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Posts Tagged ‘Remortgage’

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.

Is It Possible To Remortgage My Current Equity Release Scheme?

Sunday, August 19th, 2012

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

 

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

 

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

 

Why consider an equity release remortgage?

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

 

Which are the best schemes to switch to?

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

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

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

 

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

 

Are there any pitfalls?

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

 

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

 

How do I go about remortgaging?

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

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

 

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

 

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

 

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

 

 
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