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Posts Tagged ‘Interest Only Mortgage’

Stonehaven Equity Release Schemes – Now Available In Scotland

Friday, April 20th, 2012

 

News today in the equity release sector, is that Stonehaven’s range of equity release schemes are now available in mainland Scotland.

 

Stonehaven have been providing equity release mortgages in England and Wales since August 2006. However, due to strong demand for its range of interest only lifetime mortgages entitled ‘Interest Select’ plans, they have now incorporated the Scottish legal process into their equity release application. Therefore, with previous limited availability in Scotland for interest only lifetime mortgages, this should come as a great relief for many over 55′s in Scotland needing financial support for their retirement.

 

Why Has the Stonehaven Interest Select Plan Become So Popular?

Opinion is split whenever deciding to take a release of equity from a retiree’s property. Gone are the days when a one-off tax free lump sum was the only option. With the increasing flexibility in the market such as the drawdown lifetime mortgage & new enhanced equity release schemes, lenders are looking more towards ‘niche’ equity release plans.

 

Having captured the interest only mortgage market for the over 55′s, Stonehaven who were originally funded by Santander have come, gone, & are now back with there revised range of Interest Select Options & Lump Sum Plans. With healthy lending for 2012 & with the backing of a large mutual enhanced annuities provider, Stonehaven are now broadening their horizons & diversifying into Scotland.

 

People over the age of 55 are looking at different means of releasing equity from their property. Not only that, there are different financial attitudes towards their property & ultimate inheritance. This has increased awareness of the impact that roll-up equity release schemes have had on people’s inheritance on schemes previously taken out. Due to the compounding effect of the interest on roll-up schemes, many retirees have turned up their noses to conventional equity release mortgages.

 

This is where Stonehaven as an equity release company has benefitted. Possibly due somewhat to the demise of the Halifax Retirement Home Plan, Equity Release Supermarket advisers have seen a significant rise in enquiries for an interest only lifetime mortgage. There is a strong demand for an interest only mortgage for the over 55′s, and this signifies the fact that a majority of pensioners still have income to support a retirement mortgage. This age group has many advantages to prospective mortgage lenders, however for reasons discussed later in this article, they are significantly overlooked.

 

Why have Mortgages for Pensioners been Overlooked?

With a large proportion of equity in their properties, hence low loan-to-values, usually a good credit history & repayment record, the over 55′s are favourable for a mortgage where interest only repayment is only required. The Stonehaven range of Interest Select Plans have given this situation much thought, not only to the positive aspects, but also to the negatives in particular if someone encounters financial difficulties during the term of their plan. They have a specific ‘safety net’ in place that has the option that upon missing 3 monthly payments, or the planholder opts not to make anymore monthly payments, the plan can converted over to a roll-up lifetime mortgage. This removes any concern over incurring a poor credit record & eliminates any risk of repossession.

In addition the Protected Equity guarantee is available which can ensure that your beneficiaries receive a percentage of the final sale value of the property. Peace of mind for sure.

 

The Interest Only Mortgage Ticking ‘Timebomb’

Previous articles have discussed the FSA (Financial Services Authority) crackdown on mortgage lenders offering interest only deals. Correctly, this has made pre-retirement applications for interest only mortgages more stringent & more capital & repayment mortgages are now taken as a result.

However, this sweeping clampdown has also impacted on the post-retirement mortgage market. It seems the old adage ‘tarred with the same brush’ has been applied to the whole demographic mortgage population. It shouldn’t, as a different set of rules & principles apply to mortgages in retirement. Retirement mortgages should be made more available on an interest only or capital & repayment basis. There should be more understanding from the powers that be that the needs of pensioners are significantly different than those pre-retirement.

 

Retirees do not necessarily need, or want the eventual repayment of capital. Considering the FSA are regulating & accepting the principle of roll-up equity release schemes, then why the reluctance for interest only mortgages in retirement?

Exceptions should be made & this sector of the mortgage market be subject to a further review.

 

Nevertheless, one company who has received FSA & SHIP (Safe Home Income Plan) approval for its interest only retirement mortgage is Stonehaven. With foresight of circumstances to come & which were conceived over a decade ago, Stonehaven are currently, & will be, reeping the benefits.

Endowment shortfalls are now becoming more evident & with Aviva only expecting 1% of its low cost endowment plans to meet their targets in 2012, then we can see why mortgages into retirement are going to become a common occurrence. In addition for many reasons people are approaching retirement with a mortgage and no form of repayment. With lenders such as Santander, Woolwich, Halifax & Nationwide not extending terms for those reaching the end of their interest only mortgage terms, a solution for their plight needs to be found.

 

Stonehaven Solutions

Well, this is where Stonehaven see’s how their interest only lifetime mortgage can resolve such issues. Dependent on the size of the mortgage & property valuation, Stonehaven maybe be able to assist. By using the Stonehaven equity release calculator, one can ascertain the maximum amount they could lend & hopefully assist in remortgaging from the previous lender. This would be the ideal situation, but not always the best. Alternatives should be considered such as downsizing, using savings or getting assistance from family & friends, however this may not be in the best interests of the mortgagors & family ties may over rule such as decision.

 

If Stonehaven can raise sufficient equity on your property to repay the mortgage, it would mean transferring onto a lifetime mortgage product which then eliminates any concerns over repayment in the future. In fact repayment is only required upon 2nd death or moving into long term care. The only obligation during the term is to maintain interest only payments which will remain EXACTLY the same for life due to the lifetime fixed interest rate which currently start from 6.08% (6.40% typical APR).

 

Therefore, someone borrowing £25,000 on the Stonehaven Interest Select Lite plan would find their monthly payments at just £119.96pm fixed for life!

 

Next Steps

To discuss your interest only lifetime mortgage options & alternatives as to whether the Stonehaven equity release plans are suitable to meet your requirements, contact your local independent adviser at Equity Release Supermarket by calling  freephone 0800 678 5159.

 

Additionally, visit the Equity Release Supermarket website & read the dedicated Stonehaven Interest Select page detailing the product features & current rates available. Here you can request a Stonehaven quote & gain a greater understanding of all Stonehaven’s schemes.

 

EQUITY RELEASE SUPERMARKET RATE ALERT…Stonehaven Reduce Rates

Friday, February 10th, 2012

Just as you thought things couldn’t get much better with equity release interest rates, Stonehaven have joined the latest interest rate war by announcing the lowest annual interest rate yet of just 5.89%.

 

It looks like Aviva & Just Retirement have stirred up a hornets nest within the equity release market.

 

Stonehaven equity release have stated they will be reducing their lifetime mortgage interest rates across their whole product range with effect from Monday 13th February 2012. With their benchmark gilt rate now falling to just over 2% they have reduced their interest rates accordingly & maybe more reductions to follow?

 

The greatest reduction has been on their interest only lifetime mortgage product – Interest Select Max which offers the highest loan-to-value. This has been reduced from 7.57% down to 7.10% monthly.

 

For comparison purposes, on a £50,000 Stonehaven Interest Select Max mortgage, the monthly payments would have reduced from £315pm down to £296pm. A saving of almost £20pm.

 

However, the greatest reduction is evident the lump sum product range & it seems Stonehaven are now trying to capture more of the lump sum equity release market. Hence their slightly aggressive stance in lowering below Aviva’s 5.92% rate announced only the other day.

 

Their niche interest only lifetime mortgage has played a major role in assisting people who have been left stranded by the recent withdrawal of the Halifax Retirement Home Plan.Without the Stonehaven interest select mortgage, there would be no other interest only lifetime mortgage lender in England & Wales.

This is due to the fact that Stonehaven only lend in England & Wales, which means that people in Scotland & Northern Ireland still need to source alternative lenders should they be looking for interest only mortgages. Equity Release Supermarket can still assist here but please contact us on 0800 678 5159 for details.

 

Details of  Stonehaven’s new interest rates are as follows: –

Lump Sum Lite               5.89% (was 6.13%)

Lump Sum                      5.98%

 

Their range of interest only lifetime mortgage rates are as follows: –

Interest Select Lite         6.08% (was £6.13%)

Interest Select                6.17%

Interest Select Plus        6.46%

Interest Select Max        7.10%

 

If any of these new deals are of interest to you, please contact the Equity Release Supermarket team on 0800 678 5159 where an adviser can provide guidance as to which Stonehaven equity release mortgage would be suitable.

Alternatively, you can email on mark@equityreleasesupermarket.co.uk

 

Further links for Stonehaven are as follows: –

 

Request a Stonehaven Quote | Stonehaven Factsheet | Stonehaven Deals |

Request Stonehaven Advice

 

What Can Be Learned by Using an Equity Release Calculator or Lifetime Mortgage Calculator?

Sunday, January 8th, 2012

Those researching equity release will find the use of an equity release calculator and lifetime mortgage calculator as really helpful basic starting points in conducting their research. These online tools are excellent for understanding what the potential maximum amounts of equity release that can be withdrawn. They also prove that research is paramount in establishing whether lifetime mortgages, home reversion or equity release schemes are the most suitable option.

 

The best equity release websites will provide multiple calculator options that answer the most common question – What is the maximum release available?
Always try & find an equity release website that offers a calculator for each type of equity release mortgage option. This is vitally important, as the equity release calculators on most sites only provide you with ONE answer. These sites are not painting the whole picture & may lead you to believe that equity release plans may not be able to help your situation. They maybe just trying to capture your contact information & are basically not providing the answers you require.

 

What is the Use of Knowing the Maximum Lump Sum?

The more comprehensive equity release calculators will advise the maximum lump sum. This is an important figure which can be used to understand what the total amount of equity release loan is available, based on the specific information included in the lifetime mortgage calculator. The reason of this importance is down to the fact that you may have a predetermined lump sum in mind & unless an equity release scheme can fulfil this shortfall, then your dreams can’t become reality.

 

Both equity release calculators & lifetime mortgage calculators require a certain amount of information regarding your current situation. More in depth calculators will go that one step further & can even tailor your answer, dependent upon health. The main two elements required for input are the value of the property & the age of the youngest applicant. This equity release calculator can then provide the total equity release maximum lump sum for both a standard & impaired life arrangement.

 

Different Types of Equity Release Calculators

These will be a lifetime mortgage calculator, home reversion calculator & an interest only mortgage calculator. Of these, the lifetime mortgage calculator should provide two answers – good health & poor health (enhanced).

For an enhanced maximum calculation i.e. where there has been a history of ill-health, then further information will be required to determine whether eligibility will exist. The enhanced equity release calculation will offer a higher lump sum than standard. The assumption by the lender is that due to the ill-health, the term of the equity release mortgage will be shortened. Therefore, as the interest roll-up period will less, then the lender can release more & thereby protecting itself from the no-negative equity guarantee.

 

When looking at this equity release maximum lump sum provided by equity release calculators such as the one above, it is important to note that there are a variety of options available to the customer, from that point. Within that maximum, a customer could find an interest only mortgage or one of the many other equity release products that are currently available on the market.

 

Equity release schemes often provide these calculators because they provide such important initial research for customers. People over 55 years of age who have invested in property may find that interest only mortgages and other equity release products are excellent for the release of equity from their homes without having to sell. This keeps the property in the family or inheritance chain, but also allows the ability to recover some of the money invested or grown in value over the years. There are a range of equity release products available, and it is best to discuss needs with an independent financial advisor. However, before doing so, it is useful to do some background research on what options are available and an equity release calculator, or a lifetime mortgage calculator, is a great place to start.

 

To access the Equity Release Supermarket calculator click here or call freephone 0800 678 5159.

 

The Stonehaven Interest Select Plan Provides Salvation for Those Looking for an Interest Only Lifetime Mortgage

Friday, January 6th, 2012

Products come, & products go; & we have seen the evidence of this by the unfortunate withdrawal from the mortgage market in August 2011 of the Halifax Retirement Home Plan.

 

The global financial crisis has been challenging for many, and retired people or those looking to retire have seen a large amount of value disappear from their pensions. This can be stressful and causes worry, but finance options are still available for those looking to supplement their retirement. Equity Release Supermarket has access to market leading  interest only mortgages which are available only to people over the age of 55 & looking for ways to finance their retirement.

 

An example of such is the interest only lifetime mortgage is the Stonehaven Interest Select Plan. This is a unique and innovative option for many looking for additional financial relief in their retirement, but mindful of any inheritance that they wish to pass onto the heirs. Thus pensioner mortgages are now fully available to anyone over 55 & owning their own home.

 

The innovative Stonehaven Interest Select equity release scheme is unique among interest only mortgages as the total outstanding balance does not change. Instead of the interest rolling up like traditional equity release schemes, the interest on the Stonehaven Interest Select is paid monthly by direct debit. This is often done by the customer, but can be funded via the children or potential inheritors who are looking to keep the amount of debt on the property asset under control.

 

The great thing about the Stonehaven Interest Select equity release scheme is that the total amount of debt is managed for the duration of the interest only lifetime mortgage, making it a great financial product for those looking for interest only mortgages that don’t continue to eat into the ownership of the asset.

 

Due to this controlled nature, the Stonehaven Interest Select mortgages are fixed interest rate lifetime mortgages, the security of which many find appealing.

Stonehaven also provides a no negative equity guarantee, so even if the financial crisis worsens; there is no risk that a burden of debt will be passed on in the inheritance. These are two features which should be discussion points on any kind of interest only lifetime mortgages, as they provide important security and peace of mind.

 

Many people struggling to make ends meet during this financial crisis will be looking for ways to finance their retirement in a controlled fashion. Extra capital can really help to ensure that retirement is financially secure. At the same time, those looking for equity release schemes might be looking for control over how much value is traded for this additional security. Their research journey could start with the roll-up lifetime mortgage option, unaware that they are still eligible for an interest only mortgage even into retirement. Therefore, do not fall into the trap that some equity release brokerages will not advise this type of scheme is available. They may receive higher commission levels than payable by other companies, & this should not sway their advice.

 

Thats why approaching Equity Release Supermarket you will always receive comprehensive equity release advice; impartial & quality recommednations from experienced industry advisers.

They will discuss all your equity release options available, and endeavouring to find the right equity release solution for you. However, if your priority is to control the amount of equity that is being released from your main asset, then the Stonehaven Interest Select plan is THE innovative option to consider.

 

For further details on Stonehaven equity release plans please call Mark on freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk.

 

Reasons to Consider an Interest Only Lifetime Mortgage

Wednesday, December 21st, 2011

What is an interest only lifetime mortgage? Well there are many reasons to look into interest only lifetime mortgages in order to meet the financial challenges in our current economic climate.

An interest only mortgage should always be considered before a roll-up equity release or home reversion plan. If you are looking towards protecting your inheritance & wish to pass the full estate to your beneficiaries then an only interest mortgage will do as it says on the tin. By borrowing a fixed amount & repayment of just the interest element will mean that the balance will remain exactly the same.

 

Example of an Interest Only Lifetime Mortgage

The interest only lifetime mortgage is an especially useful product for those over 55, as there are specialist equity release style interest only lifetime mortgages available. Often these plans provide historically attractive interest rates and features that assist those in retirement to plan their financial futures. Consider Stonehaven equity release, who offer several forms of their Interest Select Plan which is effectively a non-verification lifetime mortgage. With this plan you can effectively borrow a percentage of the value of the property & you can chose how much of the interest to pay – starting from £25pm upto the full interest payment.

 

What Purposes can it be used for?

Many people who are looking to consolidate debts will find the Stonehaven Interest Select style of interest only lifetime mortgage to be an attractive option for getting all debts under one single interest only payment. This kind of debt consolidation means that the actual total amount borrowed and paid monthly is thereby reduced & hopefully under control. Additionally, the lower interest payments are likely to be less than payments made over many other debts due to the considerably lower interest rates charged by credit card companies & alike.

 

Overall, this makes the payment of debts easier, as Stonehaven will automatically take payment by direct debit, and easy to plan as the total amount is taken monthly. The fixed interest rate option on an interest only mortgage is a very attractive offer. This means that regardless of the Bank of England manipulating conventional interest rates, the Stonehaven interest select plan will always remain exactly the same. For this reason and these features, is why the Stonehaven Interest Select and Stonehaven Interest Select lite (has lowest fixed interest rate at 6.13%) are so popular. More details about these plans can be found on the Equity Release Supermarket website.

 

Are Alternative Equity release Schemes Available?

There are alternative options available for those looking for equity release schemes, including other options for interest only lifetime mortgages. These could depend upon location such as Scotland & certain counties within England where we have access to specialist lenders.  It is therefore important to discuss what is right for you with an accredited independent equity release advisor who has access to the whole of the equity release & interest only mortgage market.

 

Another place to research equity release schemes and interest only lifetime mortgages is the Safe Home Income Plans (SHIP) website, which acts as a consumer safety watchdog for elderly financial products. The Stonehaven equity release products are all registered with SHIP, so these products also come with this important peace of mind. They also have the protection of being regulated by the Financial Services Authority (FSA) thereby coming under the auspices of their compensation scheme.

 

There are many reasons for those over 55 years of age to consider equity release. Many often wonder what is an interest only mortgage? They also wonder what the best options are for their specific needs and situation. While a financial advisor is best placed to help, researching SHIP qualified products like the Stonehaven Interest Select interest only lifetime mortgages often help get started.

The Equity Release Supermarket website is also a useful place to start learning about the ‘ins and outs’ of equity release. There is a lot to learn, so be sure to speak to one of our specialist financial advisers as early as possible and often to be clear about the direction your enquiry is heading.

 

Call our Freephone number 0800 678 5159 for further details on Interest Only Lifetime Mortgage Plans.

Alternatively, follow this link to request a Stonehaven equity release quote.

 

URGENT – Withdrawal of The Halifax Retirement Home Plan on 11th August 2011

Thursday, August 11th, 2011

It is with regret that we are notifying all our Equity Release Supermarket enquirers that the Halifax Retirement Home Plan is being withdrawn with effect from the close of business on Wednesday 17th August 2011.

 

After this date NO further applications will be accepted onto this scheme.

Therefore, to take advantage of this plan all applications must have been submitted by 8pm on the evening of the 17th August 2011.

There is some good news for existing retirement home plan mortgage customers in that they will remain unaffected & their terms & conditions will remain in accordance with their mortgage deed.

Post 17th August, no further applications will acceptable & this will be the last chance to gain access to this unique pensioner mortgage.

With further options for interest only lifetime mortgages remaining limited, act now to secure a last minute place on the Halifax Retirement Home Plan scheme.

 

To make a last minute enquiry call the Equity Release Supermarket team immediately on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Equity Release Schemes – Do The Sums Actually Add Up?

Wednesday, February 16th, 2011

The main concern of equity release schemes is the reduced inheritance which is passed down to beneficiaries. Here we discuss the pro’s & con’s of roll-up equity release plans.

 

First, let’s look at the effect on the beneficiaries & the source of the causes for concern. This then leads us to the equity release calculator with facts & figures showing how these schemes fair for the beneficiaries on final redemption of the plan.

 

Ok, we’ve have all heard the saying; bad news travels faster than good news & this is synonymous with terminology ‘equity release’.

Although equity release plans were initiated in 1965, the news damaging these schemes generally dates back to the late 1980’s when the first home income plans were launched.

Linked to an annuities or regular income investment bonds & an interest only mortgage, plans such as these were destined to fail, relying heavily on investment performance in a period of falling property values & rapidly rising interest rates.

 

The mid 90’s then introduced the much derided & chastened Shared Appreciation Mortgages (SAM’s), the focus of most causes for campaigns against equity release including Trevor MacDonald’s Tonight TV programme.

Therefore, its no wonder the industries reputation was soured.

 

So what has the equity release industry done about repairing this negative sentiment?

At the time of the SAM’s debacle, SHIP (Safe Home Income Plans) was launched. Formed from its originators – Ecclesiastical Life, Hodge Equity Release, Home & Capital Trust & GE Life all members agreed to abide by a strict code of conduct, which still exists today.

Soon new lenders entered the equity release market, with household names such as Norwich Union & Northern Rock with their newly developed roll-up equity release schemes bringing a significant boost & trust to the industry.

Although equity release schemes began to blossom around 2003 with approximately 25,000 equity release loans completed, a lack of regulation still overshadowed the equity release sector. The market was still somewhat bighted by the previous misdemeanours.

 

Thankfully, partial regulation was soon imposed on the equity release industry with lifetime mortgages coming under the auspices of the Financial Services Authority on 31st October 2004. Home reversions soon joined lifetime mortgage schemes & by 2007 full regulation & confidence was brought back to the equity release marketplace.

Therefore, the market has evolved & strived to restore pride; a far cry from the negative perceptions of decades ago.

 

So what does this all mean for today’s beneficiaries?

The main ‘clean up act’ came with the introduction of SHIP & its rules imposed on the members. The ‘no negative equity guarantee’ affords the greatest level of protection the industry has to offer.

Safe in the knowledge that any amount borrowed by their parents can never escalate to more than the eventual sale price of the property, they are at least guaranteed no debt can be passed onto themselves.

A crumb of comfort maybe, but certainly peace of mind for parents.

 

As an equity release adviser, encouragement must always be shown to involve the heirs to the estate. With their input & assurance, feelings can then be vented either for or against equity release being taken as for many this is a major financial proposition.

Again qualified advisers should play an important role in explaining the pro’s & con’s of equity release mortgages & convey these issues to all parties concerned.

 

What else does the equity release sector afford by way of protection?

Interest rates for home equity release schemes, albeit not the lowest ever, are still historically low. One positive feature of these schemes is the lifetime fixed rate on all equity release loans now.

 

So what is the benefit of this?

If you borrowed an amount of capital, with a fixed interest rate for life it enables you to calculate the exact future balance.

This is building further reassurance for potential equity release applicants.

We know the equity release balance escalates over the lifetime of the scheme; this is the nature of plans & should never be entered into unless this has been clearly explained. The effect of the interest compounding annually, approximately doubles the balance every 10-11 years, depending on interest rate charged by the equity release companies.

 

Sounds daunting? Well, let’s now look at the sums as promised earlier:

One of the lowest interest rates around at present would be the Aviva Lifetime Lump Sum scheme, which  currently has a fixed interest rate of 6.65% (6.9% APR) annual.

 

A male, aged 65 borrowing a lump sum of £25,000 on the 6.65% Aviva Lifestyle lump sum would know exactly what the future balance will be, even before taking out the equity release scheme. The Key Facts Illustration provided by the equity release adviser will confirm these figures & also the costs & additional features involved.

For instance, based on a release of £25,000 in this scenario would lead to a balance in 10 years of £47,594 & after 20 years would be £90,606.

This may seem expensive given only £25,000 was borrowed initially; however there are two factors that could still rule in the equity releases favour.
One common issue overlooked is the potential for property prices to increase. If so, & with 100% ownership of the house still retained the homeowner will fully benefit from any future escalation in the house price. This will then offset some of the compounding effect of the interest & mitigate its effect on the overall estate. Again, we are looking longer term & no guarantee can be given prices will go up; nevertheless historical data confirms they still have.

As a consequence, a rule of thumb is never to borrow anymore than required beyond the initial 12 months. Plans are now flexible enough with drawdown schemes being available that funds can even be drip fed over time as & when required.

Hence, by taking a lower initial amount would result in less interest being charged, meaning more inheritance passed to the beneficiaries.

 

 

The second factor affecting the balance accruing & is the main cause of equity release roll-up is purely down the fact that NO monthly payments are required. This helps retirees to have access to the equity tied up in their property & at the same time leave their budget unaffected.

Nevertheless, equity release schemes do have an increasing role in retirement planning for the over 55’s. Care must always be taken & never rushed into without discussion & involvement of third parties.

Advice should always be provided by an industry qualified equity release consultant. If so, & in the right circumstances equity release can provide a comfortable & enjoyable retirement.

 

Finally, hopefully lessons have been learned from the past & the industry can move forward, innovate & develop further over time.

 

To discuss any of these issues & with no obligation whatsoever, please contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityrelease supermarket.co.uk

 

Equity Release Schemes – Some Important Points To Consider

Sunday, January 30th, 2011

Every individual wants to live a comfortable life post-retirement. However, sometimes lack of capital can cause financial discomfort post-retirement. In such cases, equity release schemes can act as a saviour. They can really help retired individuals who are going through a financial crisis.

 

There are certain key points that you should consider before applying for an equity release scheme. Some of these points are as follows:

 

Age restrictions:

Only those individuals who are aged above 55 and own their own property are eligible for equity release. Moreover, retired individuals can also continue to live in their homes. This is the reason why these schemes are immensely popular among older homeowners in the UK.

 

Types of equity release schemes

There are many different types of equity release schemes available today. Some of them are as follows:

• Home reversion
• Lifetime mortgage
• Interest only mortgage

 

Each of these equity release plans has different coverage features. For instance, in home reversion, individuals have to sell off a part of their homes to release some equity. This amount can be received in installments.

 

Professional advice

It is better that you consult a financial expert before you take out an equity release plan. In this way, you can get the best available policy.

 

The Halifax Retirement Home Plan – The Quest To Find Mortgages For Pensioners?

Tuesday, October 26th, 2010

Planning for your retirement in essence should start in your earlier years; however as we know life unfortunately doesn’t always go to plan!

Here we discuss the merits of the niche interest only mortgage product; the Halifax Retirement Home Plan which is becoming an increasingly popular way of providing mortgages for pensioners.

Since writing my original article on the Halifax Equity Release plan (click here to view), interest has certainly been escalating. The main reason being that people in retirement are unaware of their mortgage options once they finish work. But life must go on.

 

What is the history of the scheme?

Established in 1984, the Halifax Retirement Home Plan was initially available through the Halifax branch network and was developed to provide low cost mortgage finance for the retired & elderly.

However, under the Financial Services Authority review of the lifetime mortgage market in 2006, Halifax withdrew the branch license to offer lifetime mortgage advice.

Therefore, the responsibility for providing advice on the Halifax Retirement Home Plan was left completely with lifetime mortgage qualified advisers including independent specialists Equity Release Supermarket.

 

So what is the Halifax Retirement Home Plan?

In simple terms the scheme is an interest only mortgage for people who are retired & facilitates the release of equity tied up in the property. The release of funds can be for almost any purpose including:-

  • Debt consolidation including paying off credit cards/loans or mortgages
  • Holidays including cruises or just day trips
  • Replacement car or caravan
  • Home improvements
  • Gifts to the children providing a deposit for house purchase
  • Supporting your lifestyle through retirement.

Qualification for the Halifax equity release scheme is based on income. Halifax will only accept non-earned income & this must be in the form of: –

  • Occupational pensions
  • Private pensions such as personal pensions or retirement annuities
  • State pensions
  • State benefits including pension credits & disability benefits

The stated minimum age for the Halifax Retirement Home Plan is 65. However, as long as there is no earned income & justification for the size of the mortgage can be based solely on the above income, then ages lower than 65 can be achieved.

 

How much can be released?

The minimum release on the Halifax Retirement Home Plan is only £15,000. However, to establish the maximum release possible would require the use of an affordability calculator.

Halifax does not base the size of release on a multiple of income, but whether the interest only mortgage can be afforded through retirement.

The data Halifax requires for this calculation includes income, credit status, number of applicants & credit commitments outstanding after the new mortgage commences.

This procedure can be carried out by qualified adviser such as Equity Release Supermarket & is an accurate assessment of the potential borrowings on this scheme.

The overall maximum release available can never be more than 75% of the valuation of the property. Therefore, should the affordability calculator show a figure greater than this, it will still be capped at 75% of the property value.

 

Does Halifax require a repayment vehicle?

The answer to this is NO.

As the Halifax Retirement Home Plan is an interest only mortgage for pensioners, no form of repayment is required.

In contrast, the mainstream mortgage market is actually tightening its grip on new interest only mortgages, whereas this Halifax equity release scheme will still accept repayment by virtue of the eventual sale of the property. This would be on death of the surviving partner, moving into long term care or earlier property sale.

The term allocated to the Halifax home retirement plan is 40 years which should provide ample time for it to run for the rest of one’s life! This removes any concern about having to find the funds to pay off the Halifax scheme during your lifetime.

Most mortgage providers will only accept a mortgage term upto age 70-75 or in rare instances age 85. However, this only buys time as eventual repayment would be required. However, this scenario may still be suitable should one be downsizing at a predetermined date in the future.

The Halifax Retirement Home Plan therefore removes any element of capital repayment risk.

 

So what interest rates & products are available?

Dependent upon whether you are a new or existing Halifax customer will determine the interest rates & products applicable.

 

Currently, the better deals are offered to new customers as they have access to the whole mainstream Halifax product range. This is a great advantage, as there is full access to current low rate tracker & fixed rate products. Click here for the latest interest only mortgage rates…

These include deals such as the current 2 year tracker rate at just 2.59%. Based on borrowing £50,000 this currently would only cost £107.92pm (3.6% APR).

 

Additionally, if remortgaging from another lender then there is the benefit of a free valuation & free standard legal fees, which reduces the set up costs significantly. I have experienced clients who have just £800 outstanding on a mortgage or even documents kept in deed store that qualified for this free remortgage package!

 

What if I already have a Halifax mortgage?

The good news is you can still apply for the Halifax Retirement Home Plan. However, the situation here requires completely different advice & procedure. Should you wish to merely transfer onto the Retirement Home Plan then you can port over your existing rate which can be good news if on a standard variable rate. However, if you wish for additional borrowing then the process becomes a little more complicated.

The product range for existing Halifax customers is rather sparse & with the best deals starting currently at 4.99% fixed, hence there is a distinct advantage for new customers.

 

Such applications will be paper based & therefore processed manually which involves more human input. Experience has shown this results in a different underwriting approach to the process undertaken on new applications.

 

Can I pay off the Halifax Retirement mortgage early?

The simple answer to this is YES.

Unlike equity release plans where penalties can potentially apply for the rest of your life, the Halifax interest only mortgage will only have early repayment charges for the initial product term. Therefore, should you have opted for the 2.59% 2 year tracker product discussed previously, the penalties would only apply for the first 2 years. After, this 2 year period the mortgage would then revert to the Halifax standard variable rate, currently 3.5%.

However, before the initial rate expires you will have the option to take out a new product from the Halifax mortgage range available at that time.

 

So what is the advantage of the Halifax Retirement Home Plan over an equity release scheme?

The obvious answer to this is the fact that the Halifax mortgage is interest only & therefore requires a monthly payment of interest. The balance will always remain the same throughout the term of the plan. E.g. borrowing £50,000 today, will result in £50,000 requiring repayment once the house is sold.

In contrast, equity release schemes do not require any monthly repayment & therefore the balance will increase over time. Roughly speaking the balance of equity release schemes will double every 10/11 years.

From a beneficiary’s point of view, the Halifax interest only mortgage will guarantee an inheritance, as the final balance of the mortgage will always be known. This would be favourable for people who want to ensure the children definitely receive an entitlement to their parent’s inheritance.

 

With all this information & options available it is more important than ever to receive specialist advice to obtain the best deal for your personal circumstances.

Equity Release Supermarket can provide independent advice on both equity release schemes & interest only mortgages for pensioners.

For further information or to request a quotation, please ring Mark on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Two Different Types Of Lifetime Mortgages

Wednesday, October 13th, 2010

If you want to improve your lifestyle or repay outstanding debts and do not have enough cash then consider the potential of an equity release scheme. Homeowners who are over 55 and have little or no mortgage can release money against the value of their home. Due to different needs, different equity release schemes have been introduced.

 

Lifetime mortgages and home reversion plans are two popular types of equity release schemes.

Lifetime mortgages are further divided into two subtypes:

 

Roll-up lifetime mortgages – This equity release scheme is preferred by many people because they do not have to pay any interest. Instead the interest is added to the original balance & compounded year-on-year for the rest of one’s life.

 

Interest-only lifetime mortgages – If you do not want your debt to build up then an interest-only lifetime mortgage can be the perfect option for you. Unlike other equity release schemes, this scheme allows you to pay off the monthly interest to the lender. By opting for the interest-only option, you can preserve more money for the future. The balance of the interest only mortgage scheme will therefore remain level for the rest of the term of the mortgage. Such schemes available include the exclusive deal Equity Release Supermarket have available with the Halifax.

 

The Halifax Retirement Home Plan is available to those having already retired with a good disposable income with which they can service the monthly payments. The Halifax Retirement Home Plan is not available via the Halifax branch network as only lifetime mortgage advisers with the appropriate licence can advise on this product.

 

Whether you choose a roll-up or an interest-only mortgage you can release the equity tied up in your property to provide the tax free lump sum you require.

You can use the tax-free money to spend as you wish including buying a new car, a second home or to go on a luxury cruise; the list is endless.

If you have decided to opt for equity release schemes then it is recommended that you receive advice from an equity release adviser who will guide you to the best equity release plan & guide you through the equity release process.

 

To find a local Equity Release Supermarket financial adviser near to you click here.

 

 
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