Equity Release Latest News

Posts Tagged ‘LV Equity Release’

Stonehaven Equity Release Re-Launch With 8 Year Fixed Early Repayment Charges

Monday, March 16th, 2015

Stonehaven Equity Release schemesWhen many equity release providers are competing directly in using their lifetime mortgage interest rates, Stonehaven have decided to compete in a different field by taking the bold step of moving away from Gilt-based early repayment charges (ERC’s) & introducing a fixed penalty basis covering the first eight years of the equity release loan.

With effect from 16th March 2015, Stonehaven will move its whole lump sum & interest only lifetime mortgage range of plans over to an 8 year fixed early repayment charge of 5% in the first 5 years, 3% in years 6-8 and none in the 9th year & thereafter.

 

Background to Equity Release Early Repayment Charges

Due to the nature of the product – ‘Lifetime’ Mortgage, the plans have been designed to run for the rest of the homeowners life. This can create uneasiness for some people taking out equity release schemes in retirement as they cannot always say with certainty what their future plans entail with regards to their property.

 

Equity release early repayment charges have historically been a mixture of fixed penalty, gilt based, Bank of England base rate related and even long term interest rates called SWAP rates. The majority of equity release schemes across the market today is predominantly linked to government gilts. This can be in the form of an individually selected gilt such as Aviva’s, which is based on the age of the youngest homeowner, or follow an index of gilts such as the FTSE UK Gilts 15 Year Yield Index with Just Retirement.

 

These gilt related penalties on paper can look extreme given that Aviva can charge upto 25% of the amount repaid dependent upon the gilts yield falling from inception. Additionally, companies such as Just Retirement & Pure Retirement can charge a maximum of 20% of the fall in the FTSE UK Gilts 15 Year Yield Index. Therefore, the nature of gilts leads to uncertainty of their future levels & consequently any prediction regards their future level is unknown & cannot therefore be relied upon for early repayment purposes.

 

Currently, only one equity release company offers the certainty of knowing exactly what the future penalty could potential be; this company is LV= (Liverpool Victoria). Charging 5% for the first 5 years of the amount repaid & then 3% in the next 5 years, they actually have no early repayment charges after 10 years. This have given them a niche position within the equity release marketplace.

 

Stonehaven’s Move to Fixed Equity Release Early Repayment Charges

However, LV= equity release now have fresh competition and this is the beauty of where the equity release industry is right now. Competition is driving this market forward and its with such innovations & product development that is going to extend the volume of lending in 2015, to beyond the £14 billion released in 2014.

 

Stonehaven have been considering this move previously, however with their takeover by MGM, its plans were put on hold. With a new team behind Stonehaven now, they have obviously decided the time is now right to introduce  fixed penalty equity release plan to the market. It will be interesting to see how these new fixed ERC’s are perceived. Historically, applying fixed rate early repayment charges can come at a cost and this is usually borne in the equity release interest rate with an extra levy on it.

 

At present Stonehaven have not indicated any changes to their interest rates with the lowest currently being the Stonehaven Interest Select Lite plan at 5.46% monthly (5.87% representative APR). Therefore, the fixed penalty charges look to have been absorbed into the current equity release deals on record.

 

So for anyone considering the equity release & uncertain regards whether an equity release scheme will be required over the longer term, the new equity release early repayment charge from Stonehaven could be a viable option to consider. Providing fixed, transparent & easy to understand  ERC’s with just 5% penalty in the first 5 years, 3% for the next two & zero after the end of the 8th year, Stonehaven have taken over LV=’s mantle of potentially the best early repayment charging system available in the equity release market today!

 

Further Information

To learn more about Stonehaven’s range of products attracting the new 8 year fixed penalty, please contact the Equity Release Supermarket team on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk.

How Equity Release and Power of Attorney Can Work In Tandem

Thursday, December 11th, 2014

Equity Release Using an Enduring Power of AttorneyHere at Equity Release Supermarket we occasional experience children and attorney’s contacting us asking whether they can take out equity release on behalf of someone they hold an Enduring or Lasting Power of Attorney over? The answer is yes.

 

However, there are systems in place from equity release companies to protect the homeowner and ensure that any release of equity is being utilised for the correct reasons and correct legally. Looking after someone else’s affairs financially is a big responsibility, not only in looking after the homeowner, but also the responsibility to their beneficiaries.

 

Being an independent equity release adviser with Equity Release Supermarket, I recently dealt with an Enduring Power of Attorney case which was being utilised to meet ongoing long term care costs that were being provided to enable the homeowner to remain in her home. The following case study illustrates the steps involved in helping the attorney take equity release on behalf of someone they were looking after, due to the onset of Alzheimer’s and the inability for the homeowner to contract themselves.

 

 

Equity Release & Power of Attorney Case Study

Initially, I had a call from a solicitor who held an Enduring Power of Attorney over a frail lady in her late 80’s. The lady had nominated the solicitor to be Power of Attorney over 15 years ago as the only family she had was a son living abroad. The solicitor contacted me as the lady had now developed Alzheimer’s and needed 24 hours a day care and was concerned that the lady was about to lose her home and be forced into a care home.

 

The homeowner was unable to live on her own and the cost of paying for full time carers to stay in the property was costing over £2,500 per month. Due to the ongoing nature of these costs and the fact her income was insufficient to cover much of these expenses, her savings were rapidly reducing and apart from the bungalow, she had no other assets. The attorney, who was also the solicitor had looked into all other options including help from the state, alas none were available.

 

Additionally, moving home was not a viable option due to the lady’s poor health and she did not want the upset of leaving her bungalow of 20 years and she still had something recognisable to her which was her Labrador. Therefore, with only £15,000 left in savings, time was running out to find a solution as to how to finance the remainder of her years.

 

The Equity Release Advice Process

I basically dealt with the solicitor as if they were my client taking out the equity release scheme. After taking suitable identification for both the homeowner & the attorney I was able to gather the background to the older lady’s finances. This gave me an insight as to how much was required monthly in order to meet the ongoing long term care costs. My job then was find a suitable equity release scheme that would fulfil the needs of maintaining the payments for the long term care for the first 12 months and then beyond.

 

 

After conducting my initial equity release research I advised that a guaranteed lifetime mortgage drawdown schLiverpool Victoria Equity Releaseeme was the best option. One particular lifetime mortgage meeting these requirements was from Liverpool Victoria. LV= offer an equity release scheme with a guaranteed drawdown facility, so no matter what happens in the next 15 years money can still be taken from the creation of a cash reserve facility, to guarantee money for future care costs would be available.

 

 

This is the advantage of taking completely independent equity release advice as we can research the whole of the marketplace to find the correct scheme to fit with clients individual circumstances. The LV= Flexible Lifetime Mortgage scheme ticked all the right boxes to meet the Attorney’s requirements as a concern of hers was that money would be need to be guaranteed in the future to guarantee the future of her care.

 

The next step to save time & possible heartbreak later was to check the legal paperwork of the Enduring Power of Attorney was suitable from the lenders perspective. Therefore, I sent a copy of the Enduring Power of Attorney document to LV= legal department who checked over & made sure it was registered with the Court of Protection. It was & met their requirements which enabled me to pass on the good news to the solicitor which gave the green light to continue the process to application.

 

Not only were LV= happy that the Power of Attorney was registered with the court of protection, but also that there was no conflict of interest between the attorney and the homeowner with the Alzheimer’s. The only other concern for LV= was that there was full time carers living in the property, but who rotated their shifts on a weekly basis. The carers were employed by an agency and after seeing a copy of the agency employment agreement, LV= were happy to proceed as long as the agency would sign a letter to state that upon the death of the homeowner they would cease to remain in the property. This they had no issue agreeing to.

 

Why Should Equity Release Clients Take out a Power of Attorney?

I always recommend Lasting Power of Attorney to my clients (changed from Enduring Power of Attorney in 2007) as you can nominate someone you trust; family member, friend or solicitor to make decisions on your behalf if needed in the future. However, most people think they will never need it and do not want to think about it is reassuring to know as in the above case that your best interests are being looked after by someone that you trust.

 

There are two elements to this in England and Wales – the Property and Financial Affairs & the Health and Welfare. This enables attorneys to provide cover for permanent or temporary control of finances and also medical treatment consent. The attorney also has the power to make the decision as to whether the homeowner should be taken into care, or stay in own home & be looked after there.

 

It is not compulsory with equity release, but is recommended that a Lasting Power of Attorney (LPA) is taken out, so if you get to a stage either through Alzheimer’s or any other reason if you cannot make financial or medical decisions then someone you trust can be nominated on your behalf to make decisions for you. LPA’s can even be used on a temporary basis where then can be utilised if a situation arises and you are unable to sign documents due to a temporary event such as illness, holiday or even broken wrist!

 

Summary

In the above equity release case the advantage of having Power of Attorney in place ultimately enabled the lady to stay in her own home in the first instance and with a guaranteed lifetime mortgage drawdown scheme from LV= it enabled her to stay in her own home for the foreseeable future. This would be via an initial lump sum covering the first 12 months costs, with the option if still required a cash drawdown facility, sufficient to cover a further two years costs, subject to any changes.

 

My name is Glen Pike & I am a specialist in equity release case studies such as this involving Power of Attorneys.

 

If you have a similar decision to make on behalf of a parent, or someone close to you and would like a free initial equity release consultation, please contact me on 07510 835613 or email glen@equityreleasesupermarket.co.uk

Is It Possible To Remortgage My Current Equity Release Scheme?

Sunday, August 19th, 2012

Throughout the history of equity release schemes, now is as good a time as any to consider remortgaging your existing equity release plan. So whether you are looking to borrow additional money or looking for a lower interest rate, a review of your current equity release scheme could make sound financial sense.

 

With the equity release market constantly evolving and interest rates having fallen significantly over the past year or so, now is the right time to analyse whether you could get a better deal than your current equity release scheme. 2012 has brought about new plans and innovations in the lifetime mortgage market, so whether you are looking to borrow additional money or looking for a lower interest rate a review is always essential.

 

As a consumer, it is always good to keep exploring the market for better options. For those who already have an equity release plan, one of the most common concerns is whether they can easily switch from one scheme to another. Consider equity release schemes like a conventional residential mortgage; they are basically the same apart from the fact that with an equity release scheme there are no monthly payments.

 

Why consider an equity release remortgage?

The main reason for considering switching equity release plans today would be due to the fall in lifetime mortgage interest rates. Interest rates on borrowing are much lower today than a many years ago and with rates now as low as 5.57% on the Aviva flexible lifetime mortgage plan, considerable compound interest could be saved over the long term. Combine this lowest ever interest rate with the current crop of deals available such as Aviva’s £1,000 cashback and free valuation, makes an equity release remortgage to Aviva an great inheritance saving action plan.

 

Which are the best schemes to switch to?

Another important change in the market is that many new types of equity release mortgage have become available today. For instance, lenders may now have much more flexible terms on the loan than previously. Over 5 years ago there was no such term as a ‘drawdown lifetime mortgage’.

Now we have the likes of Just Retirement, Aviva, LV= and an even enhanced drawdown equity release plans (where poor health exists) from companies such as more2life. We now also have a repayment facility included in a new plan from Hodge Lifetime. Hodge allow 10% overpayments each year with NO early repayment charges and even no penalty on downsizing after 5 years of the start of the plan.

Not only do we have roll-up schemes, but increasingly popular are becoming the interest only lifetime mortgage schemes from the likes of Stonehaven. Whereas in the past the interest could only roll-up, nowadays with Stonehaven equity release you can actual repay the interest in order to maintain a level balance on your mortgage. This is a great idea for those who wish to take some equity out of their property, but ensure that a guaranteed amount will only be payable to the lender at the end of the day.

 

Therefore, a regular review of any equity release scheme is recommended as your circumstances may have changed, or your future plans may be different from those years ago when the original plan was taken out. Considering all this, it is likely that if you’ve had an equity release mortgage for some time now, you should be able to find a better and more suitable loan in today’s’ marketplace.

 

Are there any pitfalls?

Switching to an alternate scheme is not just a matter of searching the internet for equity release comparison sites and immediately applying for a new equity release loan. Several factors need to be considered carefully in order to work out whether a new loan is viable. Even though the terms of lending may look rather attractive on paper, these need to be considered in the light of your existing loan, particularly whether any early repayment penalties may exist.

 

Early repayment charges are penalties charged by lenders which are meant to protect the lender from any losses made due to an early repayment of the loan. This penalty could be a lump sum, or a percentage of the total amount borrowed. They could be as high as 25% of the principal amount or 5% of the amount borrowed. In order to make a considered and correct decision about switching, it is important to get more information on equity release remortgages.

 

How do I go about remortgaging?

The most appropriate person to seek advice from is a local independent equity release adviser. Your advisor can give you impartial and expert advice on which equity release plans may now work best for you. Your adviser can calculate exactly when you could start to make savings by switching to a new equity release plan. This would be assessed by considering all the costs involved in setting up a new loan, as well as taking into account any penalties.

On your behalf and with your written authority, your adviser will request an equity release redemption statement from your existing provider. This will establish exactly how much is outstanding, the interest rate being charged & any early repayment charges that may apply. Armed with this information, a full analysis can then take place to ascertain whether it is sensible & cost effective to switch plans.

 

So if you’re looking to borrow more from your existing plan, or wanting to reduce the future compounding effect of the rolled-up interest, always get specialist advice.

 

The quality of equity release advice can make significantly difference to the inheritance you leave behind. Contact the equity release remortgage experts at Equity Release Supermarket to take away any worry and ensuring you make the right decision for yourself and your beneficiaries.

 

Call freephone 0800 678 5159 and request a FREE equity release remortgage analysis today. Alternatively, complete our contact form with details of your current plan and one of our advisers will contact you to discuss further.

 

 
Ask us a question

captcha