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Posts Tagged ‘New Life Mortgages’

New Life Mortgages Buck the Trend & Launch a New 25 Year Interest Only Retirement Mortgage for the over 65’s

Wednesday, October 10th, 2012

The tabloids are currently awash with articles proclaiming the death knell for the interest only mortgage. We only heard a few days ago the Nationwide are just one of the high street mortgage lenders in declaring themselves out of the interest only mortgage market.

 

But are these lenders missing a trick?

 

There is a potentially huge retirement mortgage market out there; a society that has grown up on a life of managing debt. They have paid off their mortgage, loans and credit cards during their lives which has created a culture of good financial management and has enabled them to build a significant volume of equity in their property.

 

Lenders need to understand more about the needs and demands of our retired population: –

  • Pensioners have fixed incomes which will usually be incremented each year
  • Most have a good credit history with track record to prove this
  • The older population tend to manage credit better & have not harnessed the ‘buy now, pay later’ mentality of today’s younger generation
  • They cannot be made redundant, nor lose income due to sickness or injury

 

We know in business, where one dares to tread another will be quick to follow and New Life Mortgages have done just that with their newly launched Over 65’s Retirement Mortgage.

 

Who are New Life Mortgages?

New Life Mortgages have been offering equity release schemes since 2003 and their innovative ideas were behind the first ever buy-to-let equity release plan and 2nd home lifetime mortgage schemes.

 

Having been assessing the market for their latest launch, New Life has evidenced the potential behind the vacuum left by the withdrawal of products such as the Halifax Retirement Home Plan in 2011.

 

The 65+ Retirement Mortgage

The newlife mortgages 65+ mortgage is aimed at homeowners with a minimum age of 65 who are looking to raise a tax free lump sum secured against their property and who wish to remain in situ for the foreseeable future. The important aspect of this plan is the term – there is no upper age limit and the applicants can take it out over a 25 year term, possibly longer with lender approval.

 

Available on an interest only or capital & repayment basis, the 65+ mortgage has an interest rate of 5.74% variable. Therefore, applying for a £50,000 mortgage on interest only basis would cost £239pm.

 

Early repayment charges (ERC’s) are favourable also which isn’t the norm on most equity release or interest only lifetime mortgage schemes. With a penalty of 3% in the first year only and none thereafter, the 65+ mortgage could certainly could suit those who are unable to sell their properties in the short term but still need cash funds.

 

How much will New Life Lend?

Standard mortgage lending criteria applies and affordability needs to be evidenced to determine how much can be borrowed. A common sense approach, and & possibly one that most lenders in the current environment could benefit from.

 

The formula for calculating maximum borrowings  are based on income of 4x the first income plus 2.5x the second, or simply 3.75x joint income, whichever provides the highest release for the client. Even still the loan must prove affordable when viewed in conjunction with other household expenditures. Usual credit checks are made and references requested if necessary.

 

The overall maximum amount that New Life Mortgages will lend is £350,000, although again this can be reviewed subject to individual criteria. One caveat though is that the maximum amount that can be borrowed is 50% of the property value & there must be £150,000 equity remaining after the mortgage is granted. Therefore, the over 65’s mortgage may not fit all criteria; however it is hopefully a move in the right direction for pensioner mortgages.

 

Finally

The 65+ mortgage is available on a purchase or remortgage basis. If remortgaging then New Life Mortgages are currently offering a FREE legal fees package on every application.

 

If you wish to check eligibility or request a quote on the New Life Mortgages 65+ Mortgage please call the Equity Release Supermarket team on 0800 678 5159.

How Easy is it to Remortgage My Equity Release Plan?

Sunday, April 22nd, 2012

Equity release schemes have now been in existence for over 15 years in their current format. Here we answer some common questions such as – ‘Can I get a better interest rate?’ & ‘Can I borrow additional funds? ’.

 

Equity release schemes allow you to free up some or all of the equity tied up in your property and use the tax free cash for lifestyle reasons. This can be a particularly useful option for those who do not have enough cash flow and own a property, but do not wish to sell it.

If you already have an equity release scheme but for some reason you’re thinking, ‘should I remortgage my equity release?’ it may be worth your while to compare equity release rates & deals to find a more suitable product.

 

The equity release market is constantly changing, with interest rates rising and falling, and new innovative equity release schemes becoming available all the time. For instance, interest rates at the moment are much lower than they were just a few years back. So if you decide to remortgage your equity release just now, the fall in interest rates could result in significant savings for you over the long term, even when you take into account the setting up costs, which include solicitors fees, application fees etc. Not only that but you may have released all the money from your original plan & now find you require a ‘top-up’ to continue enjoying your retirement.

 

Why should I review my existing equity release plan?

With equity release schemes becoming increasingly popular, equity release providers are developing new products and schemes all the time. Something that was not an option a few years ago may now have become entirely possible. Therefore, a more suitable and pragmatic product may now be available. This means that by reviewing your existing equity release UK plan and shopping around for new options is a good idea, especially at this point in time.

 

What should I look out for?

Equity release schemes are defined as a lifetime mortgage. As such all plans have some form of in-build early repayment charge which is differentiated by the company offering the equity release plan. These penalties can exist for a set number of years on a fixed basis, or alternatively they can be linked to an investment such as government gilts or Bank of England base rate.

Particularly government gilts seem to be a favourable barometer used in today’s equity release marketplace. The two largest lifetime mortgage companies – AVIVA & Just Retirement have decided to use them, so you need to be aware of potential back end penalties if the equity release mortgage is paid off early.  Other potential suitors such as LV= (Liverpool Victoria) & New Life Mortgages will only charge a fixed percentage penalty over either 5 or 10 years, with no penalty thereafter.

 

What is the next step?

If you are considering remortgaging your existing equity release scheme you must seek the professional services of an equity release adviser who has the experience of remortgage work. The adviser should be independent, so as to have the whole range of equity release schemes at their disposal. This is important as to remortgage again will incur a new round of equity release set up costs which need to be minimised as much as possible to ensure the new equity release deal is viable.

Before you decide to proceed with an equity release remortgage, it is important to consider several factors.

Remortgaging an existing equity release plan is not just a matter of switching to a new policy.

 

The following areas all need to be assessed & equity release comparisons made: –

Current value of the property – this may have changed since the original valuation, particularly in light of recent market conditions
Age of the youngest applicant – since the original equity release plan was taken out, you will be older, thus the loan-to-value ratio’s will have increased also meaning you can borrow a higher percentage of the house value
Balance of the existing equity release scheme – this can be based on your last annual statement or by requesting a redemption statement from your lender
Whether any early repayment charges would apply? – this can be ascertained from the redemption statement that should be ordered from your existing lifetime mortgage provider. This figure can be the difference between staying & switching plans dependent & the size & duration thereof.

 

Upon collating this data your equity release adviser can make an informed decision as to whether to stay put, or it’s in your best interests to switch plans. This is where the adviser’s independence becomes important. With any new equity release application comes a new set of set up costs. However, if your adviser can obtain a free valuation, cashback or any other incentive current available, then this will mitigate some of the new charges & make the whole process more worthwhile.

Professional financial advisers from Equity Release Supermarket will have all these tools at their disposal. With years of practical experience & many advisers having worked at the likes of AVIVA & Prudential, we know how these plans can be remortgaged & transacted quickly & cost effectively. With our current crop of best equity release deals we ever had, now is definitely a good time as any to consider saving yourselves, & your beneficiaries £1000’s by switching your existing equity release plan.

 

For a FREE no obligation equity release remortgage analysis, please contact the Equity Release Supermarket team on 0800 678 5159.

Alternatively, please complete the ‘find an adviser’ contact form to book an appointment with your local equity release adviser.

 

Equity Release Supermarket is one of the leading independent, over 55’s equity release specialists who have won awards for quality & impartial advice.

They can be contacted at mark@equityreleasesupermarket.co.uk where your enquiry will be treated with strictest confidence.

 

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

 

What is the Maximum Equity Release Payout that I Can Expect?

Monday, January 30th, 2012

If you have been seriously considering taking out an equity release plan, the most important question to come to mind will be ‘what is the maximum equity release available?’

 

Obviously, you may not want to secure everything you can get, however, a useful equity release calculator can advise upto the maximum available. For instance with a drawdown equity release plan, it would be helpful if you knew the maximum, as any funds not taken in such a scheme would then be held in a reserve facility for future use.

You will also need to bear in mind that there are certain factors that will be taken into account in order to arrive at the figure that would be released to you in such a plan.

 

First and foremost, your age will be a very important factor. The younger you are, the less you can expect to have released in an equity release scheme. You would tend to find that the companies that deal in equity release plans add an extra percentage point of LTV (loan-to-value) for each year the applicant gets older.

This is because the relevant company has to estimate how long it is likely to be until they will be able to secure the final equity – i.e. your property. If you take out an equity release mortgage when you are in your late-fifties or early-sixties, you can expect to receive a far lower payout than if you were to have taken out the plan in your eighties, for example. This is purely down to life expectancies which are increasing all the time as people are healthier & more active in their retirement years.

 

You should also bear in mind, at this stage that the companies dealing in equity release schemes have a minimum age threshold in place and this is generally set at 55 years of age. These would be companies such as Aviva, New Life Mortgages, and Stonehaven. However, some equity release companies such as Just Retirement & LV= impose a higher minimum age of 60 before you can apply.

The next factor that will be taken into account is the actual market value of your property. Again, the higher this is, the more you can expect to receive in your payout. There are minimum value thresholds in place here as well which is £60,000. However, most companies impose higher minimum values & £75,000 or £100,000 isn’t uncommon.

If you are looking to take out an equity release plan in a joint application, the youngest applicant’s age will be the deciding factor as to the amount of money that will be released in the payout. This is because the company must wait for both applicants to either pass away or move into permanent residential care and the youngest applicant will be the most likely to vacate the property last in either capacity. Also, as stated earlier, the youngest person in the couple must also be over the age of 55.

 

There are convenient equity release calculators on many websites that will give you a very good idea of the amount of money to be expected as a payout when you take out such a plan. All you need do is simply complete an online enquiry form and these will return the maximum value that may be available to you in an equity release scheme. If you are happy with this figure, you may then go ahead and start the ball rolling with the relevant company; there is also a facility to discuss equity release mortgages in more detail with a qualified equity release adviser, if you have further questions that require attention.

 

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.

 

New Equity Release Scheme Launches To Help Landlords in the Buy to Let Mortgage Market

Friday, February 11th, 2011

The resurgence of the equity release market gathers momentum in 2011 with the news that New Life Mortgages are set to re-introduce their landlord & second home equity release schemes on 11th February 2011.

Following the additions of more2life & New Life Mortgages to the equity release market late in 2010, the latest launch from the innovative lifetime mortgage lender signals a degree of diversity to their portfolio.

New Life Mortgages temporarily withdrew from equity release market in 2009. They obviously haven’t been sat idle, but instead waited for their opportunity to re-enter at the right time & with the right products.

Following on from my previous article on New Life Mortgages rejoining the equity release market in November 2010, here we discuss the features & benefits to landlords of this unique equity release plan.

 

How does the scheme work?

The New Life Mortgages Landlord Loan provides a tax free cash lump sum based on a percentage of the value of the residential investment property & the age of the applicant. Plans start at age 55 & any landlord with a portfolio of upto 5 rental properties can potentially release some of the equity tied up within them.

This buy to let equity release has no set repayment date & no monthly repayments to make. The loan is eventually repayable on the sale of the property when the last surviving borrower has died or gone into care.

 

How do I qualify?

  • Minimum age of 55 (for joint applicants minimum age 55 of the youngest)
  • Investment property must be in England & Wales
  • Landlord loan minimum property valuation  of £100,000 & a maximum of £1million
  • Minimum release is £25,000 & maximum is £500,000
  • The property should be standard construction with flats over 5 storeys excluded
  • If leasehold property, then 80 years must be remaining on the lease
  • Any existing mortgage must be repaid on commencement of the Landlord scheme

 

How Much Can I Borrow?

This is determined by the age of the youngest applicant & the value of the investment properties:-

Age 55 –  16%
Age 60 –  21%
Age 65 –  26%
Age 70 –  31%
Age 75 –  36%
Age 80 –  41%
Age 85+ – 45%

 

Therefore, as an example a 65 year old landlord with a single investment property of £200,000 could potentially release a capital lump sum of £52,000.

 

How does it compare to a normal equity release scheme?

The scheme in principle works exactly the same. You borrow the money, the interest accrues on a monthly basis & it is repaid when the property is finally sold.

The differences lie in the rental side; an assured shorthold tenancy agreement must be in place to qualify & cannot be let to family members.

Also, there are maximum borrowing criteria, similar to a buy to let mortgage. This states that the monthly interest charged cannot be more than the rental income received.

 

What are the costs involved?

  • Valuation fee dependent upon the value of the investment property
  • Application fee which can be added to the loan
  • Solicitors legal fees
  • Lifetime fixed monthly interest rates of 6.39% (age 55-80) & 6.55% (age 81+)
  • Early repayment charges only 5% for the first 5 years. No charges thereafter.
  • Any advice fee charged by your equity release specialist

 

Practical uses of the New Life Landlord buy to let mortgage?

The equity release funds can be utilised in many ways.

With market opportunities growing in the rental market as house prices fall & yields increase, bargains are there to be had.  Should any residential landlord wish to expand their portfolio & have concerns over the expense of buy to let mortgages they can consider schemes such as this.

Should a potential landlord spot a new investment opportunity, but has limited capital for deposit, then landlord equity release schemes could assist. The borrower could review all properties under his portfolio & by using an equity release calculator; assess how much could be released individually to meet the shortfall required.

Additionally, with the age group eligible for this buy to let mortgage there could be tax implications. Therefore, should some of these assets need to be disposed of, rather than selling the property & incurring capital gains tax, then equity release can be undertaken instead.

Finally & the most common purpose for this could be for debt consolidation purposes. Should financial difficulties arise on a buy to let mortgage or other personal finances, then subject to the amount that can be released, these debts can be repaid.

 

Perhaps one has just had enough repaying a buy to let mortgage & would rather receive the gross rental income to support their retirement?

The uses of the New Life Landlord scheme can be many; so to discuss how the features of this unique buy to let lifetime mortgage can benefit you contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Equity Release Schemes – Fulfil All Your Financial Requirements

Tuesday, December 21st, 2010

If you want to release some money against the value of your property then equity release schemes can be ideal options for you. At present, many people after retirement opt for equity release to improve their income or make lifestyle purchases. Here we look at the features & minimum specifications of these schemes.

 

What qualifications are required for equity release?

As equity release schemes are specially designed for retired individuals, you must be over 55 years of age to apply. It is necessary to own a home which is generally worth more than £60,000. This is the minimum acceptable property valuation on any equity release plan in the marketplace & is offered by New Life Mortgages.

 

All equity release schemes, prior to inception will require the mortgage or any other secured loan upon it to be repaid either before, or at completion. Therefore, it is essential that the mortgage is low or at least below the maximum equity release possible. Thus, if a high mortgage balance exists it may not be possible to complete an equity release scheme. This means that you should have very little or no mortgage at all to enjoy the benefits of equity release schemes .

 

What benefits are offered by equity release schemes?

One of the best things about these schemes is that they will offer tax-free cash. This means that you can spend the money in different ways. For instance, you can buy a new car, a new home, pay off outstanding debts or go on holiday.

Unlike bank loans, equity release schemes allow you to stay in your home with no monthly repayments and also enjoy the cash. Today, various equity release loans have been introduced, so you can choose the one which suits your needs. However, as always we suggest that you always receive independent financial advice to ensure that the correct scheme is recommended to suit your requirements.

 

To ensure you receive upto date advice on the best deals & current offers available ring the Equity Release Supermarket team on freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk with your query.

 

More Great News For The Equity Release Market As New Life Mortgages Return With Lowest Interest Rate

Wednesday, November 3rd, 2010

Signs are certainly showing of a recovery in the equity release market as news that existing SHIP member – New Life Mortgages are returning with two new competitive products.

They arrive on the back of the recently launched impaired life equity release lender; more2life at the beginning of October.

 

Although New Life Mortgages hadn’t officially withdrawn from the market in 2009, it remained in the market whilst new funding sources were explored..

That time is now & details of the revamped equity release schemes can also be found on the Equity Release Supermarket website by clicking here.

 

New Life Mortgages have decided to make a statement, by not only relaunching their product range, but also arriving with the lowest interest rate in the market at just 6.35% monthly.

The Lifetime Fix and Lifetime Gold products both position themselves into the ‘roll-up’ lifetime mortgage range & are designed to be the most competitive equity release products in the market for the over-55’s.

 

The New Life Gold product is designed to offer the maximum release possible for a client in good health. Plans start at age 55, with a release of 20%, thus offering the maximum release currently available in the equity release market.

 

The age related percentage’s that can be released are as follows: –

Age 55 – 20%

Age 60 – 25%

Age 65 – 30%

Age 70 – 36%

Age 75 – 41%

Age 80 – 46%

Age 90 – 51%

 

The product is uniquely available only on a single life basis & has a very competitive interest rate of 6.75% monthly. This compares favorably with its peers at the maximum release end of the market who would be Aviva & new entrant more2life.

As an extra incentive, New Life Mortgages are offering £300 cashback on NLM Gold cases that complete prior to December 29.

 

The Lifetime Fix is the second product on offer from New Life Mortgages with the lowest rate currently available in the equity release market at just 6.35% monthly.

Available on a single & joint life basis the plan releases a lower amount than the Gold product, starting with a release of just 17% of the property value at age 55.

As an added incentive New Life are offering £600 cashback on cases completed before 29th December, so if you are considering equity release with a low interest rate hurry!
Both schemes have a minimum acceptable property value of £60,000, which again is the lowest in the equity release market & may bring previously ineligible applicants a new lease of life?

If early repayment charges are an issue with some lenders relying on gilt rates, New Life Mortgages have a more conventional attitude with the simplistic rate of a 5% penalty in the first 5 years. Thereafter no penalty exists.

This could obviously favour people who may have shorter term retirement plans with their properties, although equity release UK schemes are designed to run for the rest of your life.

 

Should you require a product fact sheet or quotation on any of these New Life Mortgage products, please call the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

Saffron’s Withdrawal Leaves The Equity Release Market Lacking Spice?

Tuesday, September 29th, 2009

Saffron Building Society  has announced it is to withdraw, albeit temporarily, from the equity release  market after meeting its lending targets for this year.

It has taken this action following a successful year of lending in which 2009 targets have now been met. Also by Saffron withdrawing from the sector now will ensure their lending portfolio remains balanced and within borrowing strategy.

 

A sensible approach maybe?

 

However, this follows the latest setbacks to the market, which has resulted in lenders pulling their products or even positioning themselves so as to reduce their exposure to the equity release market.

This has added in a long line of lenders removing their equity release schemes  over the past 12 months; we had Retirement Plus who had funding issues, Dunfermline hit by the credit crunch & Godiva who recently felt longer term funding was too expensive & consequently decided to ‘temporarily’ withdraw from the equity release market.

 

Also, recognized lenders such as Bradford & Bingley, Standard Life and Bristol & West whom all used wholesale markets to fund their new business, pulled out of the equity release market last year.

Who knows if any of them will be back – certainly not in the short term?

 

Last week New Life Mortgages  reviewed its equity release product range. The New Life Gold product which offers their highest release possible, had its maximum facility slashed by 8%, effectively ruling itself out of the maximum loan end of the market. It also withdrew both drawdown products which are now under review & possibly re-introduced later this year.

But it’s not just the equity release companies who have been affected. Intermediaries too are under financial pressure with this niche product.

 

We had the news recently that Newcastle Building Society are to withdraw their equity release advisory service by the end of the year. They have offered advice on equity release schemes since 2006 & stated the decision was due to the ‘considerable contraction’ in the equity release sector.

 

In Retirement Services, a prominent player in the tied sales force environment went into administration at the end of July with again lack of funding & a purchaser for the business not found. If a company who had been in the market since the 1990’s is left floundering, what is left for the rest of the equity release market?

 

Well, the demand for advice in equity release is still high, but with providers and specialist equity release brokers  withdrawing from the market, as economic conditions become more strained, only points to one outcome.

 

Lenders want consumers to have choice & access to good quality advice. Hence, the departure of such lenders & brokers and also their competitive equity release schemes means in the current climate – ‘only the tough will survive’.

 

Equity release companies who position themselves carefully, without too much exposure are the ones who will deliver in the long term & ride out the current storm.

 

Breathing ‘New Life’ to Buy to Let Mortgages – The Equity Release Way

Tuesday, September 15th, 2009

Could equity release assist the resurgence in the buy to let market & reclaim it from the doldrums?

 

With the equity release market becoming more & more competitive, we focus on a particular product that has found itself a niche in this market.

 

You can’t have failed to notice in the past 6 months that ‘mortgages’ have become synonymous with terms such as ‘credit crunch’ & ‘falling property values’ & anything involving difficulty in obtaining credit.

 

The mortgage market is showing preliminary signs of improvement, but not before time & there is still a long way to go before its back on its feet.

 

One particular area in the financial services sector that has been associated with this slump is the buy to let mortgage. With blame being apportioned to these products having acted as part-catalyst to the advent of the credit crunch, lenders have had their fingers burnt & even withdrawn from lending on these products. It’s therefore difficult to see how they will recover in time & ahead of the general mortgage market.

However, all is not lost. You’ve heard the saying ‘being in the right place at the right time’ – well this could be one of those moments!

 

There has been a Landlord Equity Release scheme available for a number of years which has been drifting along without much prominence. This equity release scheme from New Life Mortgages enables landlords over the age of 55 to be able to assist them financially by releasing capital from their buy to let portfolios.

 

Buy to let landlords generally build their portfolio’s by relying on property values to increase. Once additional equity is built up via property value escalation, the landlord can then apply for a buy to let remortgage to raise additional capital. These new funds can then be used as a deposit towards to next purchase…& the momentum continues.

 

The problem now is that property values have fallen, hence this portfolio creation technique has been somewhat dismantled.

 

With the buy to let market having experienced massive growth over the past decade, thousands of mortgagees are now relying on the equity in their buy to lets and holiday homes for retirement purposes.

So how can equity release help?

 

Well, landlords over the age of 55 can now raise equity without having to sell their properties or even pay any monthly mortgage payments in the process. Instead, the interest is “rolled up” and the loan is repaid only on death, go into long-term care or the house is sold.

 

This equity release scheme has proved to be attractive to landlords who want to release equity in their portfolios in order to supplement their pensions. With the current depressed property market, landlords may be reluctant to sell & thereby delay the eventual sale in order for their families to benefit from future growth.

 

The New Life equity release scheme could be taken out on an unencumbered property in which the capital raised could be used in assisting with retirement plans or even the purchase of another buy to let property.

 

Alternatively, the plan could be used to repay an existing mortgage. Thus, by not having to make any further monthly mortgage payments & with the landlord still in receipt of rental income, this has the overall effect of increasing their retirement income.

 

Another benefit of this scheme is from a taxation viewpoint.

 

By taking out equity release, landlord’s could potentially avoid a capital gains tax (CGT) bill they would pay if they sold up — although they would be still be passing on a reduced tax liability to their heirs. This can also apply to inheritance tax.

 

New Life’s equity release scheme takes advantage of the Inland Revenue rule that profits are revalued when someone dies. When people die and leave their belongings to their family, or indeed anyone else, there is no CGT to pay at the time. When the property is eventually sold, CGT is based on the difference between the proceeds of the sale and the market value at the time of death.

 

Another perk for landlords is that the interest charged on the equity release can be offset against the tax on the rental income, even though the interest is rolled up.

 

The scheme is also available on holiday cottages and second homes, thus extending the markets potential.

 

Other benefits in brief are that the New Life equity release plan has no impact on the landlord’s main residence. This will leave it free from any potential legal charges on the property.

 

Finally, the landlord can raise commercial finance at a residential rate which is currently 7.25% compounded monthly.

 

Main features of the buy to let scheme are: –

·       Minimum age of the youngest must be 55

·       LTV’s start at 15%

·       Minimum loan £26,000

·       Minimum property value of £100,000

·       Rental Income must exceed the interest being charged

·       Never owe more than the value of the property

·       Early repayment charges are over 5 years

 

It is niche equity release products like this from New Life Mortgages that will instill further confidence in the current subdued property market & we look forward to further innovations in this sector.

 

 
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