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Posts Tagged ‘Lifetime Mortgage Scheme’

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

Saturday, April 7th, 2012

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

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

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

 

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

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

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

 

So why the lethargy surrounding home reversion plans?

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

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

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

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

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

 

So why should you consider a home reversion scheme?

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

 

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

 

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

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

 

Home reversion redemption

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

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

 

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

 

Equity Release Calculators – How They Can Help You

Friday, July 1st, 2011

An increasing number of senior citizens now opt for equity release schemes with the aim to release cash (equity) from their property. This can be a wise decision in order to generate extra income during their retirement years. While a lot of equity release providers are available, not many people are aware of how such equity release schemes work. At such times, it is prudent to consider taking advantage of professional help.

Financial institutions now offer the use of equity release calculators to their customers. Using this tool, one can determine the amount of equity that can be released from their property. Based on the outcome, the applicants can decide whether or not equity release is a viable option for them.

 

With the number of equity release schemes on the increase, such as the recent addditions of Stonehaven, more2life, New Life Mortgages & last week Partnership, it is more important than ever to seek the services of an FSA qualified independent financial adviser. They will have the equity release tools available they will have been trained with to establish which scheme will provide the correct amount to be released. Guarded with this information it can lend them to the next stages of the decision making process in ascertaining which lifetime mortgage scheme is most suitable for such circumstances.

 

Therefore, the equity release calculation can be guided towards establishing the following lifetime mortgage scenarios: –

  • What is the maximum I can borrow on an equity release plan?
  • What is the lowest interest rate on an equity release scheme?
  • What is the minimum amount I can borrow on a lifetime mortgage?
  • How much can I borrow on an equity release scheme if I am in poor health?
  • What are the costs in setting equity release schemes up?

 

Equity release calculators will help answer these types of questions & with the calculator tools of Assureweb, Trigold & The Exchange each equity release adviser with the CeRER & CeMap qualification, will have these methods of calculations available. However, currently there isn’t an operational Halifax Mortgage calculator available.

 

The workings of an equity release calculator

Various equity release calculator formats exists that can usually be found on the website of the mortgages & other financial organisations. The homeowner first needs to provide information related to their property. Based on this data, the equity release calculator will predict an approximate amount of equity that can be released from their property.

Advanced calculators are also available that offer in-depth information related to different possibilities. However, the availability of such a tool is subject to the equity release provider. Before deciding on a deal, homeowners are always advised to try two different calculators. To get the best deal with equity release schemes, obtaining professional help would be wise.

 

Practically, the size of the equity release is governed mainly by three factors which are: –

  • Age of the youngest applicant
  • The valuation of the property
  • Whether any existing mortgage or secured loan is present

 

Dependent upon the answers to these questions will determine the net equity release availability from the property. The data provided by the equity release calculation will be the maximum equity release posssible, however it will give an indication of the extent to which one can go & therefore you will have the knowledge as to whether equity release will be of assistance.

 

More detailed equity release calculators can advise beyond these basic measures. For instance, should a history of ill heath be present, then a larger than normal lump sum can be achieved with an impaired life equity release scheme. This will not be present or have the ability to be calculated upon by the more basic equity release calculators. Additionally, the majority of calculators will only refer to roll-up lifetime mortgages & not home reversion plans, thus they do not answer the whole question & should only be used for guidance, not literally.

Again, it is therefore of upmost importance to seek the services of a qualified independent equity release advisor who has the accurate research & calculation tools at his disposal; whom with your input & personal information, can guide you to the right equity release plan.

 

The Equity Release Supermarket calculator can provide an overview & the statistics involved with the maximum amount that can be borrowed on each equity release scheme. Experience our equity release calculator today as see how much you can release. Alternatively, speak to one of the Equity Release Supermarket specialists who can be found in your area by using the ‘find an adviser‘ interactive UK map.

 

Equity Release Supermarket are established & award winning lifetime mortgage & Halifax Retirement Home Plan specialists.

Call freephone 0800 678 5159 for all your post retirement mortgage questions.

 

A Brief Insight Into Equity Release

Friday, March 4th, 2011

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

 

What is equity release all about?

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

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

 

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

 

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

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

 

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

 

Equity Release – Some Facts You Must Know

Thursday, October 28th, 2010

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

 

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

 

Who owns your property?

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

 

Is there any tax charged?

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

 

Criteria to qualify for equity release

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

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

 

Does Low Income Concern You? Opt For Equity Release

Tuesday, October 12th, 2010

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

 

Things to consider before opting for equity release

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

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

 

Types of equity release schemes

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

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

 

Home Reversion Plans

Friday, October 8th, 2010

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

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

 

What is a home reversion plan?

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

 

Advantages offered by home reversion plans

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

 

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

 

Lifetime Equity Release Schemes – Here Is Some Information You Ought To Know

Wednesday, October 6th, 2010

If your pension falls short of your budgetary requirements, then an equity release scheme could certainly be a good solution. Equity release is specially designed for homeowners who are above 55 years of age and want to unlock money against the value of their homes. And, one of the best things about the money which you will get under equity release is that it is tax-free.

 

What is a lifetime mortgage equity release scheme?

Most homeowners opt for this scheme & it accounts for almost 90% of all equity release schemes undertaken. These equity release schemes allow them to borrow money against the value of their homes, retaining 100% ownership. The best thing about a lifetime mortgage scheme is that it does not demand monthly payments.

As there are no monthly payments, the interest is directly added to the original amount borrowed & it can either be added monthly or annually. Under lifetime equity release, the repayment is made after your death or on moving into long term care, by selling the property.

 
Additional features offered by lifetime mortgages

As you will receive the money on the basis of fixed interest, you are therefore completely protected from interest rate volatility. This means that, providing you don’t borrow additional funds, then you will know in advance the future balance of the equity release plan. Some newer equity release schemes will let you build an inheritance protection feature which will leave some value of your home or property for your beneficiaries.

 

Lifetime mortgages – Three different types

This equity release scheme is further categorised into three different types. The first one is a roll-up scheme which allows you to avoid any repayment, with the interest compounding over the years. Under a fixed repayment scheme, you only have to pay a pre-determined amount of money to the lender, thus protecting the inheritance to your beneficiaries. Lastly, interest-only lifetime mortgages allows you to pay the interest every month.Therefore, the balance will remain the same throughout the term of the mortgage. Such schemes as the Halifax Retirement Home Plan will meet this criteria.

 

Equity Release Supermarket are independent equity release specialists who can advise you on which scheme is best for your individual circumstances. Call the team now on 0800 678 5159.

 

Equity Release Schemes – Retire With No Worries

Thursday, September 23rd, 2010

With an increasing number of retired people unable to meet their expenses on pension, equity release schemes are becoming one of the best tools to solve this area of need. It allows individuals to unlock the equity that they have built in their home, thereby assisting them meet the shortfalls in their financial affairs.

Equity release schemes allow homeowners to release the equity from their property to generate a tax-free lump sum or regular income. The money generated from equity release can be utilised to pay for home improvements, debt consolidation or to help meet the requirements afforded to a comfortable and luxurious lifestyle after retirement.

 

Retired persons over 55 years of age and having their own property are the ideal candidates for equity release schemes. With different types of equity release schemes available, you should choose the one that suits your requirements.

 

Types of equity release schemes

Two different types of equity release schemes are currently available – home reversion schemes and lifetime mortgages. As both schemes offer their own unique advantages, you must choose the best one.

 

Home reversion – This scheme allows you to live in your property till you die or move into long term care whether that is a retirement home or with relatives. However, you need to sell a part or your complete property to the reversion company. In return, the home reversion company will either offer you regular income or lump sum cash, depending on your requirements. The most popular form of release is the tax free lump sum option.

Lifetime mortgages – With lifetime mortgage equity release schemes, you will always have complete ownership of your property. By opting for a lifetime mortgage scheme, the need for making monthly repayments is completely eliminated. You can even continue to live in your property until you pass away.

 

If you are looking for a solution to retire without any worry, equity release schemes can be the perfect solution.

 

To chat to a specialist equity release adviser, contact the equity release team on 0800 678 5159.

 

The Types of Equity Release Offered By Financial Institutions

Monday, August 23rd, 2010

If you are 55 plus and own your own home that is your main residence, then you are eligible to choose from any of the current equity release schemes.

Today, many retired people are opting for equity release schemes because they offer a lump sum of money against the value of the property. Home reversion plan and lifetime mortgages are two different types of equity release schemes.

 

By opting for home reversion plans, you can sell all or just a part of your property in exchange for money. This tax-free cash will help you to live the rest of your life in financial security. There is also a lifetime mortgage scheme

which allows homeowners to sell their whole property for money.

 

Lifetime mortgages are further divided into various types such as:

  • Roll-up plan – Under this scheme, you can borrow an amount of money from the mortgage lender against your home. You do not have to make any payments to the lender in order to repay the equity release mortgage. Instead the interest charged is added to your last years balance & compounded annually thereafter. Therefore the balance will increase year by year until the equity release planholder either moves into care or dies. At this point, the property is usually sold & the equity release company is repaid.
  • Home income plan – By opting for this scheme, you will receive a regular monthly income against your home. In this scenario, a percentage of the value of the property is sold in exchange for a tax free lump sum. These funds are used to purchase an annuity which is how the scheme then provides the monthly income. The lender or financial institution will be paid by selling the home after you die.
  • Interest-only mortgage – Unlike the roll-up plan, this type of equity release scheme allows you to pay off the interest charged monthly. Therefore the balance of the mortgage will remain exactly the same for the duration of the plan term. As a consequence the beneficiaries will know the exact amount that will be deducted from their inheritance. The actual loan is again repaid by selling the property. For interest only lifetime mortgage deals see our website.

 

Out of the above mentioned lifetime mortgage schemes; you can choose the one which suits your financial needs by contacting Equity Release Supermarket on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

All You Should Know About Equity Release

Sunday, August 22nd, 2010

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

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

 

What are the different types of equity release?

There are two types of equity release schemes:

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

 

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

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

 

Types of payment

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

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

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

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

 

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

 

 
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