Posts Tagged ‘No negative equity guarantee’
Friday, January 6th, 2012
Products come, & products go; & we have seen the evidence of this by the unfortunate withdrawal from the mortgage market in August 2011 of the Halifax Retirement Home Plan.
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The global financial crisis has been challenging for many, and retired people or those looking to retire have seen a large amount of value disappear from their pensions. This can be stressful and causes worry, but finance options are still available for those looking to supplement their retirement. Equity Release Supermarket has access to market leading interest only mortgages which are available only to people over the age of 55 & looking for ways to finance their retirement.
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An example of such is the interest only lifetime mortgage is the Stonehaven Interest Select Plan. This is a unique and innovative option for many looking for additional financial relief in their retirement, but mindful of any inheritance that they wish to pass onto the heirs. Thus pensioner mortgages are now fully available to anyone over 55 & owning their own home.
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The innovative Stonehaven Interest Select equity release scheme is unique among interest only mortgages as the total outstanding balance does not change. Instead of the interest rolling up like traditional equity release schemes, the interest on the Stonehaven Interest Select is paid monthly by direct debit. This is often done by the customer, but can be funded via the children or potential inheritors who are looking to keep the amount of debt on the property asset under control.
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The great thing about the Stonehaven Interest Select equity release scheme is that the total amount of debt is managed for the duration of the interest only lifetime mortgage, making it a great financial product for those looking for interest only mortgages that don’t continue to eat into the ownership of the asset.
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Due to this controlled nature, the Stonehaven Interest Select mortgages are fixed interest rate lifetime mortgages, the security of which many find appealing.
Stonehaven also provides a no negative equity guarantee, so even if the financial crisis worsens; there is no risk that a burden of debt will be passed on in the inheritance. These are two features which should be discussion points on any kind of interest only lifetime mortgages, as they provide important security and peace of mind.
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Many people struggling to make ends meet during this financial crisis will be looking for ways to finance their retirement in a controlled fashion. Extra capital can really help to ensure that retirement is financially secure. At the same time, those looking for equity release schemes might be looking for control over how much value is traded for this additional security. Their research journey could start with the roll-up lifetime mortgage option, unaware that they are still eligible for an interest only mortgage even into retirement. Therefore, do not fall into the trap that some equity release brokerages will not advise this type of scheme is available. They may receive higher commission levels than payable by other companies, & this should not sway their advice.
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Thats why approaching Equity Release Supermarket you will always receive comprehensive equity release advice; impartial & quality recommednations from experienced industry advisers.
They will discuss all your equity release options available, and endeavouring to find the right equity release solution for you. However, if your priority is to control the amount of equity that is being released from your main asset, then the Stonehaven Interest Select plan is THE innovative option to consider.
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For further details on Stonehaven equity release plans please call Mark on freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk.
Tags: equity release, Equity Release Adviser, Equity Release Supermarket, halifax equity release, Halifax Retirement Home Plan, interest only lifetime mortgage, interest only mortgage, lifetime mortgage schemes, lifetime mortgages, No negative equity guarantee, Stonehaven, Stonehaven equity release, Stonehaven interest select
Posted in Interest Only Lifetime Mortgage, Stonehaven Interest Select | No Comments »
Tuesday, October 18th, 2011
An increase in the standard of living & more recently inflation levels has caused a shortfall in pension provision. This is now affecting all those people who are on the verge of, or now in retirement. So for those retirees who are on fixed incomes, how can they allay their fears of personal budget shortfalls?
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Well consider equity release schemes as an effective solution to this problem. If you are looking for some more information, this guide will help you understand the lifetime mortgage schemes available.
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What is an equity release scheme?
Equity release schemes allow you to release equity tied up within your home. These schemes are very popular amongst individuals who are entering, or now into the retirement phase of life. Thus, retirees can therefore overcome any shortfall in their income by utilising the tied up tax free cash within the value of their home. Equity release schemes provide pensioners with a steady flow of income thereby helping them to maintain and improve their quality of life. Additionally, in recognition of the demand for irregular tax free cash, drawdown equity release schemes can now provide flexibility.
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Equity release is used to cover financial products that release home equity. However, they need not require any monthly payments & therefore do not affect retirement budget. It is very important to keep in mind that equity release schemes can only be considered for people who are above 55 years of age. For home reversion schemes this minimum age is increased to age 65 in lieu of the manner these schemes operate.
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Lifetime mortgage plans are becoming increasingly popular amongst retired individuals. They provide a lump sum amount based on a combination of the age of the youngest homeowner & the property value.
The younger this age is, the lower the loan-to-value.
In contrast for those more elderly can release a percentage of the property upto 54%.
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A few other benefits of SHIP (Safe Home Income Plans) equity release schemes are:
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- Improved standard of living
- Portable mortgage to another property
- A fixed rate of interest for life
- No monthly payment or instalments required
- No negative equity guarantee
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Equity release is an ideal option when it comes to securing your future. If you find the process confusing, it is highly important to consult an equity release advisor such as Equity Release Supermarket. With access to market leading deals & special interest rates they can research the whole of the equity release market to find the best equity release deal available.
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If you require advice on which equity release is suitable for you, contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk
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Tags: drawdown equity release, equity release, Equity Release Adviser, equity release schemes, Equity Release Supermarket, home reversion schemes, No negative equity guarantee, Roll up lifetime mortgage, SHIP
Posted in Equity Release, Interest Only Lifetime Mortgage | No Comments »
Sunday, July 3rd, 2011
More great news for the increasingly buoyant equity release market as Partnership re-enter with their Enhanced Lifetime Mortgage plan.
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Specialists in impaired life annuitys; Partnership are now bringing their underwriting expertise to equity release schemes. The logic behind their offering, provides a bespoke underwriting event for each client looking to achieve a maximum equity release status. Their experience from the enhanced annuitys market has led to a radical re-think in the equity release market where effectively the same principles can apply.
Consideration for impaired life equity release schemes is certainly gaining momentum as rumour has it other equity release companies such as Aviva may also be looking into the possibility of developing their own impaired product. In fact any of the existing equity release providers who offer an annuity proposition could be in the market with potential launches under their wings?
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So what is an impaired life equity release scheme?
Well firstly lets have a look at how an impaired life annuity works…
Primarily, an enhanced annuity provider will ask the annuitant a series of health questions which dependent upon their health conditions & severity, will determine the size of the annuity pension they will receive. In essence, the worse their health is the better, as they will potentially receive a more sizeable pension due to their life expectancy not being as long as a healthy person.
It may sound crude, however Partnership’s years of underwriting experience allows them to now offer the same principles in the equity release market by offering a bigger lump sum than standard equity release providers. The maximum release, dependent upon the health questionnaire is 55% of the property value.
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What illesses will qualify?
The questionnaire itself is not as detailed as one would imagine. Likewise the number & severity of the qualifying conditions is lower than expectations, thus making the underwriting aspect of the equity release plan simplistic in assessment. The health questions are as follows:-
- Have you smoked 10 cigarettes per day for the last 10 years?
- Have you been diagnosed with high blood pressure, requiring ongoing medication?
- Have you suffered a heart attack requiring hospital admission?
- Do you suffer from diabetes, requiring insulin or tablet treatment?
- Have you suffered from a stroke (CVA), excluding mini-strokes (TIAs)?
- Have you suffered from angina, requiring ongoing medication?
- Have you been diagnosed with cancer requiring surgery, chemotherapy or radiotherapy?
- Have you been diagnosed with Parkinson`s disease?
- Have you been diagnosed with multiple sclerosis?
- Have you taken early retirement on the grounds of ill health?
- Are you currently taking any prescription medication?
Given this information, the online Partnership equity release calculator will then produce a maximum lending figure taking also into account age(s) & property valuation. A signature will then be required on a declaration form to confirm the medical questions have been correctly answered as only a sample number of applications will actually be looked into with the clients general practioners. This makes the application process quicker & smoother putting the onus on the applicant accurately qualifying their ailments.
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Are their any other features in Partnership’s enhanced lifetime mortgage scheme?
The simple answer to that is yes.
Partnership have managed to squeeze in some important features that provide additional security & protection for applicants. Aside from being a member of SHIP & thus passing the protection features of the no negative equity guarantee, assured tenancy & ability to move home, there is also an Inheritance Protection facility.
The inheritance protection feature is included at no extra cost & provides the ability to protect a part of the final sale proceeds which can then be successfully passed onto the heirs & beneficiaries. Therefore, peace of mind reigns when the biggest objection to the use of equity release schemes is ‘how much will be left for the children when I die’.
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What is their lending criteria?
The Partnership Enhanced Lifetime Mortgage is currently only available in England & Wales on property valuations over £70,000. Their approach to property types is standard amongst the industry, although they will permit borrowings on some concrete build constructions such as Laing Easy Form & Wimpey No Fines which down to the valuers comments would pass as acceptable.
The minimum age of the youngest applicant must be 60 & at least one suffering from one of the aforementioned illnesses/conditions. The minimum loan on application is £25,000 which is higher then most equity release providers, however the plan is pitched at the higher release end of the lifetime mortgage market.
The major factor setting themselves aside from the alternative impaired life equity release offering from more2life is the FREE cost to market for any applicant. Partnership have initially launched with a tempting proposal of a FREE valuation & NO application or completion fee payable on set up. In fact they even go one step further with a CASHBACK of £250 on completion which goes some way to offsetting any legal fees incurred.
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Again, thanks to companies such as Partnership showing innovation, the equity release market has shown its durability over the past 12 months at a time of economic diffculties. Perhaps the old days when the two words – ‘equity release’ & ‘apprehension’ were associated, are now becoming more of a distant memory.
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If you would wish to find out whether you would qualify for an enhanced lifetime mortgage with Partnership, please fill in this Partnership enquiry form or call freephone 0800 678 5159.
If you smoke manufactured cigarettes, have you smoked 10 or more cigarettes per day for the last 10 years?
If you smoke rolling tobacco, have you smoked more than 3ozs or 85g per week for the last 10 years?
Have you been diagnosed with high blood pressure, requiring ongoing medication?
Have you suffered a heart attack requiring hospital admission?
Do you suffer from diabetes, requiring insulin or tablet treatment?
Have you suffered from a stroke (CVA), excluding mini-strokes (TIAs)?
Have you suffered from angina, requiring ongoing medication?
Have you been diagnosed with cancer (excl. skin cancer and benign tumours) requiring surgery, chemotherapy or radiotherapy?
Have you been diagnosed with Parkinson`s disease?
Have you been diagnosed with multiple sclerosis?
Have you taken early retirement on the grounds of ill health?
Are you currently taking any prescription medication?
Tags: enhanced lifetime mortgage, equity release, equity release schemes, impaired life, lifetime mortgage schemes, maximum lump sum, more2life, No negative equity guarantee, Partnership
Posted in Equity Release, News | No Comments »
Wednesday, June 22nd, 2011
The amount of equity you own is the term used to describe the value of a home less any mortgage or secured pending on it. Equity release allows you to free up this money tied up within your home.
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The equity release process will allow you to receive a tax free, lump sum of capital allowing you to spend it in whatever way that you choose.
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An obvious disadvantage is that you will not be able to hand down all of your property to your offspring. Nevertheless, you do get to live out the remainder of your life in your home, rent free or till you move into elderly care.
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If you are considering an equity release scheme, the best way to get started would be to approach an expert. Some organisations which provide equity release schemes also provide a free consultation, so remember to take advantage of their services. Some research of the advisor would be of benefit as they must be regulated by the FSA (Financial Services Authority) & have an individual registration number with them. The equity release adviser should therefore be found on the FSA website register.
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Ensure they are independent, which means they are free to deal with ANY equity release provider in the market. So ask. Some companies purport to be whole of market, however upon closer analysis they only deal with a handful of companies. You may therefore be missing out on a beneficial feature of an equity release scheme that they do not have available. This could save you £1000′s in the long run & could prove costly if the wrong equity release plan was chosen.
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Your advisor will let you in on all the vital details regarding the procedure. This will be after the equity release adviser has collated all the necessary facts regarding one’s current situation. Guarded with this information, & any soft facts provided such as ‘how important is that you leave part or all of your property to your beneficiaries?’ will be asked. Also income & whether you are in receipt of means tested benefits is important as this will reflect on which equity release schemes are advised upon. The equity release consultant can then document & record this stage of the lifetime mortgage process.
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Once an accurate financial picture has been ascertained & observed the clients objectives, the equity release adviser can then discuss the mortgage options available. These would include an explanation of the various schemes available to suit. Included in this would be roll-up equity release schemes, home reversion plans & interest only lifetime mortgages such as the Halifax Retirement Home Plan or the Stonehaven Interest Select.
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You do not have to give them an instant decision; after all, going for an equity release scheme is a big decision and something which should not be rushed into.
Upon presentation of the equity release advisers recommendations a Key Facts Illustration must be offered to you. This would include a summary of the scheme in principle, costs & charges, future balance & the commission payable by the lifetime mortgage providers. This is quite a comprehensive overview of the scheme & covers the finer details, as well as the main features, such as the no negative equity guarantee & early repayment charges etc.
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Once you have made your decision, all you have to do is simply call your advisor and give them the go ahead. They will have all your paperwork taken care of, contact your solicitor and keep you updated about everything, right to the time that you get your money released.
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A professional & courteous adviser will confirm the funds have been released & offer any after care service in the future; for example when additional funds are required such as on a drawdown equity release scheme.
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As a company Equity Release Supermarket keep contact with its clients to advise on new products & interest rates in the future as it is important to keep abreast of the market as & when more competitive products become available.
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Independent & award winning equity release specialist Equity Release Supermarket offer all the above benefits & quality of service that the testimonials at the bottom of the home page illustrate.
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To discuss your options in the release of equity from your property call freephone 0800 678 5159 today or alternatively complete our contact form & one of our advisers will be in touch
Tags: drawdown equity release, equity release, Equity Release Adviser, equity release schemes, equity release solicitor, home reversion, independent, Independent equity release advice, interest only mortgage, lifetime mortgages, No negative equity guarantee
Posted in Advice, Equity Release, Halifax Retirement Home Plan | 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 »
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.
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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.
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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.
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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 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.
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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.
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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 equity release 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 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.
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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.
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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 »
Monday, November 29th, 2010
Equity release is a scheme which is designed to assist retired homeowners release some money against the value of their homes. If you find it difficult to live with small pension, possibly even benefits and little savings then equity release is an ideal option for you. Once you have opted for equity release then the eventual repayment will be done after your death or when you move to long term care. This is the time at which beneficiaries will be in receipt of their inheritance.
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Today, two different types of equity release schemes have been introduced to the market. These include home reversion plans and roll-up lifetime mortgages.
Many homeowners opt for lifetime mortgages because they offer great benefits.
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Two types of lifetime mortgages: -
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Roll-up lifetime mortgages – These equity release schemes are specially designed for those who want to release equity without paying monthly repayments. The amount that can be released is based on the age of the youngest applicant & the property value.
The younger the age, the lower the equity release sum that can be released. The reason for this is down to life expectancy, as lenders do not want to release too much at a younger age due to the roll-up of interest. With average life expectancy of a 60 year old now reaching beyond 80, lenders must err on the side of caution. The reason being that they do not want the equity release balance to reach beyond the property value in the future. This would cost them dearly as the no negative equity guarantee would then need to be invoked.
The mechanics of the roll-up lifetime mortgage means that the interest will be compounded monthly or annually & re paid eventually along with the original capital on the eventual sale of the property. Another important feature of these equity release schemes are that they allow you to maintain 100% ownership of the property.
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Interest only mortgages – This is one of the unique schemes which allow homeowners to release equity and repay monthly interest only. This means that the monthly repayment must be affordable on their retirement incomes. Such equity release schemes such as the Halifax Retirement Home Plan are few & far between as there are not many mortgage or equity release companies that offer finance to the over 65 age group.
Nevertheless, Equity Release Supermarket have unique access to such schemes & their team of friendly equity release advisers can identify which is the most suitable scheme dependent on your personal circumstances.
Interest only mortgages such as those offered by Halifax, will maintain the same balance from start to finish & therefore can guarantee how much of your estate will be required to settle with the lender at the end of the term. The balance will only be repaid after your death by selling the property. This will be carried out by the nominated executors who have been appointed in your Wills.
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If you have a question on whether a roll-up or interest only mortgagee is right for you contact the Equity Release team free on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk.
Tags: equity release, Equity Release Adviser, equity release schemes, Halifax Retirement Home Plan, home reversion, lifetime mortgage schemes, lifetime mortgages, No negative equity guarantee, Roll up lifetime mortgage
Posted in Equity Release | No Comments »
Monday, October 25th, 2010
Are you wondering how would you cope up with your financial requirements after retirement? Do you want to live a comfortable and luxurious life in your old age? Are you looking for ways to get a steady flow of income after your retirement? If your answers these questions are yes, you can consider opting for an equity release scheme.
Equity release schemes are the perfect solution for homeowners who want to unlock the equity they have built up in their property.
Most people do not know what equity release is and how can it help them. Seeking professional advice can provide a clear understanding about different types of equity release schemes.
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Equity release schemes – what are the available options?
Equity release on property is of two different types – a home reversion plan and a lifetime mortgage. Homeowners can opt for either of the above options. However, the suitability of equity release schemes varies with the needs of the retirees.
In the home reversion plan, you need to sell your home partly or completely to an equity release company. In return, you will receive either a lump sum or monthly income from the equity release company. The amount you receive from the equity release company will depend on the current value of your property & your age.
Home reversion equity release schemes are available for senior citizens of 65 years or more. After opting for equity release, borrowers can continue to stay in their home, which is one of the biggest advantages of the scheme. After the borrower passes away, the home reversion company will sell the property and recover the loan amount.
The lifetime mortgage encompasses the roll-up schemes whereby the mortgagor retains 100% ownership of the property. No monthly payments are required.
Interest is charged & added to the balance on an annual or monthly basis depending on the equity release provider. Therefore the balance will increase over the period of the loan, which in turn can reduce the inheritance of one’s beneficiaries. However, all SHIP plans have the no negative equity guarantee included which ensures that no debt can be passed onto the beneficiaries.
Tags: equity release, equity release schemes, No negative equity guarantee, SHIP
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Saturday, October 16th, 2010
Equity release schemes are perfect for elderly people who are looking for ways to generate funds during their retirement.
The less common home reversion equity release schemes allows you to sell a part or your entire property to the reversion company. In return, you can get a guaranteed lifetime lease and tax-free money with no monthly repayments.
You can continue to reside in your property for as long as you want. Home reversion schemes also guarantee an inheritance to your beneficiaries. It is a scheme where you sell a percentage or all of your property to the reversion company while retaining the rights to live rent free in your home for the rest of your life. The equity received can either be paid out as a monthly income, lump sum or a combination of both.
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Some important benefits of home reversion schemes
As a home reversion equity release scheme is not actually a loan, there is no need to pay off any interest. Other equity release schemes such as lifetime mortgages not only charge you interest, but also reduce the inheritance for your beneficiaries which in extreme cases can erode ALL the equity in the property. This means that the interest amount can grow considerably over the years; in some cases it may exceed the value of your property.
This cannot happen with a home reversion scheme unless you select to sell 100% of the property in the first place.
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- Benefit from rise in property values
Unless you have sold your entire property, you can get your share as the property value increases.Therefore, if you have sold 50% of the property value, you will still retain any growth in your share of the remaining 50% of the property.
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- Release more equity compared to lifetime mortgages
With home reversion schemes, you can release more cash than lifetime mortgages allow you to. This can be advantageous should you have no children to leave your estate to. In addition home reversion schemes can have an impaired life facility built into the scheme. Therefore, if your health is poor or have an impaired life condition should as high blood pressure or you have suffered a heart attack, stroke or cancer then the home reversion company can give you a higher lump sum than otherwise have been. This would be due to the fact that they do not anticipate your life expectancy to be as high as the average & thus have actuarily decided they can afford to offer a greater lump sum.
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To request further information on home reversion schemes & a home reversion quote, please contact the Equity Release Supermarket team on 0800 783 9652.
Tags: home reversion, home reversion schemes, impaired life, No negative equity guarantee
Posted in Advice | No Comments »
Tuesday, October 5th, 2010
Equity release schemes can be considered a blessing for individuals in their retirement. Like any other scheme, it is important that you consider certain factors before arriving at a decision. Given are some important factors to take into account:
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Regulation
Bear in mind that all equity release schemes are regulated and monitored by the Financial Services Authority (FSA). Additionally, all equity release advisers must themselves be authorised by the Financial Services Authority. The adviser must have passed the industry equity release examinations by the relevant body; be it Chartered Insurance Institute (CII) or the Personal Finance Society (PFS).
A trade body set up within the industry to provide self regulation is SHIP (Safe Home Income Plans). To become a member of SHIP the equity release company must have certain features within the plan features. These include: -
- a no negative equity guarantee
- the ability to repay the scheme at any time (however it can be subject to early repayment charges)
- The freedom to move property & transfer the scheme at the same time
Non negative equity guarantee
The feature is included at no extra cost & ensures that the equity release plan has added protection for the plan holder. The guarantee ensures that the debt never exceeds the overall value of the property. Moreover, any of your outstanding debt will not be transferred to your next of kin after the sale of the property.This provides peace of mind in that no debt can be levied on your beneficiaries.
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Moving to a new property
All lenders whom are SHIP members must allow you to change your residence after taking out an equity release plan. Therefore, contact Equity Release Supermarket to ensure any recommended lender meets this criteria.
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Joint plan
You may have to take out a joint equity release plan if you are living with your partner. This decision will depend on which lender you intend to proceed to application with. If the house is in the sole name of a couple, & they are married, then lenders such as Aviva & LV= will insist that the application & the property is put into joint names. This would involve additional costs at the land registry. However, Just Retirement won’t insist on this basis of application as they will accept the party excluded on the deeds to remain so & merely sign a waiver of occupancy form. This will state that if the person on the deeds died, then they would waive their rights behind that of the equity release. This would ensure the the lender received their funds from the sale of the property within an allotted timescale.
The debt will only be reclaimed only after the death of you both or both moving into long term care. At this point the executors of the estate will be responsible for selling the property & the repayment of the equity release scheme.
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Set-up charges
There may be various charges involved in setting up equity release schemes. Some of the costs are as follows: -
- Legal fees
- Fees for the building survey
- Fees for redemption of any existing loan
- Advice fee
It is recommended that you find out any hidden costs before taking a decision. Consider these given points and arrive at a decision accordingly.There can be a large difference between one equity release adviser & another.
For instance, Equity Release Supermarket’s advice fee is a flat £595. You can be sold exactly the same plan by certain larger equity release brokerage’s who charge over £795 & even charge for the administration between themselves & the solicitor.
Always shop around & look out for any hidden fees such as these which can make the whole process much more expensive.
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For a detailed breakdown of Equity Release Supermarket’s charges & how much you can save in charges, please contact Mark on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk
Tags: Aviva equity release, equity release, Equity Release Adviser, equity release schemes, FSA, LV= equity release, No negative equity guarantee, PFS
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