Equity Release Latest News

Posts Tagged ‘Roll-Up Equity Release Schemes’

On Why Finding A Good Equity Release Consultant Is A Must

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.

 

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.

 

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.

 

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.

 

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.

 

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.
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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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

 

Some Crucial Benefits of Halifax Equity Release

Sunday, May 29th, 2011

The Halifax equity release scheme is an interest only lifetime mortgage plan. It is specially developed for retired individuals to boost their retirement standard of living. With this type of scheme, the outstanding balance remains unchanged throughout the plan tenure. The applicant only needs to pay interest regularly to the lender.
Traditional roll-up equity release schemes do not require the applicant to make interest payments. However, the interest keeps rolling up over the tenure period. This means that the outstanding loan keeps rising all the time. With the present interest rates, the loan amount will keep doubling after approximately every 10-11 years dependent upon the equity release interest rate. This means, if you have a loan of £10,000, after 10-11 years, you will owe £20,000.

 

Retired individuals, who can afford to make monthly repayments from their state benefits or pension, should opt for a Halifax equity release plan. While considering opting for equity release, it is important to get the right advice from the professionals. As professionals have the required knowledge and expertise, they can help you get the right scheme that will cater to your needs.

 

Why do people opt for a Halifax equity release plan?

The Halifax equity release scheme, being an interest only mortgage plan for pensioners, does not require any form of repayment. This is also one of the most exclusive features of the Halifax equity release plan. With this kind of scheme, your mortgage is automatically allocated for a term of 40 years. However, should you live longer than this period then this lifetime mortgage plan will continue until death or the last person has moved into long term care.

It is due to these reasons that the Halifax equity release scheme has become extremely popular amongst retired individuals.

 

Contact the mortgage desk on 0800 678 5159 or email admin@equityreleasesupermarket.co.uk for the latest rates & information.

 

Equity Release Schemes – Do The Sums Actually Add Up?

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

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.

 

Sounds daunting? Well, let’s now look at the sums as promised earlier:

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.

 

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.
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.

 

 

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.

 

Finally, hopefully lessons have been learned from the past & the industry can move forward, innovate & develop further over time.

 

To discuss any of these issues & with no obligation whatsoever, please contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityrelease supermarket.co.uk

 

Equity Release Is A Relief To Your Retirement Problems

Tuesday, September 14th, 2010

Many individuals still are still taking financial issues into their retirement. We are all aware of the issues that have dogged the pensions industry over the last decade or two. With the decline in final salary schemes & corresponding members of such schemes, retirement that ensures a safe and constant source of income is a worrying concern.

To solve such pension shortfalls & the financial problems in retirement this causes, equity release schemes have been introduced.

 

Some facts about equity release schemes

Before opting for equity release, you need to know some important facts about it.

 

Payments received

You are paid by the equity release lender for the property you mortgage. This money can be paid as a lump-sum amount or as a monthly income. The type of payment to be received depends on the applicants choice. Monthly payments are the constant income that works exactly like a monthly salary. A lump sum payment is when you can retain the complete value of your property at one time. This type of payment can help you to invest in another property, maybe a holiday home for yourself or a deposit on a new  property for your children. People who use an equity release scheme as an additional form of income choose to receive the payment as a regular lump-sum amount.

 

Repayment of loans

Roll-up equity release schemes have a unique benefit. They allows you to maintain the complete ownership of your property for your lifetime. You can enjoy complete rights over your property even after mortgaging it without worrying about the repayment at all. Interest is added annually to the actual amount till the loan is repaid.

On the other hand, a home reversion scheme allows you to sell your property and then receive the money. In this case, you do not have to pay anything in return later on. The loan should be paid within a period of 6-12 months.

 

Should you require further advice or quotations on lifetime mortgage or home reversion schemes please contact Mark Gregory on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

 
Ask us a question

captcha