Posts Tagged ‘lifetime mortgages’
Tuesday, June 14th, 2011
Retired homeowners can now safely make plans for their future with the help of an equity release scheme.
There are a number of equity release schemes available today in the market. Some of these are:
- Interest only mortgages
- Lifetime mortgages
- Home income plans
- Home reversion
Amongst these schemes, the interest only mortgage is very popular. It can either have a fixed or tracker rate of interest which is to be paid at the end of every month. Interest only mortgage schemes have gained popularity in recent times.
This scheme is highly suited to people who are retired and it can help them in their old age. Those retirees who are opposed to the roll-up effect of conventional equity release schemes, can find solice in these interest only lifetime mortgage schemes. The reason being is that the balance will always remain the same & never increase, thus protecting any beneficiaries inheritance.
The interest only mortgage scheme is considered as the safest option by many people. It promises a fixed capital lump sum to spend on anything they wish in retirement.
In other plans such as home reversion, one sells all or part of the property & can thereafter live rent free in the home for the rest of their lives. These schemes do not start until age 65 & now only account for 3% of all equity release plans taken out.
It should be noted that none of the interest only schemes put the retired person at a risk to lose their right to live in their property. However, monthly payments must be maintained in order to not default on their mortgage. Obviously, these interest only mortgages always come with the health warning – Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Should you have any questions on lifetime mortgages, home reversion schemes & interest only mortgages please contact the Equity Release Supermarket advisory team on 0800 678 5159 or alternatively email mark@equityreleasesupermarket.co.uk
Tags: equity release, equity release schemes, Equity Release Supermarket, Halifax Retirement Home Plan, home reversion, home reversion plans, home reversion schemes, interest only mortgage, lifetime mortgage schemes, lifetime mortgages
Posted in Equity Release | No Comments »
Tuesday, June 7th, 2011
Equity release schemes have become extremely popular amongst retired individuals due to their myriad of benefits. The most notable benefit of these form of lifetime mortgage is that you do not have to move out of your home to get equity from your property & you have no monthly mortgage payments to make. Similar to any other financial scheme, it is important to consider your needs and requirements before you arrive at a decision.
Mentioned below are some important factors that you need to understand before selecting an equity release scheme.
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No negative equity guarantee
Most equity release schemes have a no negative equity guarantee provided free of charge & automatically incorporated into any SHIP equity release plan. A no negative equity guarantee will ensure that your outstanding debt will never exceed the overall value of your property. At the same time, any outstanding debt will not be transferred to your family after you pass away. Therefore, your beneficiaries can be safe in the knowledage that by you taking equity now, will not make you pay for it later.
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Moving to a new property
It should be noted that moving to a new property is permitted by the equity release provider you choose to go with. However, as long as the property you are moving to is of standard construction & if leasehold has a lease still in excess of 75 years then it should still be possible to transfer your scheme. Because of this reason, it is recommended to look for a reutable equity release scheme that caters to your specific needs.Again, all equity release schemes that are members of SHIP (Safe Home Income Plans) must have this facility to transfer the mortgage built within the terms.
If you are looking to downsize, then a repayment maybe required to bring the amount riased in line with the equity release providers loan to value. This amount would usually come from the equity that has been raised by downsizing so there would be no need for alarm. Additionally, as you are making some form of repayment, then NO early repayment charge would be applied by the lifetime mortgage provider.
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Criteria
It should be noted that you will need to meet the equity release companies criteria to become eligible for equity release schemes. For starters, you need to be at least 55 years of age & own your own home. At the same time, the market value of your home should be at least £60,000, although some equity lenders do impose higher valuations so check beforehand. Ensuring you meet these criterion’s will help if you are planning to opt for one of best equity release plans.
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However, help is always on hand. Therefore to establish whether equity release is the correct path for you to follow then speak to the specialists at Equity Release Supermarket. Call freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk
Tags: equity release, equity release schemes, lifetime mortgage schemes, lifetime mortgages, No negative equity guarantee, SHIP
Posted in Equity Release | No Comments »
Sunday, May 29th, 2011
The Halifax equity release scheme is an interest only lifetime mortgage plan. It is specially developed for retired individuals to boost their retirement standard of living. With this type of scheme, the outstanding balance remains unchanged throughout the plan tenure. The applicant only needs to pay interest regularly to the lender.
Traditional roll-up equity release schemes do not require the applicant to make interest payments. However, the interest keeps rolling up over the tenure period. This means that the outstanding loan keeps rising all the time. With the present interest rates, the loan amount will keep doubling after approximately every 10-11 years dependent upon the equity release interest rate. This means, if you have a loan of £10,000, after 10-11 years, you will owe £20,000.
Retired individuals, who can afford to make monthly repayments from their state benefits or pension, should opt for a Halifax equity release plan. While considering opting for equity release, it is important to get the right advice from the professionals. As professionals have the required knowledge and expertise, they can help you get the right scheme that will cater to your needs.
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Why do people opt for a Halifax equity release plan?
The Halifax equity release scheme, being an interest only mortgage plan for pensioners, does not require any form of repayment. This is also one of the most exclusive features of the Halifax equity release plan. With this kind of scheme, your mortgage is automatically allocated for a term of 40 years. However, should you live longer than this period then this lifetime mortgage plan will continue until death or the last person has moved into long term care.
It is due to these reasons that the Halifax equity release scheme has become extremely popular amongst retired individuals.
Contact the mortgage desk on 0800 783 9652 or email admin@equityreleasesupermarket.co.uk for the latest rates & information.
Tags: equity release, Halifax, Halifax Retirement Home Plan, Home Retirement Plan, interest only lifetime mortgage, interest only mortgage, lifetime mortgage schemes, lifetime mortgages, mortgages for pensioners, pensioner mortgages
Posted in Halifax Retirement Home Plan | No Comments »
Tuesday, April 19th, 2011
Upon researching whether equity release is a suitable option, you may be finding most of the information available in the press or on the internet focuses on the main types of plans available which are Roll-Up Lifetime Mortgages.
There is in fact another type of plan which is less commonly understood and these are called Home Reversion plans.
I think it’s important to consider these plans in more depth. Increasingly home reversions are become more appropriate for those considering taking an equity release plan, particularly if those looking for a simple plan giving a high degree of certainty.
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A home reversion plan involves transferring ownership of all or part of your property to the provider in exchange for a tax free cash lump sum (or you can choose regular payments). Your property is independently valued and from this the provider will work out how much they will pay you for the percentage of the property being sold.
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The amount you’re paid wont be as much as the market value of the property. This is simply because you will be living there rent free for the rest of your life (or until moving out permanently into long term care). As a “rule of thumb” the older you are the more the home reversion provider will pay you for the share sold, that’s because your life expectancy is less. You are still responsible for paying all your bills, insurance and maintaining the property. At the end of the plan the property is sold and if you’ve retained part of it, your share of the proceeds will be paid to your estate.
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When considering a home reversion company, it’s important to choose a provider who is a member of the trade body Safe Home Income Plans. SHIP members offer a guarantee to their customers, the main benefits of this are that you’re allowed to remain in your property for life (provided the property remains your main residence) and you have the right to move plan to another suitable property without any financial penalty. Plus of course you have the safeguard of independent legal advice.
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Home reversions are also regulated by the Financial Services Authority (FSA) which oversees how providers and advisers must deal with you. And finally, because home reversions involve the sale of property a third level of extra consumer protection is given by UK property law, which governs the relationship with the provider and their obligations towards you.
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So what type of people are home reversion schemes most suitable for?
Well it really boils down to your thoughts and concerns. As a guide a reversion might be more appropriate for someone who falls into some or all of the following categories:
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- Customers who want to specifically avoid debt – a home reversion plan is not a mortgage & cannot therefore be repossessed
- Those concerned house prices won’t keep going up – the risk of falling house prices is passed to the provider
- People in good heath and confident that they may live for many more years to come (for example there may be a history of longevity in the family) – generally the longer you live the better value a reversion becomes
- Anyone wanting to the peace of mind of knowing that if they need to in the future, they can access the maximum cash from their remaining equity – some providers will guarantee to always release further funds until 100% of the property is sold
- Clients wanting to guarantee an inheritance for their estate – for example if only 25% of the property is sold, the estate will inherit 75% of its value after costs
- Those wanting to release more cash from their property than they can by using a lifetime mortgage
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Naturally home reversion plans are not for everyone. Generally you will only be eligible to take a reversion plan if you are 65 or older. Ideally, to get the better rates you would need to be over age 70.
As reversions are a long term commitment they should not be considered if you intend to repay the money released at some stage in the future (for example if you’re expecting an inheritance).
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If you are in poor health or expect to have below average life expectancy then you may not get full value from a reversion either. However, we do have access to products now that do offer an impaired life (poor health) facility & therefore can provide an extra lump sum for this reason.
For those unfamiliar with how a reversion works there is understandably a little concern about giving up all or part ownership of your property.
The reality is that the terms and conditions of a reversion (ie the “small print”) are similar to that of equity release and your right to privacy and freedom to live in your own home are not affected.
Usually with a home reversion you are granted a lease for life to live in the property for as long as you wish to. And this important legal arrangement is recorded by HM Land Registry much the same as a leasehold flat or house is. So although you may have sold all or part of the property to the provider it still very much remains your home.
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The decision to release equity from your home using a home reversion plan or a lifetime mortgage is an important one and you will need specialist advice from a Financial Adviser in order to do so. They can talk to you about whether equity release is right for you and if it is what sort of product best suits your particular needs.
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To obtain further information on Home Reversion schemes, please contact an Equity Release Supermarket adviser on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk
Tags: equity release, Equity Release Adviser, FSA, home reversion, home reversion plans, home reversion schemes, impaired life, inheritance protection, lifetime lease, lifetime mortgages, lifetime tenancy, SHIP
Posted in Advice, Equity Release | No Comments »
Tuesday, March 8th, 2011
On Thursday 3rd March 2011, the equity release market saw another welcome lender return with Stonehaven relaunching their Lump Sum & Interest Select plans.
Having been absent for over a year whilst new funders were sourced, Stonehaven have now streamlined & simplified their product range.
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One product in particular will answer a common question –
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“Can I have an interest only equity release plan where I can repay the interest?”
Well the answer is now categorically – ‘YES’
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Before discussing the Stonehaven Interest Select option in greater detail, let’s have a look at the two products launched.
Stonehaven now have two propositions available to customers: -
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1. Lump Sum Only Option
2. Interest Only Equity Release
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The lump sum option does as it says on the tin; namely two lump sum options which offer different loan to values. Stonehaven are not launching at the maximum release end of the market, but aiming competitively with lower interest rates.
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Lump Sum Lite has the lowest interest rate at market leading 6.13%.
Plans start at 55 & this product will release 11% of the property value at this age.
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The Lump Sum plan has a higher interest rate of 6.24%, with a higher release of 14% at age 55.
Both plans have no drawdown facility, but a simplified single lump sum option from the outset.
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Next we come to the Interest Select products.
These innovative plans allow you to choose how much of the interest charged you would like to repay each month, and also how long you wish to pay this for. You could pay off the whole interest, or if you have a specific budget just pay off part of the interest with the remainder rolling up onto the original capital borrowed.
In effect it can be classed as an interest only lifetime mortgage for pensioners.
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Traditional equity release may not be suitable for everyone, especially due to roll-up of interest & the reduction this will make to potential beneficiaries.
Therefore, particularly suitable for people with good disposable incomes & used to servicing & managing debt throughout their working lives, these people can now control how much inheritance they leave behind by these new equity release schemes.
Primarily, it can be regarded as a half way house between a conventional mortgages and roll-up equity release. The scheme is an interest only eqity release & has all SHIP safeguards and protection offered by the FSA.
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However, a major feature of the Interest Select plan is the ability to be converted over to a full roll up scheme at a later date. This could be when one party to the mortgage dies or financial circumstances dictate that no more monthly payments wish to be made.
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Simplification on the new Interest Select means that when conversion arises, the new rate on the equity release plan will only be 0.2% higher than on the previous Interest Select. However, better still, should the roll-over date be previously set, then roll-over will be at the SAME interest rate as the original interest only element.
With interest rates starting at 6.13% which are currently the lowest in the market, a particularly attractive proposition can be found here for those interest rate tarts!
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TIP – Should one be able to afford the minimum monthly contribution of £25pm for the minimum roll-over period of 12 months, then one can easily achieve a roll-up equity release plan with a 6.13% monthly interest rate thereafter!
Surely, a tip not to be passed by?
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There have been four Interest Select plans launched which surely indicates which way Stonehaven feels the market potential lies.
These range from the Interest Select Lite at just 6.13% & releasing 11% at age 55, upto Interest Select Max with an interest rate of 7.57%, but releasing a higher 19% at age 55.
An example of borrowing £40,000 on the Stonehaven Interest Select Lite at 6.13% would result in monthly payments of £205pm.
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Qualification Criteria for Both Schemes
All Stonehaven equity release products are available to people aged 55 and over, living in a main residence in England and Wales & must have a minimum property valuation of £70,000. The minimum release has been reduced to £10,000.
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Additional Features
No Negative Equity guarantee
There is the guarantee that when the property is sold on death or long term care, the proceeds payable to Stonehaven can never be greater than the property value itself. This guarantees there can be no excess debt passed to the beneficiaries.
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Protected Equity
A valuable inheritance protection feature applicable to the lump sum plans. There is the facility to choose to protect a percentage of the final sale value of the property. Point to note is that the no negative equity guarantee and the amount that Stonehaven will lend are based on the value of the unprotected portion of the property.
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Thus, another chapter unfolds in the equity release storyline; providing greater diversity in the whole of market lifetime mortgage product range. A welcome read & a promising sign of further things to come for the industry.
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If you have any questions, or wish to obtain advice on the Stonehaven range of products please contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk
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Tags: equity release, Equity Release Adviser, equity release schemes, Halifax Retirement Home Plan, inheritance protection, interest only mortgage, lifetime mortgage schemes, lifetime mortgages, SHIP, Stonehaven, Stonehaven interest select
Posted in Equity Release, News | No Comments »
Wednesday, March 2nd, 2011
With the main concern over equity release schemes being the inheritance passed down to beneficiaries, here we discuss the pro’s & con’s of these lifetime roll-up mortgages.
Firstly, we look at the effect on beneficiaries & the sources of these areas of concern. This then leads us onto the equity release calculator with facts & figures showing how these schemes fair for the beneficiaries at the end of the day.
Ok, we’ve have all heard the saying; bad news travels faster than good news & this is synonymous with term ‘equity release’.
Although equity release plans originate back to 1965, the damaging news about them generally dates back to the late 1980′s when ‘home income plans‘ were initially launched.
Linked to an annuity or investment bond & an interest only mortgage, these plans 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 shared appreciation mortgages (SAM’s), the focus of most causes for campaigns against equity release including the Trevor MacDonald Tonight programme.
Is it any wonder reputation was soured?
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So what has the equity release industry done about it?
At the time of the SAM’s debacle, SHIP (Safe Home Income Plans) was launched.
Formed from its originators – Ecclesiastical Life, Hodge, Home & Capital Trust and GE Life all members agreed to abide by a strict code of conduct, which still exists to this day.
Soon, new lenders entered the market with household names such as Norwich Union & Northern Rock introducing the first roll-up schemes & bringing a significant boost & trust to the industry.
Although the volume of applications began to blossom around 2003 with 25,000 loans completed, a lack of regulation still overshadowed the equity release sector. The market was still somewhat blighted by its previous misdemeanours.
Thankfully, partial regulation was soon imposed on the industry with lifetime mortgages coming under the auspices of the Financial Services Authority on 31st October 2004. Home reversions joined lifetime mortgage schemes soon after & by 2007 full regulation & confidence was brought back to the sector.
Therefore, the market has evolved & strived to restore pride; a far cry from the negative perceptions of decades previous.
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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 this industry can 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, beneficiaries are at least guaranteed no debt can ever be passed onto themselves.
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A crumb of comfort maybe, but peace of mind for the parents.
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An equity release adviser should always encourage involvement of 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 elderly people this is a major financial proposition.
Again qualified advisers should play an important role in explaining the pro’s & cons of lifetime mortgages & convey these issues to all parties concerned.
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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 loans now.
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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 mortgage applicants.
A client will always be made aware that the equity release balance escalates over the lifetime of the scheme; this is the nature of these 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:
One of the lowest interest rates around at present would be the Aviva Lifetime Lump Sum plan, which at the time of writing this article has a fixed lifetime interest rate of 6.65% (6.9% APR) annual.
A male, aged 65 borrowing a lump sum of £25,000 on the Aviva Lifestyle lump sum at a fixed interest rate of 6.65% 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, given the aforementioned figures at the end of 10 years the mortgage balance would be £47,594 & after 20 years it 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 favour of the a lifetime mortgage scheme.
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One common issue overlooked is the potential for property values to increase. If so, & with 100% ownership of the house still being retained, then the homeowner will fully benefit from any escalation in the house price. This will then offset some of the compounding effect of the interest & mitigate its effect on the estate somewhat. Again, we are looking here at the longer term & no guarantee can be given they will go up; nevertheless historical records show they have indeed.
Consequently, a rule of thumb is never to borrow anymore than required beyond the initial 12 months. Plans are now flexible enough & with drawdown equity release schemes introduced & now being the most popular roll up lifetime mortgage, then the funds can be drip fed over time as & when required.
Additionally, by taking a lower initial amount, results in less interest being charged, thus meaning more inheritance passed onto the beneficiaries.
The second factor affecting the balance accruing & is also the primary cause of roll-up & that is purely down to the fact that NO monthly payments are required. This helps retirees to have access to the some of the equity tied up in their property & at the same time having NO effect on their budget.
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Finally, equity release schemes do have an ever increasing part to play in the retirement planning for the over 55′s. Care must always be taken & should never rushed into without discussion & involvement of third parties. Advice should always be provided by an industry qualified equity release adviser.
Hopefully lessons have now been learned from the past & the industry can move forward, innovate & develop further over time. If so, & in the right circumstances equity release can provide for many, a comfortable & enjoyable retirement.
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If you require furthjer advice on equity release schemes, please call freephone 0800 783 9652 or email mark@equityreleasesupermarket.co.uk
Tags: drawdown equity release, equity release, Equity Release Adviser, Equity release calculator, home income plan, lifetime mortgage schemes, lifetime mortgages, SHIP
Posted in Advice, Equity Release | No Comments »
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.
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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.
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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.
X
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.
X
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.
X X
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.
X
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.
X
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.
X
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.
X
Sounds daunting? Well, let’s now look at the sums as promised earlier:
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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.
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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.
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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.
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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.
X
Finally, hopefully lessons have been learned from the past & the industry can move forward, innovate & develop further over time.
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To discuss any of these issues & with no obligation whatsoever, please contact the Equity Release Supermarket team on 0800 783 9652 or email mark@equityrelease supermarket.co.uk
Tags: drawdown equity release, equity release, Equity Release Adviser, equity release awards, Equity release calculator, equity release schemes, lifetime mortgages, No negative equity guarantee
Posted in Equity Release, News | No Comments »
Wednesday, December 22nd, 2010
Home reversion equity release schemes allow you to sell a part of or your entire property to a lender. In return, the home reversion company will provide you with a monthly or lump sum cash amount or a combination of both.
Although the interest is not paid on the loan you take, the home reversion company will take a percentage of the value of your property when it is eventually sold. This percentage will often depend on numerous factors including – your age, the cost of your property and its condition.
The older you are, the more money you will be able to receive. Additionally, should you have a history of poor health then certain home reversion providers can potentially offer you a greater lump sum, or alternatively a lower percentage sale of your property.
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How do home reversion equity release schemes work?
With home reversion equity release schemes, you sell part of or the entire property to the lender and become a tenant with a lifetime tenacy guarantee. You will still be responsible for your property, its maintenance and bills. Although you become a tenant, you get the rights to reside in your property with your partner under a lifetime lease. Unlike normal residential tenants, there is no rent to pay for the rest of your life.
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The difference between lifetime mortgages and home reversion
Under a lifetime mortgage scheme you retain the complete ownership of your property. On the other hand, with a home reversion scheme you can sell anything up to 100% of your property to the home reversion company.
A major benefit of home reversion schemes is that you can guarantee the percentage of the final sale value of the property at the end of the day. A lifetime mortgage has no guarantee as there is no knowledge of how long the plan will roll-up for, which at the end of the day could result in NO inheritance for the children.
There are also some interest only lifetime mortgage schemes such as the Halifax Retirement Home Plan that enable you to repay the interest but not the capital to the building society or bank. This greatly helps you to calculate how much inheritance will be left as long as the monthly payments are an affordable option.
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If you wish to discuss whether a lifetime mortgage or home reversion scheme is right for you contact the Equity Release Supermarket team on 0800 678 5159.
Tags: Halifax Retirement Home Plan, home reversion, home reversion schemes, lifetime mortgages, poor health equity release
Posted in Equity Release | No Comments »
Monday, December 20th, 2010
Should you have already purchased your annuity from your pension scheme, then unless it is indexed linked by inflation you may now be feeling that has lost some of its purchasing power over the years. With inflationary fears currently still persisting, even with the recent downturn in the UK economy, then people are looking at extra ways to enhance their retirement income & lifestyle.
Obviously, once a pension has been purchased then it is fixed for life, so alternative sources of boosting one’s retirement income need to be sourced.
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So how can equity release assist?
Equity release allows you to enjoy the monetary benefits of your assets without having to sell them. This is one of the ways to use the equity locked in your property. Equity release schemes are available only for retired individuals over the age of 55.
There are two types of equity release schemes: Lifetime mortgages and home reversion schemes. Consider the benefits of these two and choose one that suits your requirements. It is prudent to opt for independent financial advice when dealing with equity release schemes.
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Lifetime mortgage schemes: These schemes are designed for property owners. They help in gaining money by mortgaging the property. A major benefit of opting for this scheme is that you still remain the sole owner of your property. Individuals over 55 years of age are eligible for lifetime mortgage schemes.
One type of lifetime mortgage scheme called drawdown equity release could be a solution here. The lender will calculate an overall maximum that can be released & from this the applicant can withdraw this reserve facility in small amounts at times to suit one’s requirements. This could be monthly, half yearly or even annually, but the choice is yours. Therefore, by opting for a drawdown scheme could boost your retirement finances with flexibility.
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Reversion schemes: Contrary to lifetime mortgage schemes, home reversion schemes require you to sell a part or all of your property to enjoy monetary benefits. A lump sum from one of these schemes can be used to purchase an annuity which could therefore supplement any existing pension scheme.
Dependent on the lump sum raised, age & health & options built into the annuity would determine the regular income to be paid by the annuity provider. Always shop around or seek the advice of an independent financial adviser to ensure the maximum possible income is achieved.
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Eligibility
You should be the sole owner of your property prior to mortgaging it. The aforementioned schemes have different age requirements. While lifetime mortgage schemes require an individual to be 55 years of age, home reversion schemes need the individual to be 65 years of age to qualify. Your property will be surveyed and you can qualify for these schemes only if it is worth £60,000 or more.
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Equity Release Supermarket have independent financial advisers that can provide advice on both equity release & how to maximise your retirement income with annuities & pensions.
Contact us on freephone 0800 678 5159 if you wish to discuss whether any of these products can help your retirement financially.
e: mark@equityreleasesupermarket.co.uk
w: http://www.equityreleasesupermarket.co.uk
Tags: drawdown, equity release, equity release schemes, home reversion, home reversion schemes, lifetime mortgage schemes, lifetime mortgages, pension annuity, purchased life annuity
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Thursday, December 16th, 2010
Before entering into for equity release, you need to be well versed with this financial product. Below are answers to some common questions that might make your task easier such as what is equity release.
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What is equity release?
Equity release schemes help retired individuals to raise money from their property. Firstly, the term ‘equity’ describes the net value of your property. This is calculated by taking the current sale value of the property & deducting any mortgage or secured loans upon it.
The money raised is this equity tied up in the property. This money can either be withdrawn as a lump sum or in monthly instalments, the popular of which is primarily the former. A main feature of these equity release schemes is that you do not have to move out of your house and allows you to live your life in peace and financial comfort.
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What are the uses of equity release plans?
The tax free lump sum released is yours to spend as you wish. The equity release companies do not place any restrictions on how the money is spent. You can make use of the released cash to supplement your retirement income and clear debts including mortgages, loans, credit cards, hire purchase & catalogues.
Apart from this, you could also use the money to go on holidays, redesign your home, purchase new car or increasingly an popular reason which is to help children invest in bricks & mortar or get on the property ladder for the first time.
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What are the types of schemes available?
Equity release schemes broadly fall into two categories – lifetime mortgages and home reversion plans.
With lifetime mortgages, you get a secured loan on the property. You do not have to make any monthly interest payments. Instead, the interest gets rolled up and is paid off when the property is sold. This would be on death of the last survivor or moving into long term care. Therefore, you can continue to live in your home for the rest of your life or until the time you move into a retirement or care home. The main difference between the roll-up lifetime mortgage scheme & the home reversion is that with the former, the property remains 100% in the name of the property owner.
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With home reversion plans, you can sell a part or all of your property to the lender in return for a lump sum. The home reversion providers will therefore take partial ownership of your property to the extent of the percentage sold.
A lifetime tenancy is created so you can live rent free in the property for the remainder of your life. This are great equity release solutions for those who wish to guarantee an inheritance for their children & beneficiaries.
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Why is life expectancy important?
The type of scheme chosen by you will depend on how long you are likely to stay in your house. The older you are, the more tax free cash you can raise.
With a lifetime mortgage scheme, the longer you live the greater the final balance will be. This is due to the roll-up & compounding effect of the interest on a year on year basis. Therefore, there you cannot predict how much equity will be left at the end of the day as you do not know long the plan will roll-up for.
On the 0 hand the advantage of home reversion schemes are that you can guarantee an inheritance for your beneficiaries. The reason for this is due to the fact that if a percentage of the property is sold, then the remaining percentage is yours to keep. Consequently, the estate will retain this percentage of the final sale value of the property & can guarantee an inheritance to pass down.
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Not sure which scheme is best for your circumstances? Why not call the Equity Release Supermarket team on freephone 0800 678 5159 or email mark@equityreleasesupermarket.
We look forward to hearing from you.
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Author
Mark Gregory CeMap CeRER
Tags: equity release, equity release companies, equity release schemes, home reversion, home reversion schemes, lifetime mortgages
Posted in Equity Release | No Comments »
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