Posts Tagged ‘Roll Up Lifetime Mortgage’
Saturday, July 5th, 2014
It has recently come to my attention, having watched my own daughter attempt to buy her 1st property, how difficult it has become for 1st time buyers to fulfil their dreams of becoming a homeowner.
It also occurred to me that EQUITY RELEASE could in fact play a significant role in assisting the “Bank of Mum and Dad” and others in providing funds to enable these dreams to come true.
First some FACTS:
- The average age for 1st time buyers is now 29
- 2/3rds of 1st time buyers now turn to the Bank of Mum and Dad (BoMAD) for help
- 30 years ago 12% of income was needed for a deposit on a property. Today this is staggering 82%!
- The cost of an average house in the UK is 10 times bigger than the average salary rising to 14 times in London
- In all but 2 regions in the UK, prices are 7 or more times the average salary for that area (Office of National Statistics)
- More than 3.3 million 20-34 year olds were still living with their parents in 2013
Although these figures clearly indicate it is becoming almost impossible for 1st time buyers to get on the property ladder, help could be at hand – YES, from the “Bank of Mum and Dad”
Parents are an obvious first point of call. However with rising living costs, low interest rates and diminishing savings pots, it has become increasingly more difficult for mum and dad to find surplus funds to gift to their children, grandchildren or loved ones, to assist in fulfilling the dream of property ownership.
However, there could be a way to take an early inheritance from parents now in order to benefit 1st time buyers when the money is needed the most!
A special type of retirement mortgage commonly known as Equity Release could potentially unlock cash tied up in a parent’s property. This can enable mum & dad to generate sufficient funds to gift as a deposit on a property purchase for their loved ones.
What is equity release?
Equity release schemes are available in two formats – home reversion & the more popular lifetime mortgage. Both of these equity release schemes enable people who own their main residence to release a percentage of its value in return for a tax-free cash lump sum. These two types of equity release mortgages then run for the rest of your life & only repaid once upon death or moving into long term care.
The equity release scheme known as a lifetime mortgage has proven the most popular due to its flexibility. This has been strengthened this year with providers such as Hodge Lifetime & Aviva both providing an option to repay upto 10% of the original capital borrowed each year. Therefore, control over its final balance, or even repayment of the whole scheme over the longer term could represent a serious possibility, for either parents to pay, or the children themselves!
Lifetime mortgages are available to those aged 55+, with a minimum property value of £60,000. The amount that can be borrowed is not always based on affordability, but on factors such as age & property value. Effectively, the older you are, the greater amount of equity you can release.
Following a release of the equity, the lifetime mortgage company places a first legal charge on the property. This is exactly the same as any conventional mortgage and 100% legal ownership is still retained by the client providing peace of mind.
Typically, someone age 60 could release equity of between 18-25.5% of the value of the property, dependent on the lender concerned. These equity release funds can be spent on anything you like, however a sensible & cautious approach is always advised. Therefore, parents looking to assist their children onto the property ladder, a lifetime mortgage could prove an effective mortgage vehicle to achieve this goal.
Which equity release schemes can help 1st time buyers?
Equity release schemes have become a lot more flexible and innovative these days. You can choose to make NO repayments and have the interest added to the loan which is known as a roll-up lifetime mortgage. The amount borrowed plus any interest accrued is repaid upon sale of the property. This would happen on death (last death if joint plan) or having to go into long term permanent care. Thought must be given here should there be more than one beneficiary. With an increasing balance & possibly reducing net equity figure, consideration must be afforded to any remaining beneficiaries as to what they may potentially receive at the end of the day?
However, there are new repayment versions of equity release schemes that have proven even more popular with parents looking to securely gift money to their children to help with a property purchase.
Interest only lifetime mortgages from Stonehaven & more2life will allow the repayment of just the interest only element. By repaying interest charged each month prevents the loan from increasing and thus remains level for the rest of the mortgagor’s life. This is a great idea when there is more than one child involved. The problem has always been how to separate the gift now, from the overall inheritance at the end of the day if more than one child is involved?
The solution is having an interest only lifetime mortgage. By knowing in advance what the balance will be, this loan amount can be deducted from that child’s share of the inheritance at the end of the day. This would be even fairer for the other siblings, should that child also pay the monthly premiums on behalf of the Bank of Mum & Dad!
NEW -Voluntary partial repayment plans
Equity Release Supermarket now has access to specialist equity release schemes where there is the option to repay up to 10% of the original capital released each year without any early repayment charges. These equity release schemes through Aviva & Hodge Lifetime have proved popular for those not just looking to repay the interest, but also the opportunity to repay the equity release scheme in full over approximately 16-17 years. These voluntary partial repayment equity release schemes are proving to be the next generation of the equity release market.
How is the Bank of Mum & Dad protected?
All the equity release schemes we recommend are members of the Equity Release Council, which means that there are certain guarantees built into them for consumer protection. As a minimum the Equity Release Council will ensure the following guarantees are included:-
- The schemes are portable and can be transferred to another qualifying property should you wish to move in the future
- There is a no-negative equity guarantee which means a debt cannot be left to your estate even if the value of the property becomes less than the balance of the loan outstanding
- You can live in your house for as long as you wish and with a lifetime mortgage you retain full ownership
- They can be repaid at any time, subject to potential early repayment charges
Benefits of using Equity Release
Contrary to directly gifting your property to your children, by using equity release to gift instead, would avoid any Capital Gains Tax as the main residence is retained by the client. There could still be a potential Inheritance Tax liability, but only if the client died within 7 years of the gift.
The lifetime mortgage would be a deductible liability against the client’s estate, reducing the value being taxed and although interest would have to be paid on the loan; this could still prove beneficial to both the client and those receiving the gift. Always consult a tax expert on these matters in conjunction with your independent equity release adviser.
Of course let’s not forget the best part of this!
The potential to fulfil the dreams of our loved ones in an age where quite frankly, property purchase is almost becoming nothing more than just a dream for some. The joys of parenthood!
I would be delighted to offer a FREE initial consultation to discuss any of the above matters relating to how equity release can help your children step onto the property ladder.
Please call me on 07788 605620 or 0203 7517228 or email email@example.com
Tuesday, May 20th, 2014
Anytime housing values begin to increase, it is time to assess the home buying situation. Retirement has been a topic of some concern for those heading into their 60s. In fact, over 55s are starting to realise while they have worked hard, they may not have enough in their pension portfolio to live on. The reason is all down to living longer – longevity. The average life is no longer to 70, but closer to 90 for females. Even in London families are cash poor, but property rich. Take advantage of new housing statistics and use a UK equity release calculator to determine if there is an equity release solution for you. London equity release schemes are being called upon because of their ability to help those who need cash, but own large amounts of equity in their property.
Equity Release Defined
Equity releases most popular form is the lifetime mortgage. This mortgage comes in various guises and can either come with or without a method of monthly repayment until the property is sold, either because the homeowners move, pass away or end up in long term care. The mortgage can be taken out from the age of 55. These lifetime mortgages do collect interest based on a fixed APR that adds up each year until the mortgage is repaid.
The London Housing Market
London housing prices have increased by 17.7 per cent in the last year. New and pre-owned homes in London are continuing to increase rather quickly. While housing prices are increasing, mortgage interest rates have actually decreased in the last few years, however storm clouds are on the horizon with news that early 2015 could see an interest rate rise. The monthly cost even on equity release is lower than in previous years. Now with lifetime mortgages it is true you do not make a monthly repayment; however, it is important to use an equity release calculator to compare the cost of your lifetime product against a standard mortgage.
By comparing the two you can determine if the low monthly cost stacks up against the equity lifetime release. Standard mortgages in London offer a loan to value of 75 per cent, meaning the other 25 per cent has to be a down payment for the purchase of the property. Even the LTV has been increasing over the last few years and markedly in the last few months. What this means for lifetime equity release is a higher percentage of lump sum tax free cash available for homeowners.
The increase of housing prices means more value is in the home, thus more money can be released with any form of available equity release product. Even though there is a potential for more money to be available, it does not mean all homeowners will take the larger lump sum. It is just important to know it is available and there as a back-up should anything untoward happen.
Agenda – Lifetime Mortgage
Lifetime mortgages are defined and the London housing sector is ripe for the picking. You have an idea of the solution, but why might lifetime mortgages continue to rise in popularity even in the Big Smoke?
Younger generations tend to spend more during an average week than older generations, say those in their 80s. Many retirees are in their 60s, which means they are still spending money as if they were working.
If you add the expenditures that occur each week to the recession issues of the past couple of years, there is a detriment to retirement funds for most individuals, even those in London. Especially people living in London, considering the expense of daily living without being overly effusive with spending.
Housing costs to run a large home, food purchases, travel, and entertainment are all going to be more in the capital city. As retirement pensions and other retirement investments lost a great deal with stock market troubles, it has left many retirees without enough funds to sustain their retirement life.
More so has been the fundamental flaw in endowment mortgage schemes whereby large shortfall are being evidenced upon maturity of the endowment plan. This has left many London homeowners with shortfalls on the repayment of their interest only mortgage. Therefore, London equity release schemes have come to fruition with the likes Of Stonehaven, more2life & Hodge Lifetime whom can provide an escape route via remortgaging onto their London lifetime mortgage schemes.
It puts lifetime mortgages on the agenda because they are a way to gain cash for mortgage repayments, general living, extravagant holidays, and any other type of entertainment retirees might wish to enjoy. The cash poor situation suddenly becomes obsolete as the property rich gain a little of that hard earned money back to use as they grow older.
Inheritance Factors are Imperative
As you consider whether a lifetime mortgage is right for you, it is imperative to think about inheritance, especially with the associated property values in London borough’s. A large estate when provided to family all at once is subject to inheritance tax over & above the £325,000 allowance for each party. This tax can be so large that it wipes out the entire inheritance. It is the reason those with a huge estate set up trusts and other tax planning instruments which can alleviate some of the IHT burden.
A lifetime mortgage can work in one of two ways, both as detrimental to any inheritance you may want to leave behind, but can also be used as a successful vehicle for mitigating IHT issues. Even in London, equity release can threaten an inheritance depending on the type of loan. For instance, the roll-up lifetime mortgage has the interest compounding as long as the mortgage is outstanding. On the other hand it is an opportunity to disperse inheritance without fear of taxes. By using a UK equity release calculator, can help you calculate the percentage of loan to leave as an inheritance.
Before entering into any equity release contract, you must seek independent equity release advice from a reputable company. For a full list of equity release brokers visit the Equity Release Council website, where using a postcode search can identify a London equity release brokerage near to you.
Thursday, October 24th, 2013
A new and rather unusual expression has recently emerged which is the term – ‘silver splitters’. It hasn’t made the Oxford Concise Dictionary yet, but I suspect it’s just a matter of time!
Figures released by the Office for National Statistics (ONS) for the year 2011 reveal that 8% of all men divorcing in the UK were aged 60 and over. The equivalent figure for women aged 60 and over was 5%. Compare this to 2001 when these figures were 4.6% and 2.6% respectively.
While overall figures for divorce have been falling, divorce amongst the retired and elderly have been increasing significantly, resulting in financially strained circumstances for many at a time when they should be enjoying life.
This increase in the number of silver splitters appears to be the result of the ‘baby boomer’ generation reaching retirement, experiencing the empty nest syndrome with children departed, looking at each other and deciding that they have little in common. Matters take their course and separation is followed by divorce.
Next follows the murky area known to the legal profession as ‘ancillary relief’ which is quite separate from the divorce itself (or ) and is concerned with the financial settlement between the parties. In the absence of an amicable agreement the family court can dictate how the assets in the marriage are shared out, and that includes the matrimonial home irrespective of whose name is on the deeds.
This is where help from equity release can come into play to facilitate the financing of any payment between the divorced parties and to alleviate the prospect of poverty and homelessness for either ex-spouse.
Silver Splitters Case Study
Let us take an example. A couple, both aged 65, jointly own a property valued at £300,000 and they have paid off their mortgage. They decide to divorce but the wife wishes to remain in the family home and as the split is amicable the husband is willing to accommodate her wishes, but in exchange for a cash payment. By applying for a lifetime mortgage at the age of 65 the wife can raise up to 30% of the value of the home, i.e. £90,000. The property is transferred into her sole name and simultaneously the lifetime mortgage proceeds of £90,000 are paid over to the husband.
This leaves the husband with £90,000 cash which he can use as a deposit on a property for himself. Being 65 he can also raise a 30% lifetime mortgage on his new home and this enables him to buy a property for say £128,500 (i.e. cash £90,000=70% and lifetime mortgage 30%=£38,500).
Alternatively, if both parties in my example agreed to sell the matrimonial home and split the proceeds equally then prospects look brighter. With say £150,000 each as a deposit and with a 30% contribution from a lifetime mortgage, my divorced couple would each be looking to buy new homes in the region of £214,000. (These examples do not take fees into account but these would be roughly £1,800 for both parties, plus moving costs).
The husband and wife could have two options on the types of equity release schemes available. They could elect to make no further payments to make for life and opt for the roll-up lifetime mortgage which would see the balance increasing yearly.
Alternatively, they can apply to take out an interest only lifetime mortgage and repay the monthly interest which would render the lifetime mortgage balance the same throughout. This is ideal should they be considering leaving a fixed inheritance for their beneficiaries.
How is the equity release mortgage repaid?
Dependent on which type of lifetime mortgage is selected, the final balance is usually upon repayment of the loan and any accrued interest takes place on death, entry into residential care or earlier sale of the property.
And the option to avoid monthly interest payments could be very attractive to divorced ex-spouses on reduced pension incomes. This is maybe the reason why the roll-up equity release types are the most popular?
Equity release is increasingly being used to fund divorce settlements, either by the parties themselves or by concerned parents. If you find yourself in a similar situation in experiencing divorce in retirement and need financial advice on how to separate the matrimonial home then please contact Mike Vicary of Equity Release Supermarket on 07795 195302.
All discussions will be kept in strictest confidence and any initial consultation will be FREE of charge. I look forward to speaking with you.
m: 07795 195302
Monday, September 30th, 2013
We often read comments in newspapers, or see reports on TV, that before taking equity release you should always consider your alternatives, as there maybe financial solutions that have not been previously considered. One of these which has created much debate recently is the possibility of downsizing.
This article, discusses the advantages of downsizing and how equity release schemes can still have an important role to play in such situations.
Equity Release versus Downsizing
The practice of downsizing, effectively means selling one property at a higher value than the one you wish to move into. Therefore, the equity generated from the price differential can be used to support you financially during retirement. This is usually the main reason for people deciding against taking equity release.
Downsizing is fine in principle, and it is one of the options Equity Release Supermarket advisers always discuss with clients. However, for economic and personal reasons, the idea of downsizing can be impractical.
Equity Release Case Study – How downsizing works in principle
Take for example Peter and Clare, both aged 73 and living in their semi-detached house worth £275,000 which they’ve owned for over 30 years. They are settled in the area, their family and friends are local to them and they feel comfortable and safe in their current surroundings.
Unfortunately, they still have a mortgage of £100,000 and the lender has informed them they will need to repay this by the time they reach the age of 75. Like many people in their situation, they do not have the money set aside to do so. Their family are in no position to help as they too are struggling to keep their own heads above water!
So what are their options?
- They could sell up, pay off the mortgage and look for another lower valued property. After taking into consideration the costs of moving this would mean considering properties around £165,000. Unfortunately, there are no properties of this value nearby, as even smaller properties locally that would still cost them in the region of £200,000.
- Consider a remortgage with another lender. This would involve switching their £100,000 mortgage to another lender. However, most high street banks & building societies will not allow borrowing beyond the age of 70, or even 75.
The only option it would seem is to have to move further away, to an area they would not feel comfortable with, and considering this would be their last ever move, it must be the right decision as happiness during retirement is key. This situation leads to anxiety and stress for the couple as their network of friends and family would no longer be around them and they would be moving to an unknown location which may turn out to be both undesirable and unpopular.
Therefore, only option 1 is feasible, but there is still the issue that the property would not be entirely suitable for their requirements moving forward.
Revised Case Study – The maths of upsizing
Let’s revisit option 1 again, as there is some good news for those that wish to downsize.
Equity release schemes can actually allow you to ‘up-size’ when moving house by using the equity release tax free cash to help fund the purchase of the new property. This would mean Peter & Clare still purchasing of a lower valued house. However, by using a new equity release plan in conjunction with the purchase, they can now attain property values of around £200,000+, which they needed to stay near to where they currently live.
Taking Peter & Clare’s example again. The couple are both aged 73. Using the Equity Release Supermarket calculator, they could borrow upto £78,000 on a property worth £200000, on a roll-up lifetime mortgage basis.
This would enable them to purchase the £200,000 property; by using £165,000 of their own equity, plus the difference coming from an equity release plan. In fact given the equity release calculation figures they could go even higher if they wished to do so, or even use some of the surplus to have a small emergency fund for the future which is missing at the moment.
Now Peter & Clare have come to terms with the downsizing, the couple can now consider fine tuning their equity release solutions.
In fact, they could consider a lender allowing interest payments – commonly known as an interest only lifetime mortgage provided by companies such as Stonehaven. These off-set the effect of the rolled up interest, but unlike their existing mortgage which comes to an end in two years’ time, a scheme such as Stonehaven’s Interest Select Plan would be open-ended and therefore run for the rest of their life.
In some cases, depending on their state of health, Peter & Clare may be eligible for more money if they could take advantage of enhanced lifetime mortgage rates offered by some lenders. These enhanced lifetime mortgage schemes can lend more than any standard lifetime mortgage & give that extra amount making all the difference.
So as a solution, what does this up-sizing option offer: –
- The opportunity for the couple to repay their existing mortgage in full
- To move to a location near to their current property, ensuring that they can maintain the support of family and friends
- To continue to live in a safe environment with familiar surroundings including local amenities which have become increasingly important to them, such as their doctor and local hospital along with good transport links and shop
- To purchase a property which they’re happy with rather than taking on a property ‘because they have no choice’
To down-size is an option which may be suitable to some, but like all decisions taken it needs careful consideration. This is where specialist equity release advice can make all the difference to retirees making such important financial decisions in retirement.
Having an alternative in the form of equity release scheme or interest only lifetime mortgage may enable them to make a decision based on a more practical solution and providing clients ‘peace of mind’, something which is not commonly advised upon in the news.
Equity Release Supermarket has experienced advisers who have dealt with such situations & can therefore make all the difference to people over 55 & in retirement.
If you wish to ask, or discuss anything with regards to his article with our team please call Freephone 0800 678 5159 or email firstname.lastname@example.org
Friday, April 20th, 2012
News today in the equity release sector, is that Stonehaven’s range of equity release schemes are now available in mainland Scotland.
Stonehaven have been providing equity release mortgages in England and Wales since August 2006. However, due to strong demand for its range of interest only lifetime mortgages entitled ‘Interest Select’ plans, they have now incorporated the Scottish legal process into their equity release application. Therefore, with previous limited availability in Scotland for interest only lifetime mortgages, this should come as a great relief for many over 55′s in Scotland needing financial support for their retirement.
Why Has the Stonehaven Interest Select Plan Become So Popular?
Opinion is split whenever deciding to take a release of equity from a retiree’s property. Gone are the days when a one-off tax free lump sum was the only option. With the increasing flexibility in the market such as the drawdown lifetime mortgage & new enhanced equity release schemes, lenders are looking more towards ‘niche’ equity release plans.
Having captured the interest only mortgage market for the over 55′s, Stonehaven who were originally funded by Santander have come, gone, & are now back with there revised range of Interest Select Options & Lump Sum Plans. With healthy lending for 2012 & with the backing of a large mutual enhanced annuities provider, Stonehaven are now broadening their horizons & diversifying into Scotland.
People over the age of 55 are looking at different means of releasing equity from their property. Not only that, there are different financial attitudes towards their property & ultimate inheritance. This has increased awareness of the impact that roll-up equity release schemes have had on people’s inheritance on schemes previously taken out. Due to the compounding effect of the interest on roll-up schemes, many retirees have turned up their noses to conventional equity release mortgages.
This is where Stonehaven as an equity release company has benefitted. Possibly due somewhat to the demise of the Halifax Retirement Home Plan, Equity Release Supermarket advisers have seen a significant rise in enquiries for an interest only lifetime mortgage. There is a strong demand for an interest only mortgage for the over 55′s, and this signifies the fact that a majority of pensioners still have income to support a retirement mortgage. This age group has many advantages to prospective mortgage lenders, however for reasons discussed later in this article, they are significantly overlooked.
Why have Mortgages for Pensioners been Overlooked?
With a large proportion of equity in their properties, hence low loan-to-values, usually a good credit history & repayment record, the over 55′s are favourable for a mortgage where interest only repayment is only required. The Stonehaven range of Interest Select Plans have given this situation much thought, not only to the positive aspects, but also to the negatives in particular if someone encounters financial difficulties during the term of their plan. They have a specific ‘safety net’ in place that has the option that upon missing 3 monthly payments, or the planholder opts not to make anymore monthly payments, the plan can converted over to a roll-up lifetime mortgage. This removes any concern over incurring a poor credit record & eliminates any risk of repossession.
In addition the Protected Equity guarantee is available which can ensure that your beneficiaries receive a percentage of the final sale value of the property. Peace of mind for sure.
The Interest Only Mortgage Ticking ‘Timebomb’
Previous articles have discussed the FSA (Financial Services Authority) crackdown on mortgage lenders offering interest only deals. Correctly, this has made pre-retirement applications for interest only mortgages more stringent & more capital & repayment mortgages are now taken as a result.
However, this sweeping clampdown has also impacted on the post-retirement mortgage market. It seems the old adage ‘tarred with the same brush’ has been applied to the whole demographic mortgage population. It shouldn’t, as a different set of rules & principles apply to mortgages in retirement. Retirement mortgages should be made more available on an interest only or capital & repayment basis. There should be more understanding from the powers that be that the needs of pensioners are significantly different than those pre-retirement.
Retirees do not necessarily need, or want the eventual repayment of capital. Considering the FSA are regulating & accepting the principle of roll-up equity release schemes, then why the reluctance for interest only mortgages in retirement?
Exceptions should be made & this sector of the mortgage market be subject to a further review.
Nevertheless, one company who has received FSA & SHIP (Safe Home Income Plan) approval for its interest only retirement mortgage is Stonehaven. With foresight of circumstances to come & which were conceived over a decade ago, Stonehaven are currently, & will be, reeping the benefits.
Endowment shortfalls are now becoming more evident & with Aviva only expecting 1% of its low cost endowment plans to meet their targets in 2012, then we can see why mortgages into retirement are going to become a common occurrence. In addition for many reasons people are approaching retirement with a mortgage and no form of repayment. With lenders such as Santander, Woolwich, Halifax & Nationwide not extending terms for those reaching the end of their interest only mortgage terms, a solution for their plight needs to be found.
Well, this is where Stonehaven see’s how their interest only lifetime mortgage can resolve such issues. Dependent on the size of the mortgage & property valuation, Stonehaven maybe be able to assist. By using the Stonehaven equity release calculator, one can ascertain the maximum amount they could lend & hopefully assist in remortgaging from the previous lender. This would be the ideal situation, but not always the best. Alternatives should be considered such as downsizing, using savings or getting assistance from family & friends, however this may not be in the best interests of the mortgagors & family ties may over rule such as decision.
If Stonehaven can raise sufficient equity on your property to repay the mortgage, it would mean transferring onto a lifetime mortgage product which then eliminates any concerns over repayment in the future. In fact repayment is only required upon 2nd death or moving into long term care. The only obligation during the term is to maintain interest only payments which will remain EXACTLY the same for life due to the lifetime fixed interest rate which currently start from 6.08% (6.40% typical APR).
Therefore, someone borrowing £25,000 on the Stonehaven Interest Select Lite plan would find their monthly payments at just £119.96pm fixed for life!
To discuss your interest only lifetime mortgage options & alternatives as to whether the Stonehaven equity release plans are suitable to meet your requirements, contact your local independent adviser at Equity Release Supermarket by calling freephone 0800 678 5159.
Additionally, visit the Equity Release Supermarket website & read the dedicated Stonehaven Interest Select page detailing the product features & current rates available. Here you can request a Stonehaven quote & gain a greater understanding of all Stonehaven’s schemes.
Tuesday, November 9th, 2010
Equity release schemes are one option available to enjoy the fruits of retirement in a way many would never have envisaged.
Some people are still unaware of equity release schemes and their numerous benefits; here we aim to address those issues.
Maintain standard of living
Immediately upon retirement, there is an evident drop in income. Unfortunately expenses do not.
You may think that saved money during your working life will be adequate for you to live comfortably. Rising inflation & lack of confidence in pension plans might make this difficult.
There are other options to consider & one of these maybe to downsizing to a smaller home. Other options available prior to considering equity release would be using any savings, asking relatives for financial assistance, claim any benefits due or if you have a good disposable income there is still the option of an interest only mortgage. The Halifax Retirement Home Plan can assist here.
If you look into equity release schemes, you will notice that you do not have to sell your property. Therefore, you can remain at the property for the rest of your life.
Applying for equity release, enables you to obtain some of the cash value of your property and with a roll-up lifetime mortgage you still remain the owner. This way, you can maintain your standard of living and can avoid the hassle of moving into another house.
Fulfil your needs
Additional cash can help retired individuals to fulfil basic needs as well as allowing them to pursue leisure activities. You may want to clear some debts, go on a long holiday, buy a new house or simply develop new hobbies. Equity release schemes can help you with these things.
The age factor
Age is an important factor when buying an equity release scheme. Your age is directly related to the amount of cash you can get. The older you are, the more you can get. Lifetime mortgage schemes start at age 55 with a maximum release of 20% & run beyond age 90 releasing over 50%.
Home reversion schemes start at age 65 & again go past age 90 with the maximum release being the sale of 100% of your property to the home reversion provider.
No limitations on spending
A good thing about equity release schemes is that you can spend the money the way you want to and there are no restrictions. We would only advocate initially taking an amount which you are likely to require in the first 12 months. The reason for this is that drawdown equity release schemes allow you to take the equity release cash in stages rather than all at once. This ensures that you pay less interest in the long run as you only pay interest on the actual amount you have withdrawn.
The cash you receive from the scheme is free of income tax. However, if any funds are placed on deposit then you could pay tax on any interest gained.
To find out whether equity release is suitable for you why not have a free initial consultation with one of our qualified equity release advisers. Call now on freephone 0800 678 5159.
Alternatively, email email@example.com
Website – http://www.equityreleasesupermarket.co.uk
Wednesday, November 3rd, 2010
Signs are certainly showing of a recovery in the equity release market as news that existing SHIP member – New Life Mortgages are returning with two new competitive products.
They arrive on the back of the recently launched impaired life equity release lender; more2life at the beginning of October.
Although New Life Mortgages hadn’t officially withdrawn from the market in 2009, it remained in the market whilst new funding sources were explored..
That time is now & details of the revamped equity release schemes can also be found on the Equity Release Supermarket website by clicking here.
New Life Mortgages have decided to make a statement, by not only relaunching their product range, but also arriving with the lowest interest rate in the market at just 6.35% monthly.
The Lifetime Fix and Lifetime Gold products both position themselves into the ‘roll-up’ lifetime mortgage range & are designed to be the most competitive equity release products in the market for the over-55’s.
The New Life Gold product is designed to offer the maximum release possible for a client in good health. Plans start at age 55, with a release of 20%, thus offering the maximum release currently available in the equity release market.
The age related percentage’s that can be released are as follows: –
Age 55 – 20%
Age 60 – 25%
Age 65 – 30%
Age 70 – 36%
Age 75 – 41%
Age 80 – 46%
Age 90 – 51%
The product is uniquely available only on a single life basis & has a very competitive interest rate of 6.75% monthly. This compares favorably with its peers at the maximum release end of the market who would be Aviva & new entrant more2life.
As an extra incentive, New Life Mortgages are offering £300 cashback on NLM Gold cases that complete prior to December 29.
The Lifetime Fix is the second product on offer from New Life Mortgages with the lowest rate currently available in the equity release market at just 6.35% monthly.
Available on a single & joint life basis the plan releases a lower amount than the Gold product, starting with a release of just 17% of the property value at age 55.
As an added incentive New Life are offering £600 cashback on cases completed before 29th December, so if you are considering equity release with a low interest rate hurry!
Both schemes have a minimum acceptable property value of £60,000, which again is the lowest in the equity release market & may bring previously ineligible applicants a new lease of life?
If early repayment charges are an issue with some lenders relying on gilt rates, New Life Mortgages have a more conventional attitude with the simplistic rate of a 5% penalty in the first 5 years. Thereafter no penalty exists.
This could obviously favour people who may have shorter term retirement plans with their properties, although equity release UK schemes are designed to run for the rest of your life.
Should you require a product fact sheet or quotation on any of these New Life Mortgage products, please call the Equity Release Supermarket team on 0800 678 5159 or email firstname.lastname@example.org
Thursday, September 30th, 2010
With the economy in its current state, people are trying to come up with new ways to generate capital for everyday expenses. Although it is possible for working individuals to do this, it can be difficult for the retired population. Fortunately, there are still a few ways retired people can gain capital and it is mainly through the equity in their homes that they can benefit.
Equity release programmes can provide retired homeowners with revenue from the value of their homes. These programmes are ideal for homeowners who are not interested in selling their homes and who want to stay there indefinitely. After weighing up the pros’s & con’s of moving & having decided that residing at the family home is to remain permanent, then equity release can be considered.
There are many other benefits offered by equity release
Equity release offers a lump sum that is free of income tax. It can also be utilised in reducing the amount of tax homeowners have to pay for their property. Providing any gift made to children or other beneficiary was made seven years prior to their death then this amount can become exempt from inheritance tax.
Equity release plan holders have the assurance that the interest rate taken at the outset, will remain exactly the same throughout the duration of the plan. Therefore assuming no further advances are taken, the future balance will be known for definate & one can budget for accordingly. If Bank of England interest rates do rise, the equity release interest rate remains unaffected.
All equity release schemes that are members of SHIP will also be protected by a no negative equity guarantee. This ensures that should the equity release scheme become more than the value of the home, then the equity release company can only receive the full market value of the house; any excess over & above will be written off under the no negative equity guarantee.
In addition to this, on the roll-up lifetime mortgage, the plan holders will always retain 100% ownership of the property. Therefore, any escalation in house price will be kept by the equity release plan holder, not the lender.
The capital gained through equity release, which is also known as an annuity, can be used as steady income. However, taking up an equity release programme will result in a lower inheritance for the family after the homeowner’s death. Due to this, it is important to consider this process carefully.
To see how equity release could benefit you, please contact Mark Gregory on 0800 678 5159 or visit Equity Release Supermarket’s website.
Friday, December 11th, 2009
At a time when the equity release market is downsizing with the withdrawal of many lenders, alternative funding sources need to be recognised to help widen the options available. It is in the generic mortgage market that some unique & flexible mortgage products can be sourced that offer an alternative to the traditional roll-up lifetime mortgage; it is one of these that I write about.
Upon gathering client details & ascertaining a generous disposable income, sometimes it can be evidenced that monthly payments can be afforded into retirement. However, there is a common misconception that someone in retirement cannot have a mortgage.
This is incorrect.
Providing income multiples can justify the borrowing requirements, then research can be sought that would provide recommendations of suitable mortgage products. However, providers that can lend into retirement have varying criteria with regards to age & the term permitted & here advice & a knowledge of the market comes into the domain of an experienced independent financial adviser.
The options available would be dependent on budget, but also on attitudes as to how much inheritance is to be left at the end of the day. Should it be imperative that the maximum inheritance remain, then a capital & repayment mortgage should be advised. Conversely, if this is not a major issue then an interest only mortgage can be recommended which will maintain the balance at the same level throughout the term of the mortgage.
Some of the major lenders such as Abbey & Alliance & Leicester do have a maximum age of 75, by which time the mortgage must be repaid. A few will lend to age 85 such as Leeds Building Society which does give more time for the mortgage to run, however, this may only be suitable for capital & repayment mortgages, not interest only mortgages.
Therefore, should you be looking for equity release in retirement, have surplus monthly disposable income, wish to ensure an inheritance for your beneficiaries & want the mortgage on an open-ended basis then look no further than the Halifax. It may come as a surprise that such a product may be available with a mainstream lender, however it has become more evident how this product can fulfill in-retirement needs.
The Halifax Retirement Home Plan can release cash over a maximum 40 year term, which for someone already near to, or actually in retirement, should be sufficient! They will only permit this product upto 75% of the property value, however this is not usually not an issue due to the amount of equity in retirees properties. Finally, dependent on whether a mortgage currently exists, we can also obtain for you a free valuation & free legal fees.
They will also allow the product to use the mainstream Halifax interest rates such as their 2 year base rate tracker at 2.79%, which for a £50,000 interest only mortgage would equate to a payment of only £116 per month. Obviously, consideration must be given to future potential changes that may affect the mortgage, such as the death a mortgagor which would reduce the household income & in turn affordability of the mortgage. However, this can be catered for with a life insurance policy which would repay the mortgage should either party die.
Alternatively, it should be borne in mind that if the level of borrowing is kept to within current equity release lending limits, then if one party did die, the surviving party could repay the mortgage with an equity release plan. This would resolve any affordability issues, as no monthly payments would be required thereafter.
Having completed several of these products recently, I can vouch for the speed of transacting this deal – 4 weeks, which compared to an equity release application is quicker too. Therefore, rather than just assuming equity release is the only solution, ensure you receive advice from an independent financial adviser – which Equity Release Supermarket can provide.
For further information & eligibility for the Halifax Retirement Home Plan please contact Mark Gregory on 0800 678 5159 or alternatively email email@example.com