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Posts Tagged ‘Papilio UK Equity Release Mortgages’

Switch Equity Release from Papilio UK – Time is running out

Sunday, May 25th, 2014

Switch equity release from PapilioIn my last article on this subject in February 2013 I drew attention to the ease with which borrowers could escape the higher equity release  interest rates charged by Papilio UK, the successor to Northern Rock. I also reminded Papilio equity release borrowers that the option to take further loans from Papilio UK, an option Northern Rock originally considered, was no longer available.

 

Since my original Papilio article, Equity Release Supermarket have been inundated with enquiries leading to many satisfied clients switching to cheaper lifetime mortgages. And with many lifetime mortgage lenders currently offering free valuations and cashbacks, the costs of such transfers rarely exceed £1,500 – a sum that could soon be recovered through cheaper borrowing or funded by increasing the new mortgage.

 

Indeed, with fixed interest rates as low as 5.63% (5.83% representative APR) we have achieved savings for our clients of over 1.3% on their loans. With such low equity release interest rates, now is an excellent time to consider a remortgage from Papilio UK to a new provider.

 

Reasons to switch equity release plans

This could be for one of two reasons;

  1. To borrow additional funds & consolidate all old & new borrowings under one roof with a much lower interest rate.
  2. To simply swap equity release schemes on a like-for-like basis, but obtaining a much lower interest rate for the long term.

 

As an example in real terms, assuming that you remortgage a lifetime mortgage of £50,000 onto a fixed rate of 5.68% from a Papilio UK equity release mortgages rate of 6.99%, then after just 10 years the saving in interest charges would be in excess of £15,000. This would be not only beneficial for you if you require further borrow in the future, but also your beneficiaries who would now receive a larger inheritance.

 

Obviously, the larger the loan is, the greater the potential savings. This in turn would make large savings for your ultimate beneficiaries. Think of switching equity release schemes like any residential remortgage; you want to obtain the best rate for your outstanding debt, so as not to pay any more interest than necessary to the mortgage lender. The equity release switch principle works in exactly the same way.

 

New equity release schemes have greater benefits

In addition to the cheaper cost of borrowing, many lenders with whom you can swap equity release schemes to have now developed much more flexible lifetime mortgage plans.

 

For example, you could select a new lender with various penalty free options. The most recent innovations in the lifetime mortgage market are:

  1. Lifetime mortgage plans with Hodge Lifetime & Aviva where voluntary repayments of upto 10% per annum can be made each year. These ad-hoc repayments enable you to ‘control’ the future balance of the loan. This could be to maintain a level balance or even use it as a capital & interest mortgage by repaying the whole balance over a set number of years.
  2. Downsizing protection option from Hodge Lifetime which allows full repayment of the plan after 5 years by “trading down” your home. Therefore, if you move house & downsize you have the option to clear the whole mortgage debt & end up equity release ‘free’.
  3. Depending on the value of your property, you could remortgage to a new drawdown lifetime mortgage where a cash reserve facility could be established for ready access to further loans in case of future need ( a great way of protecting a surviving spouse on a reduced income)
  4. The option to protect a percentage of the eventual sale proceeds of your home with a guaranteed inheritance protection option for your children and beneficiaries.

 

So why consider switching from Papilio UK now?

The present economic conditions will not last for ever. Long term interest rates have started to creep up and the recent increase in property values in certain parts of the country might not be sustained. The Governor of the Bank of England warned over the weekend about the danger of the property “bubble” bursting, and this could remove from those with larger loans the opportunity to escape the higher interest rates charged by Papilio.

 

In our opinion, the time to act to escape Papilio UK equity release mortgages is NOW before interest rates increase and property values fall. And if you intend to take action then swapping equity release scheme from Papilio could be your recommended ‘escape route’

 

For further information, or to receive a FREE initial consultation, please contact me, Mike Vicary, on 07795 195302 or if you prefer email mike@equityreleasesupermarket.co.uk where I would be more than happy to discuss your options.

 

The Papilio UK remortgage process

In the meantime it would be advisable to write to Papilio UK to obtain an up to date redemption statement to include all fees and the ongoing daily accrual of interest. Their address is:-

PO Box 1003, Ipswich, Suffolk, IP1 9UZ (Tel: 0844 8464716).

 

Armed with this information, I can then discuss with you your financial position and future plans and make a formal recommendation, if appropriate. You would receive clear details of the benefits to you of the Papilio UK remortgage and a full breakdown of costs.

 

Assuming you accept my recommendations, then we would complete the application paperwork at a mutually convenient home visit (preferably with family members present) or by post.

 

Following that Equity Release Supermarket would then oversee the valuation of your home by the new lender and we would instruct your solicitor on your behalf.

(We would strongly suggest appointing a specialist solicitor from our recommended panel to ensure that the transaction is completed as quickly and efficiently as possible.)

 

Our new business administration department would then manage your equity release application through to a successful completion by liaising with your new provider, solicitors & yourself. Once arranged, the Papilio UK equity release mortgage would have been repaid & the outstanding balance transferred to your new lifetime mortgage company & taking full advantage of the new lower rate &/or additional borrowing.

 

The time to take action is now.

 

Please do contact me for a free consultation on 07795 195302 or email mike@equityreleasesupermarket.co.uk

Why Are You Still With Papilio UK Equity Release?

Friday, February 15th, 2013

Are you one of those lifetime mortgage borrowers who were originally with Northern Rock but, since March 2012, have seen the ownership of your mortgage transferred to Papilio UK Equity Release Mortgages Ltd, a subsidiary of J P Morgan?

 

If so, do you realise that you are probably paying interest at more than 1.3% higher than rates charged by some other lifetime mortgage lenders? And Papilio UK Equity Release no longer allows you to take further loans from the equity in your home, an option Northern Rock originally considered!

 

If so, you could make considerable savings by the simple process of remortgaging to another regulated lifetime mortgage lender. With equity release schemes now in the prime of their life, now has never been a better time anyway to consider an equity release remortgage.

 

For example, assuming you remortgaged an equity release balance of £50,000 onto a fixed rate of 5.60% instead of the 6.99% currently charged by Papilio UK, after 10 years you could save yourselves, and your beneficiaries approximately £12,000 in interest charges.

 

Competitiveness & Flexibility of New Plans

Depending upon the value of your home, many new lenders will allow you access to further loans either immediately, or by providing a cash reserve to draw upon at your discretion. Drawdown lifetime mortgages now account for the majority of equity release schemes taken out and provide best advice for those retirees that only need a smaller upfront lump sum, but may require additional cash in the future.

 

Modern day lifetime mortgage schemes have surpassed the rigid plans of old. Since Northern Rock (aka Papilio Equity Release) withdrew providing equity release mortgages the market has seen diversification unseen before. With the advent of interest only lifetime mortgage schemes, we have experience of people actually switching from old roll-up lifetime mortgage plans. Where they feel the balance has reached a point whereby they no longer want it to increase any further, they can switch to an interest only lifetime mortgage. This option may never have been available in the past.

 

A free initial comparison offer

Should you have a Papilio UK equity release mortgage then you will undoubtedly be paying over the odds on your interest rate. Many people contact us who hold an existing Northern Rock mortgage and ask for the Papilio UK equity release mortgages ltd telephone number to contact them.  Equity Release Supermarket has advisers that are experienced in analysing whether it would be in one’s interest to switch equity release schemes.

 

As acknowledged specialists, Equity Release Supermarket has given objective advice to increasing numbers of applicants seeking to remortgage from Papilio UK and we have guided them painlessly through the remortgage process.

The switch analysis will take into account the set up costs of the proposed new equity release mortgage. These costs can be lower than anticipated, especially as J P Morgan/Papilio equity release have indicated in the past that they will waive early repayment charges.

 

Allied to the current practice of many lenders offering free valuations and paying “cashbacks” of upto £1000, then equity release companies such as Aviva can offer a new safe haven for your mortgage. By providing a smooth transition in the equity release application process you can seamlessly transfer you Papilio (Northern Rock) equity release plan to a more competitive rate benefitting yourself & beneficiaries in the long run. Aviva are currently offering rates to Equity Release Supermarket customers starting at 5.57% annual.

 

If you want to join those who have successfully made the transition from Papilio UK then please do contact Mike Vicary of Equity Release Supermarket, on 07795 195302 for a free initial consultation.

 

Do Banks Offer Equity Release Schemes?

Tuesday, December 11th, 2012

It has been a mystery why the UK mainstream banks haven’t fully embraced their traditional image of lenders to the masses, by entering into the realm of equity release schemes. We look at the history of attempts and corresponding results of many high street banks who have previously offered equity release schemes to the over 55’s.

 

Problems from the start

We start our history lesson back in the 1990’s, when Barclays & Bank of Scotland dreamt up the concept of the Shared Appreciation Mortgage (SAMs) whilst the housing market was quite stagnant. People were looking desperately to get on the housing ladder and it seemed a good buyers market.

 

These two banks were offering the elderly a mortgage with NO monthly payments; however they would instead take a share in the future rise in the property value. Around 11,000 Shared Appreciation Mortgages were sold of which these unlucky retirees thought would only need to pay back a few thousand pounds.

 

However, the property boom followed the property slump of the 1990’s, and by 2007 property values had almost quadrupled of which the banks also took their large share. The resultant effect has left many pensioners now unable to sell as they haven’t sufficient equity of their own to move house. The legacy of these schemes still exists today with legal action being taken by some of the unfortunate customers of these banks.

 

Some have tried and failed

We have seen in the last decade a couple more banks have dipped their toes into the water & failed with lifetime mortgage schemes. Notably one temporary success was NatWest/Royal Bank of Scotland who ventured into lifetime mortgages for a period, but none have ever felt comfortable offering this form of mortgage for the over 55’s.

 

NatWest/RBS equity release schemes became available in 2006 and were made available to its long time bank customers or retired bank staff. However, by 2009 after much back office investment & a surge in recruitment RBS ran out of funds and closed the whole equity release operation down.

 

The importance of independence

In Retirement Services logoHSBC offered equity release back in 2006, after tying itself up with a tender from the now dissolved equity release company – In Retirement Services. In Retirement Services were an equity release provider in their own right and funded by private equity firm 3i, but only offered their own products.

This was always considered a strange decision for HSBC at the time to tie themselves with a non-independent equity release company & left the markets bemused. Afterall, why would a major high street bank tie themselves to someone with no independence for its customers?

The relationship ceased and the products were no longer available once In retirement Services went into administration due to funding issues in 2009.

 

Have Building Societies fared any better?

There has been a history of building societies that have yielded greater success with their own equity release solutions. They have ventured in & out of the market but no building society has remained and stood the test of time. Many building societies have fallen victim to the credit crunch over 3 years ago. This was due to the issues with raising funds on the money markets, and inter-bank lending at the time was virtually suspended.

 

This left many building societies involved in equity release lending, moving their mortgage book of funds towards the most profitable products such as mortgages which provide greater profit margins that equity release over the shorter term.

northern-rock_999576c

 

Within the last 10 years we have had Northern Rock as a major provider; however we know how the how the market crash affected them & its customers! They are now accepting repayment of their equity release schemes to clear their mortgage books of these old equity release plans.

 

Northern Rocks early equity release mortgages only had 5 years early repayment charges, so it could be an excellent chance to get a better deal today with the current crop of low interest rate home equity schemes available. (Northern Rock has sold its equity release book now to Papilio UK Equity Release Mortgages)

 

Other building societies that tried and failed due to the credit crunch were Bristol & West, Saffron Building Society and a notably, although temporary, unique scheme launched by Godiva. They were the first to enter the equity release market with an equity release plan with NO early repayment charges. Unfortunately, again the credit crunch put paid to this, and you would hope a similar product would one day re-enter the lifetime mortgage market; albeit the Hodge Flexible Lifetime Mortgage Plan goes some way to meeting a no redemption penalty equity release plan – see below.

 

So what types of equity release providers are currently in the UK equity release market?

It seems the secret to success and longevity is to find a niche product with a USP in the equity release market.

Lets consider the current lifetime mortgage providers and the schemes on offer and you can see why…

 

 Provider  Product Name  USP
 Aviva  Lifestyle Flexible Option Lowest interest rate currently in the market.Rates currently start from 5.57% and come with free  valuation and cashbacks
 Stonehaven  Interest Select Plan An interest only lifetime mortgage. Monthly payments help maintain a level balance.Great inheritance protection for the children
 More2life  Enhanced Lifetime Mortgage Offers the maximum release in the market by underwriting on the grounds of ill-health. The more severe one’s heath the greater the release
 Hodge Lifetime  Flexible Drawdown Plan Hodge have two USP’s. One is the ability to repay upto 10% of the balance each year. The 2nd is you can downsize after 5 years with NO early repayment charges

 

Today’s range of equity release companies stem from insurance companies to finance houses who have the ability to fund their lifetime mortgage schemes via their annuity books. We still have a mutual society and the remainder are private companies who manage to find funding from business partners.

 

Whatever the funding source, the current breed of equity release schemes offer the most diverse range of plans and competitive interest rates the equity release market has seen.

 

If there are any lifetime mortgage plans, old and new that you wish to discuss further, contact mark@equityreleasesupermarket.co.uk or call the Equity Release Supermarket team on 0800 678 5159.

 
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