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Posts Tagged ‘Roll up lifetime mortgage’

Equity Release Schemes - the main types of lifetime mortgages

Wednesday, July 28th, 2010

Would you like to have a secure and enjoyable retirement?

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If your answer is yes, then an increasingly effective option for the over 55’s is using equity release schemes.

We all have different financial needs & the more recently developed equity release schemes are designed to meet these requirements. These schemes are incorporated within the lifetime mortgage schemes and reversion plan product range.

From this selection the roll-up lifetime mortgage scheme is preferred by the majority of people.

A lifetime mortgage scheme is specially designed for homeowners who are entering retirement and want to release equity from their home as a secured loan. Under this equity release scheme, the repayment takes place on death or the client moving into long term acre.

Once you have opted for this scheme, you can continue living in the same residence for the rest of your life, even if the equity release balance become more than the value of the house. This is due to the inclusion, at no extra cost, of the no negative equity guarantee. This ensures that no debt, over & above the property value can be passed onto the beneficiaries.

Reassurance is therefore given to the children that they cannot incur debt by the actions of their parents.

This rule is a condition of all lenders that are members of the equity release trade body - SHIP (Safe Home Income Plans) who provide consumer protection in the equity release marketplace.

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In Summary

A lifetime mortgage scheme can divided into the following types.

  • Roll-up lifetime mortgage
  • Fixed payment lifetime mortgage
  • Interest-only lifetime mortgage

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Roll-up lifetime mortgage - Under this kind of scheme, you do not have to pay any interest or repayments for rest of your life. The interests will be compunded yearly onto your actual loan amount and it will be paid when the home is sold on death or moving into long term care.

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Fixed repayment lifetime mortgage - In this scheme, there is no interest added to the actual amount but you have to payback a fixed amount when your home is sold. The scheme remains the same even if you sell your home after six months or 25 years, hence it is always important you receive independent equity release advice. This equity release is currently offered by Just Retirement.

The maximum charge that can be secured is 75% of the property value. The value of the overall facility is determined by several factors including your ge, sex, property value & your health & lifestyle situation. Click here to request further details on this unique equity release scheme.

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Interest-only lifetime mortgage - People who do not want the build up & compounding of interest can choose to make monthly repayments of interest only. Using this method, no interest is added onto your main loan as any interest generated is repaid back on a monthly basis.

Before choosing a type of lifetime mortgage, you must consider your post-retirement income and what your needs will be.

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To discuss any of the above issues please contact Mark Gregory on 0800 783 9652 or visit the Equity Release Supermarket website at http://www.equityreleasesupermarket.co.uk

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Unlock the money from your home with equity release

Saturday, July 3rd, 2010

Equity release schemes are more commonly & individually known as lifetime mortgages, home reversion or home income schemes. These schemes are the perfect solution to purchase a new car, get funds for a new home improvement project, to pay for a holiday or to simply make your everyday life more comfortable.

Equity release schemes enable you to release money against the overall value of your home. The debt is then repaid from the sale of your property after your death, moving into long term care or earlier sale of the property.

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How do equity release schemes work?

While there are different schemes that offer a lump sum or/and regular income, they work on two principle’s.

The lifetime mortgage schemes provide you a with a capital amount from the value of your home with the amount to be repaid being determined by the interest rate charged & how long the interest roll’s up over.

Home reversion schemes still provide you with a capital amount, however the reversion company takes a percentage of the value of the property in return. Therefore, there is no interest element. Once the property is finally sold on death or long term care, the original percentage sold is retained by the reversion company & the beneficiaries receive the remainder. e.g. if 50% of the property was initially transferred to the home reversion provider, then on the eventual sale of the property there would still be 50% of this value to pass to the beneficiaries.

The minimum age for lifetime mortgages is only 55, whilst the minimum age for a home reversion scheme is 65. The property should must be owned & be in a reasonable condition. If a mortgage exists before inception, then this needs to be repaid from the equity release proceeds or any savings held. The equity release scheme, whether lifetime mortgage or home reversion scheme can be the only secured loan on the property.

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The attractive features of an equity release plan

Equity release plans can offer you a regular income, a lump sum amount or both with the money released being free of income tax. However, if the amount is invested & you are a taxpayer, you may need to pay tax on any interest gained.

In order to unlock equity, there is no need to sell or move your home. Using an equity release scheme, you get assurance that you can continue to reside in your home until you die.

If you do not have any family or children to leave your inheritance to, then an equity release scheme can be an extremely attractive concept.

With the above advantages that equity release schemes offer, it could be the perfect way to unlock your money & enoy a comfortable retirement.

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If yu have any questions on the topics discussed above then please contact the Equity Release Team on 0800 783 9652.

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AVIVA Equity Release - Latest Changes To Interest Rates & Lending Limits

Sunday, June 6th, 2010

This article provides information on the latest interest rates & changes that Aviva are making to their product range.

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With the current shortage of equity release lenders, additional pressures are mounting on the remaining companies providing equity release schemes.

These lenders are now experiencing larger than normal business volumes as the number of providers has dwindled over the past 12 months. As a consequence some servicing issues are of concern, of which the biggest provider is now addressing.

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Of these equity release companies; Aviva are the first to change their lending criteria & this post provides details of this in advance.

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Come the 14th June, Aviva will be increasing their interest rates & lowering their loan-to-values (LTV) & details of these changes are detailed later in this article.

This is a negative step for the market given that Aviva’s Maximum Cash Release plan offers the highest cash release in the lifetime mortgage market at present.

Therefore, clients looking for financial relief by releasing the maximum possible after this date now have a reduced cash sum available. Couple this with Aviva’s recent reduction in loan-to-values on flats & maisonette’s & there is a definite swing away from higher loan values.

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Aviva will now only lend on 75% of property values on flats & maisonette’s, which is a dramatic move away from lending on these abodes. Couple this with the reductions in loan-to-values which are being announced on the 14th June, means a significant shift in their lending criteria.

This will affect in particular clients looking at debt consolidation or potential other requirements that demand the maximum possible.

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Equity Release Supermarket as independent financial advisers have witnessed firsthand the demand for larger advances this year alone. Predominantly, this has been for debt consolidation purposes whereby clients in retirement are now experiencing income shortfall issues as their investment returns have fallen significantly.

This has resulted in financial pressures meeting these monthly liabilities including mortgage payments, personal loans or more commonly, credit card debts.

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Nevertheless, there are fresh signs within the market indicating that external forces are construing to develop new plans & ideas to drive this stagnant market forward.

We heard last week that More2 Life is introducing an impaired life roll-up equity release scheme. This is welcoming news for the market & hopefully the sign of things to come.

In the meantime the current crop of lenders can dictate in a market having little competition from other providers.

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Part of the result of this is Aviva’s impending equity release scheme changes.

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Aviva have announced an increase of 0.1% to the interest rates for new business on the Lifestyle Flexible Option, Lifestyle Lump Sum and Lifestyle Lump Sum Max.

Equity Release Supermarket receive an exclusive interest rate lower than that offered directly by Aviva themselves.

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The new Aviva interest rates wef 14th June are therefore 6.70%, 6.55% & 7.40% respectively. On paper this doesn’t represent a large percentage increase; however given the roll-up nature of these products, this will result in £1000’s difference in the future balance.

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Additionally, Aviva equity release are reducing the loan-to-values on the Lifestyle Lump Sum Max by 2% for customers aged 60 or below, and by 1% for those over 60.

Even with this decrease, they currently still offer the best LTV scale in the market on all properties (apart from flats & maisonettes).

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The LTV rates for the Lifestyle Flexible Option and Lifestyle Lump Sum will stay the same.

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Example LTV’s on the Lifestyle Lump Sum Max are now: -

Age 55                        -           19%

Age 60                        -           23%

Age 65                        -           29%

Age 70                        -           35%

Age 75                        -           40%

Finally, there are transitional arrangements in place which anyone considering the Aviva equity release schemes should be aware of;

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Applications on the Lifestyle Flexible Option, Lifestyle Lump Sum and Lifestyle Lump Sum Max dated prior to 14th June and received by the 18th June will receive the old interest rates. Also, any Lifestyle Lump Sum Max applications will be on the old LTV scale.

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Applications on the Lifestyle Flexible Option, Lifestyle Lump Sum and Lifestyle Lump Sum Max dated before 14th June and received after 18th June will receive the new interest rate. Lifestyle Lump Sum Max applications will be on the new LTV scale.

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Applications dated after 14th June will receive the new interest rates. Lifestyle Lump Sum Max applications will be based on the new LTV scale.

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To request an Aviva illustration or further advice on any of the issues discussed above, please contact Mark Gregory on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk

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Has Your Prudential Equity Release Application Expired?

Monday, April 12th, 2010

Prudential equity release schemes were withdrawn on 31st December 2009, however the application period was extended in order for pipeline cases to reach satisfactory completion.

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However, this period was only extended until 31st March 2010 & Prudential invoked strict guidelines as to their final outcome.

Initially it seemed the 3 month extension seemed quite generous as most equity release cases should normally complete within a 6-8 week period.………………………………………………….


However, in certain circumstances delays may be incurred which may not have been apparent from the outset. It is becoming inceasing apparent that clients are now experiencing scenarios resulting in this deadline being missed.

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One example such example is aligned to the fact that a previous charge may have been placed on the property; often many years ago.

As an equity release company will not permit any other charge being present on the property, then this previous charge must be removed.

The solicitor must therefore include this procedure in the legal process & thus could result in considerable delays in finding who originally put on the charge.

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Over the past decade, many financial institutions have changed name, been taken over or even ceased trading. It can therefore prove difficult for the solicitor to trace the original source of the charge & then getting this removed in order for the equity release to complete.

Nevertheless, a solicitor of experience in these matters would seek to obtain proof from the subject lender to prove the charge still exists. If they are unable to do this then the lender must remove the charge from the land charges register & subsequently the equity release can proceed to completion.

However, from experience this period of dialogue between lender & solicitor can take time, cost & has resulted in the Prudential application being cancelled.

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Obviously, this Prudential deadline has now passed & it is become evident that clients have now become stranded & out of pocket given if their application had not completed by 31st March 2010.

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All is not lost.

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Equity Release Supermarket are increasingly assisting customers left stranded & financially out of pocket by the Prudential. Client fees that have been paid already could include valuation fee & solicitor’s fees for work incurred upto the cancellation of the Prudential application.

We are able to take over from where the Prudential left off & with liaison with the solicitor concerned, can take over the case, find an alternative lender & endeavour to complete quickly with the existing information.

In many cases we are able to provide reduced fees in setting up the new application.

This is due to Equity Release Supermarkets ability to obtain free valuations, reduced interest rates & cashback deals that will go considerable distance in alleviating some costs already incurred.

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If you have experience of the Prudential cancelling your equity release application & would like to explore your options with transferring to a new lender, please contact Mark Gregory on

t: 0800 783 9652 or

e: mark@equityreleasesupermarket.co.uk

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Equity Release on divorce -‘A House is not a Home??’

Sunday, March 28th, 2010

An increasing phenomenon in later life is the number of couples who are now deciding to divorce.

Often having lived together but had separate lives for many years, retirement then can seem the final straw in their relationship. Perhaps the knowledge of the impending hours of greater social time together once retirement arises is the most common reason!

Nevertheless, statistics show increasing numbers are deciding to end their marriages in retirement and move on, once their children have left home.

This works well for many people, but one of the major problems of divorce in retirement is dividing assets when you are approaching or have reached the end of your earning power.

Someone who was set for a comfortable retirement as part of a couple may well be struggling as a single person on half the assets. The marital home is often a bone of contention because it is usually the most valuable asset and often represents stability and security to the occupants.

However, pensions can also create many issues & this will be discussed in a separate article including pension sharing on divorce with offsetting & earmarking being the methods of distribution.

With reference to the marital home, equity release can often help in these situations.

The person who remains in the marital home can release cash from the value of the property either by a lifetime mortgage or a home reversion plan to ensure that the spouse receives their share of the property.

In most cases, it would not be possible for the person living in the marital home to take out a conventional mortgage because they may not have enough income to support it. However, by taking out a lifetime mortgage or a home reversion plan, they know they can stay in their home for life without having to make repayments during their lifetime.

‘A house is not a home’ may be easy to understand in normal circumstances but in the context of divorce, particularly from a woman’s point of view, a home is where you nurture and provide for those you love and care for and where you feel secure. Divorce is a traumatic time when normal life is disrupted. If it’s possible to maintain some security by doing a lifetime mortgage or home reversion plan to keep your home, many would take that option.

So How Can Equity Release Assist?

Well depending on the percentage split to each party, whether it is 50/50 or similar proportion, equity release could contribute either partial or in full towards the settlement.

However this would be dependent on age.

The size of the equity release is calculated based on the age of the youngest party & in some circumstances the health of the remaining party.

For example at age 60 the maximum release could only be provided by a roll-up lifetime mortgage & the percentage currently is only 26%.

Nevertheless at age 65 a lifetime mortgage can release 31%, however a reversion scheme can also now be considered.

As age increases, so do the percentages, to the extent that at age 80 one can release a maximum of 46% on a lifetime mortgage & 56% on a reversion scheme.

In circumstances of ill health, some lenders will even increase the home reversions 56% giving a more favourable lump sum based on an impaired life facility.

Therefore, via a combination of negotiation of existing assets & the application of equity release could result in the remaining party not having to move or downsize at a distressing time.

This enables stability throughout the remainder of their retirement..or until a new partner is found!

For further information

e: alison@equityreleasesupermarket.co.uk

t: 0800 783 9652

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Just Retirement Become The First Company To Reduce Equity Release Interest Rates In 2010

Monday, January 4th, 2010

With immediate effect Just Retirement has reduced their equity release interest rates from 6.79% to 6.59%.

This news arrives in conjunction with the departure of Prudential from the equity release market at the end of 2009 & is a bold move readdressing the negative moves on interest rates at the back end of last year

The interest rate reduction applies across all age ranges & as a consequence Just Retirement now becomes one of the lowest drawdown equity release schemes in the market.

In addition to this rate reduction, Equity Release Supermarket can also obtain a generous £450 cashback for the client on completion of the plan.
This certainly assists in reducing the overall set up costs of the plan.

For further information or quotation on the Just Retirement Roll-Up Lifetime Mortgage, please contact Mark Gregory on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk

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