we look at how existing equity release customers could still benefit by reviewing and possibly remortgaging their existing plans.
Today, the equity release market has expanded to include a variety of different products. At the same time, interest rates today also tend to be more favourable to those a few years back. In light of this, those with existing lifetime mortgage schemes need to weigh-up the pros and cons of shopping around and possibly swapping or switching lifetime mortgage schemes.
Older lifetime mortgage schemes from the likes of Norwich Union, Northern Rock, Mortgage Express and Portman Building Society could have equity release interest rates of 8% and upwards if taken out in the halcyon days. However, times and products have all changed, and for those who thought their equity release was a ‘one-off’ event, could never have been more mistaken.
Like any conventional mortgage, equity release plans can also be moved to a new provider should the terms be more favourable. There could be a number of reasons to remortgage an older equity release scheme: -
- Lower interest rate
- Further borrowings
- Swap to a more flexible plan
Looking at these individually, we can explain the circumstances why many more people are now remortgaging their old lifetime mortgage plans.
Lower Interest Rate
The major factor to the expense of lifetime mortgages is the interest rate. Due to the annual compounding effect of the interest, then by cropping 1-2% off the current interest rate can literally save £1000’s over the remainder of the planholders life. This would be most beneficial for the children who will end up with more net equity available upon the death or their parents moving into long term care.
With interest rates from Aviva now as low as 5.57%, by conducting a lifetime remortgage even from an old Aviva capital release plan, would be possible & cost effective. With older lifetime mortgage rates being as high as 8%, the amount that could be saved in interest would be enormous over a long enough period of time.
Further Borrowings
It may have been many years since the original tranche of tax free cash was taken and as we know, money these days doesn’t go that far. Therefore, existing lifetime mortgage policyholders may have found this money they took out years ago has dwindled away and are maybe considering their next steps again.
Don’t worry because you have two options – return to your current lender for a lifetime mortgage further advance, or failing that, consider a completely new lifetime mortgage company, if their terms are favourable.
For instance, if your health has taken a turn for the worse then consider an enhanced lifetime mortgage scheme from the likes of Aviva, Partnership or more2life. Having ailments such as high blood pressure, diabetes, heart trouble or even being a smoker can influence a lifetime mortgage terms and conditions. If any of these symptoms exist, then the aforementioned lenders can offer a greater lumps sum than normal; exceptional should you now require maximum fund availability.
Swap to a more flexible plan
Lifetime mortgage plans of old were pretty inflexible, being a matter of taking a one-off lump sum and then sitting back thinking ‘job done’. Today’s equity release schemes have been designed with flexibility in mind.
Whereas previously only a single lump was on offer, nowadays with the advent of drawdown lifetime mortgage schemes, you can take a smaller initial amount & leave the surplus in reserve for later. This course of action has its benefits as you will only be charged interest on the capital withdrawn, not on the funds left in the reserve facility. A drawdown lifetime mortgage therefore can provide a cash reserve facility for additional borrowings required in the future. This would prevent you from having the expense of moving schemes again in the future.
A more recent development in the field of lifetime mortgages has been the ability to repay the interest which has not been a function that has previously been available. The interest only lifetime mortgage has seen a boom in sales recently now that retirees can protect their children’s inheritance by making monthly repayments of interest. Therefore, even if you have been on a roll-up scheme, but feel ‘enough is enough’ with the balance reaching its peak to feel comfortable with, you could switch to an interest only lifetime mortgage plan & consolidate the balance.
Which lifetime mortgage to swap to
Lifetime mortgage schemes essentially allow you to release some of the equity tied up in your home. The main types of lifetime mortgage schemes are the drawdown lifetime mortgage, roll-up, enhanced and the interest only lifetime mortgage. Lifetime mortgages are loans which need to be repaid once the property is sold.
Clearly, when it comes to equity release schemes, the lower the interest rate on the loan the more you save over the longer term. If you already have an existing equity release loan on your property, switching to a scheme with better interest rates may save you money. However, switching to an equity release scheme with a lower and better interest rate may not necessarily mean that you end up saving money.
It is important to find out whether your existing equity release lender has any early repayment charges in place. If you are liable to pay any early repayment penalties, these may cancel out any saving you make by switching. To find out whether switching to a scheme with better interest rates really saves you money, it is important to consider any early repayment charges in your calculations.
Equity release schemes have come a long way since they were first introduced to the market. Today, a much wider variety of products with various bells and whistles can be found. Switching to a more current plan may therefore be beneficial not just from the point of view of interest rates but for flexibility and new features as well.
For a free assessment of whether a lifetime remortgage could be beneficial then contact Equity Release Supermarket. With experienced lifetime mortgage advisers attuned to the complexities of swapping plans, they can analyse whether it would be in your best interests, or not to change equity release plans.
Call us on freephone 0800 678 5159 today for you free lifetime remortgage assessment or email mark@equityreleasesupermarket.co.uk
Tags: Aviva, Aviva capital release plan, drawdown lifetime mortgage, early repayment charges, equity release, equity release schemes, Equity Release Supermarket, interest only lifetime mortgage, lifetime mortgage, lifetime mortgage schemes, Mortgage Express, Northern Rock, Norwich Union, Portman Building Society, Prudential
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Monday, January 14th, 2013
Following on from the last article entitled – ‘Will Equity Release Providers Accept Repayments of Interest and/or Capital?‘ we now look at the three companies concerned & their equity release plans in greater detail by covering the features these schemes have brought to the marketplace.
Hodge Lifetime
Hodge Lifetime returned to the equity release market in 2012 with a truly innovative lifetime mortgage product which has since been improved again to include a new drawdown facility.
This lump sum lifetime mortgage is unique in that it includes a 10% flexible repayment option with absolutely no early repayment charges under certain circumstances upon downsizing.
Hodge Lifetime Allow 10% Overpayments
The Hodge Lifetime Lump Sum Lifetime Mortgage is basically a traditional roll-up lifetime mortgage scheme in that it allows you to borrow a lump sum with a fixed interest rate for life. The flexible repayment option allows you to make a repayment of up to 10% of the original amount borrowed, without incurring any penalties or charges. Since there are no monthly commitments, repayment is flexible and you are free to pay as and when you choose, once the first 12 months has elapsed.
These payments are permitted on an irregular basis with a maximum of two repayments per annum. This would ideally suit people who want to control the balance of the plan in the future and in particular want to keep a level balance, or even repay some of the capital by taking advantage of the maximum 10% overpayment rule.
The effect of making these 10% overpayments
The Hodge Lifetime Flexible Repayment Option Calculator (accessible via their website) shows the effect making the maximum 10%pa repayments has on borrowing £20,000 at their current rate of 5.83% monthly (6.2% APR).
Over a 10 year period, by repaying £2,000pa back to Hodge Lifetime (10% of capital amount borrowed), it would reduce the balance by almost half to £11,340. Compare this to if NO repayments were made at all and the balance would have risen to £35,778; a significant difference of £24,438!
Hodge also have NO early repayment charges…
A second feature that is proving extremely popular with Equity Release Supermarket customers is the favourable early repayment charges that Hodge Lifetime offer.
The plan is geared towards those clients who maybe considering downsizing in the future. Again this has always been a stumbling block for many who see equity release schemes as a solution, however have been put off by the potential size of some of the lenders early repayment charges if repaid early. With some lenders such as Aviva, these penalties can be upto a maximum of 25% of the amount borrowed.
Hodge Lifetime make downsizing a more attainable option by applying a sliding scale of early repayment charges (ERC’s) over the first 5 years. These ERCs descend from 5, 4, 3, 2, 1 over the first five years of downsizing. There are no early repayment charges if you downsize after 5 years.
The starting age for the Flexible Repayment Lump Sum Lifetime Mortgage is 60, and the minimum property value is £100,000 with a minimum initial borrowing of £20,000. Hodge Lifetime is a member of the Equity Release Council and all their plans follow SHIP Guidelines. Click here to request a Hodge Lifetime quote.
Stonehaven
Stonehaven launched their Interest Select Plans over 7 years ago and were the first of the current crop of equity release companies to offer an interest only lifetime mortgage option.
Stonehaven have been important addition to the equity release range of companies as they created the original concept of this type of interest only lifetime product, which now is starting to make in-roads into the over 55’s mortgage market. With features unseen before in this sector of the equity release market, Stonehaven’s Interest Select range of products have been launched with the changing needs of the customer in mind.
Stonehaven help protect your inheritance
Like the other two flexible repayment plans, this plan is designed to suit those who wish to have more control over repayment and to protect their inheritance.
The Stonehaven Interest Select plans include the Interest Select Lite, Interest Select Plus, Interest Select and the Interest Select Max. Each plan has its own lending limits, or loan-to-value. The greater the borrowings, the higher the interest rate becomes.
You can select your monthly payment
All these plans offer a disciplined monthly repayment plan that maintains a level balance throughout the term of the contract. The minimum amount that needs to be repaid monthly is only £25. The client can actually elect how much of the total interest charged they wish to repay. It can be anywhere between the total amount of interest charged each month, down to this £25pm level. The interest rate charged depends on which interest select option you choose.
If only partial repayment is made then the Interest Select loans have two parts – the interest payment part, and the interest roll up part. The part of the loan on which you make interest repayments is the interest payment part. If you are not paying all of the interest, then the roll up part is included and this element will accrue over time depending on how much of the total payment is being made.
Stonehaven give you the option from the outset to choose how long you wish to make these monthly payments for. Most people will select over their lifetime. However, if there is to be a significant event arising in the future, then you can elect to fix a term for the payments. The interest rate is fixed for the term you will be making interest payments, but cannot extend it later.
Protection against repossession
Stonehaven also include a protection feature that is unique to the equity release market. In the future, should you ever fall upon difficult times, then the monthly payments can always be stopped and the plan is automatically converted into a roll-up lifetime mortgage. No further repayments are then requested. There are no actual penalties for this, however if this has been done without prior notification then Stonehaven will increase the future interest rate by just 0.2%
What are the Stonehaven Interest Rates?
The monthly rates of interest for the Lite, Select, Plus and Max options vary, and are currently as follows –
Interest Select Lite – 5.99%
Interest Select – 6.08%
Interest Select Plus – 6.17%
Interest Select Max – 6.81%
The selection of each product is determined by the loan-to-value of the application. The lower the loan-to-value the better the interest rate offered by Stonehaven is.
An example of borrowing £20,000 on their interest select lite plan would result in monthly payments of £103.08 (6.4% APR).
Stonehaven are also a member of the Equity Release Council and all their plans follow SHIP Guidelines. Their plans start at a lower age of 55 with a minimum property valuation of £70,000 and a minimum initial release of just £10,000. Click this link to request a Stonehaven Interest Select quote.
more2life
more2life which is part owned by Key Retirement Solutions, has recently launched their Interest Choice Plan with a fixed lifetime interest rate.
This is a flexible drawdown interest only lifetime equity release plan, and allows applicants the option to repay between upto 100% of the monthly interest. The minimum amount that needs to be repaid is £25. The drawdown facility however, is provided only on a roll-up basis, not an interest only basis.
Plans start at age 60, with a minimum property value of £70,000 in England & Wales and with a minimum initial release of just £10,000.
If you wish to request a quote from more2life follow this link.
For additional information on any of these interest only lifetime mortgage schemes call freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk
Tags: Aviva, early repayment charges, equity release, Equity release calculator, equity release schemes, Equity Release Supermarket, Hodge lflexible lump sum lifetime mortgage, Hodge Lifetime, Hodge lifetime flexible repayment option calculator, interest choice plan, interest only lifetime mortgage, interest only mortgage, lifetime mortgage, lifetime mortgages, more2life, NO early repayment charge, Stonehaven, Stonehaven equity release, Stonehaven interest select
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