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Posts Tagged ‘Stonehaven Equity Release’

Stonehaven Equity Release Rebrand to ‘Retirement Advantage’

Friday, May 29th, 2015

Stonehaven + MGM Advantage rebrand as Retirement Advantage
Further evidence of the progress & changes within the equity release industry has been witnessed this week after Stonehaven rebranded its name to ‘Retirement Advantage’. With effect from 26th May 2015, all Stonehaven’s equity release plans will come under the umbrella of Retirement Advantage.

 

 

Who are Stonehaven?

Stonehaven equity release was formed in 2006 as a provider of not just traditional lump sum lifetime mortgages, but innovative interest only lifetime mortgages with a difference. Their concept of being able to service the interest, thus rendering a level lifetime mortgage balance outlived the more conventional mortgage products such as the Halifax Retirement Home Plan which was withdrawn in August 2011.

 

Stonehaven = Innovation

To date, the Stonehaven range of interest only lifetime mortgages have stood the test of time. It is only recently that new hybrid versions of the Stonehaven Interest Select plans have been developed & now introduced. These voluntary repayment plans from the likes of Hodge Lifetime, Aviva, Newlife & now following suit – Stonehaven, have revolutionised the way equity release is perceived. It is now just the general public & journalists who need to take note of the new wave of flexible lifetime mortgages that can be tailored to any client’s requirements.

 

Stonehaven’s Recent history

Stonehaven’s success resulted in the company being taken over by MGM in 2014 and slowly their products have been redesigned & renamed accordingly, with a simplification of their offering – Interest Select, Lump Sum & Voluntary Select. Each product now has two further options depending on the level of borrowing required (loan-to-value) & ultimately also affects the interest rate applied. Board level changes have since occurred and the people who were at the core of their initial operation and built their model around the wider distribution model of using mortgage intermediaries as a source of referral business, have since departed.

 

The New Retirement Arena

We now have a new era in retirement planning & finances. With the demographics of the UK changing, longevity & health factors all combining to make insurers change the way the retirement landscape is evolving. The recent annuity changes have impacted severely on annuity providers of which MGM Advantage has been a major player in this market. These annuity & life insurance companies have had to rethink how retirees will need to manage their finances and stretch them further into retirement. This is probably only the start of what is to come for the over 55’s in the new retirement arena as new products are developed to cater for their needs.

 

MGM and Stonehaven Together = Retirement Advantage

Bringing together two successful retirement companies should lead to a complement of retirement products that can provide retirement solutions. Both MGM Advantage’s annuity and Stonehaven’s lifetime mortgage products are therefore suited to this retirement solution goal. The new retirement brand of Retirement Advantage will further strengthen their retirement proposition with a new retirement account launching soon.

 

Retirement Advantage is therefore one of the first significant mergers we may see in the retirement arena as equity lenders & insurers vie for the ever more lucrative retirement space. Equity release and annuities are changing for the better, hopefully the sign of more innovative thinking ahead.

 

For details on Retirement Advantage product range visit our website here where all their lifetime mortgage deals are listed along with a quote request facility.

Alternatively, please call Mark Gregory on 07966 889597 or email mark@equityreleasesupermarket.co.uk to discuss this further.

Stonehaven Equity Release Re-Launch With 8 Year Fixed Early Repayment Charges

Monday, March 16th, 2015

Stonehaven Equity Release schemesWhen many equity release providers are competing directly in using their lifetime mortgage interest rates, Stonehaven have decided to compete in a different field by taking the bold step of moving away from Gilt-based early repayment charges (ERC’s) & introducing a fixed penalty basis covering the first eight years of the equity release loan.

With effect from 16th March 2015, Stonehaven will move its whole lump sum & interest only lifetime mortgage range of plans over to an 8 year fixed early repayment charge of 5% in the first 5 years, 3% in years 6-8 and none in the 9th year & thereafter.

 

Background to Equity Release Early Repayment Charges

Due to the nature of the product – ‘Lifetime’ Mortgage, the plans have been designed to run for the rest of the homeowners life. This can create uneasiness for some people taking out equity release schemes in retirement as they cannot always say with certainty what their future plans entail with regards to their property.

 

Equity release early repayment charges have historically been a mixture of fixed penalty, gilt based, Bank of England base rate related and even long term interest rates called SWAP rates. The majority of equity release schemes across the market today is predominantly linked to government gilts. This can be in the form of an individually selected gilt such as Aviva’s, which is based on the age of the youngest homeowner, or follow an index of gilts such as the FTSE UK Gilts 15 Year Yield Index with Just Retirement.

 

These gilt related penalties on paper can look extreme given that Aviva can charge upto 25% of the amount repaid dependent upon the gilts yield falling from inception. Additionally, companies such as Just Retirement & Pure Retirement can charge a maximum of 20% of the fall in the FTSE UK Gilts 15 Year Yield Index. Therefore, the nature of gilts leads to uncertainty of their future levels & consequently any prediction regards their future level is unknown & cannot therefore be relied upon for early repayment purposes.

 

Currently, only one equity release company offers the certainty of knowing exactly what the future penalty could potential be; this company is LV= (Liverpool Victoria). Charging 5% for the first 5 years of the amount repaid & then 3% in the next 5 years, they actually have no early repayment charges after 10 years. This have given them a niche position within the equity release marketplace.

 

Stonehaven’s Move to Fixed Equity Release Early Repayment Charges

However, LV= equity release now have fresh competition and this is the beauty of where the equity release industry is right now. Competition is driving this market forward and its with such innovations & product development that is going to extend the volume of lending in 2015, to beyond the £14 billion released in 2014.

 

Stonehaven have been considering this move previously, however with their takeover by MGM, its plans were put on hold. With a new team behind Stonehaven now, they have obviously decided the time is now right to introduce  fixed penalty equity release plan to the market. It will be interesting to see how these new fixed ERC’s are perceived. Historically, applying fixed rate early repayment charges can come at a cost and this is usually borne in the equity release interest rate with an extra levy on it.

 

At present Stonehaven have not indicated any changes to their interest rates with the lowest currently being the Stonehaven Interest Select Lite plan at 5.46% monthly (5.87% representative APR). Therefore, the fixed penalty charges look to have been absorbed into the current equity release deals on record.

 

So for anyone considering the equity release & uncertain regards whether an equity release scheme will be required over the longer term, the new equity release early repayment charge from Stonehaven could be a viable option to consider. Providing fixed, transparent & easy to understand  ERC’s with just 5% penalty in the first 5 years, 3% for the next two & zero after the end of the 8th year, Stonehaven have taken over LV=’s mantle of potentially the best early repayment charging system available in the equity release market today!

 

Further Information

To learn more about Stonehaven’s range of products attracting the new 8 year fixed penalty, please contact the Equity Release Supermarket team on 0800 783 9652 or email mark@equityreleasesupermarket.co.uk.

Hodge Lifetime Launch New Innovative Retirement Mortgage Plan

Wednesday, July 31st, 2013

Equity Release Supermarket can today announce the launch of  the new Hodge Lifetime Retirement Mortgage Plan.

 

Only available through a selected number of intermediaries, the plan aims to provide a solution to the crisis surrounding the repayment of interest only mortgages.

 

Many articles have been written highlighting the plight of 2.6 million interest only mortgage holders who have no repayment strategy in place at the end of their mortgage term. Today marks the equity release industries response to this crisis.

 

On 1st August 2013, Hodge is launching its alternative interest only lifetime mortgage solution called the Hodge Lifetime Retirement Mortgage Plan.

 

Reasons for the Hodge’s launch

Hodge Lifetime has identified the growing crisis in people approaching retirement with interest only mortgages and no exit strategy. There have been many reasons for this situation such as poorly performing endowments, pension plans, ISA’s or simply that no repayment plan was ever in force.

 

The question for interest only mortgagors is how are they ever going to repay the mortgage balance?

 

Equity Release Supermarket is experiencing an increasing number of enquiries by people looking for an emergency repayment route from their existing mortgage provider. Where once lenders were willing to extend the mortgage term, under new FCA guidelines there is now a reluctance to extend the mortgage term, leaving repayment as the only option.

 

The options available to repay this debt include downsizing property, remortgage to an equity release scheme, transfer to another interest only mortgage, or cash in any available investments. Each of these can present their own set of problems.

 

For those looking to downsize is the ability to sell the property within the timescales provided by the mortgage lender. Equity release schemes may present limitations as to how much they can lend as they are based on a loan-to-value ratio. Depending on age, a conventional mortgage may not be available as they will not usually lend beyond age 75. Investments may not be available if used for income, or even present at all.

 

How The Hodge Retirement Mortgage Plan Can Help

Hodge Lifetime is launching a mortgage product to compare to the Halifax Retirement Home Plan which proved immensely popular until its withdrawal in August 2011.

 

Similar in concept, it enables people between the ages of 55-70 to remortgage their properties for any purpose. The amount borrowed is based on income multiples rather than a loan-to value ratio, as with equity release schemes.

 

Monthly payments of interest are then made to the lender until age 80, effectively maintaining a level mortgage balance. At that point a decision can be made as to whether you wish to continue with the payments for life, or cease & allow the interest to roll-up thereafter. The latter option would result in the mortgage balance thereafter increasing for the duration of the term.

 

The Hodge Lifetime Retirement Mortgage is eventually repaid upon death, or sale of the property.

 

By using affordability as the basis for lending criteria means people on good retirement incomes can borrow upto 50% of the property value with Hodge, subject to income. Compare this to the current interest only lifetime mortgage lender – Stonehaven, who would only lend a maximum of 19% at age 55.

 

Therefore, on a property valuation of £250,000 the difference between the two schemes is a significant £77,500.

 

Features of the Hodge Lifetime Plan

  • Flexible Repayment – Hodge will allow 10% capital repayment each year upto year 6 with no penalty
  • Fixed Early Repayment Charge (ERC) – over the first 5 years the penalty decreases from 5% down to 1% of the capital repaid. No ERC exists after year 6.
  • Fixed Interest Rate – 4.75% for 5 years, renewable thereafter (5.1% APR)
  • Minimum Loan – £20,000; Maximum Loan – £500,000
  • Eligible Income – basic state pension, pension schemes, annuity payments, SERPS or S2P
  • No Negative equity Guarantee – ensures the loan can never be greater than the property value
  • Location – available in England, Wales & mainland Scotland

 

This a lifetime mortgage. To understand the features & risks please ask for a personalised illustration.

Your home maybe repossessed if you do not maintain repayments on a mortgage secured on your home.

 

For further details, or to request a quote on the Hodge Lifetime Retirement Mortgage Plan please call the equity release team on freephone 0800 678 5469 or email mark@equityreleasesupermarket.co.uk

 

How the FCA Interest Only Mortgage Review May Impact Sales of Interest Only Lifetime Mortgages

Sunday, May 5th, 2013

May 2013 will be remembered as the wake-up call for customers with interest only mortgages. After all the talk about time bombs ticking down to zero, the FCA (Financial Conduct Authority) has now issued a regulatory warning, advising that action should be taken, and also how.

 

The interest only mortgage has been sold in bucket-loads for reasons a plenty. Ideally, an interest only mortgage should always have some form of repayment vehicle which is confirmed to the mortgage lender at inception.  This could be in the form of a low cost endowment, personal pension plan, regular savings ISA, stock and shares, investment bonds or even sale of 2nd home such as buy-to-let or holiday home. The only way of guaranteeing repayment of a mortgage is by choosing the capital & interest repayment mortgage route.

 

However, the relaxation of lending rules during the pre-credit crunch era meant that these mortgages where only interest is repaid were all too often taken due to being the cheaper option. It soon became apparent that these mortgages were not necessarily taken for the right reasons.  Not only that, where repayment vehicles were set up using pre-determined growth rates, these have fallen way short of their target growth rate.

 

These statistics have been confirmed by the FCA, who stated that almost half of the 2.6 million customers with a UK interest only mortgage won’t be able to clear their mortgage by the end of its term. In fact the average only interest mortgage balance will be approximately £72,000 by its eventual settlement date. These interest only mortgagors will somehow need to find this repayment amount, or end up having to sell their home and downsizing.

 

How Can Interest Only Lifetime Mortgages help?

This will depend upon at what stage of the mortgage term any retrospective action is to be taken. The best situation would be if remedial action could be effected during the interest only mortgage term itself. This would mean assessing the amount to be repaid & the time remaining for repayment of the original capital amount. Using a suitable interest only mortgage calculator, you can check to see how much you should be repaying in order to meet the mortgage outstanding. This will illustrate the size of the problem and what strategy is vital moving forward.

 

However, this is all & well if the situation can be nipped in the bud with many years remaining. Unfortunately, there are many mortgagors where the FCA interest only mortgage review has come too late. These are the people who have now reached retirement and realisation has sunk in that they still have no means to repay their mortgage. Mortgage lenders are reigning in these mortgages, many with no remorse.

 

Nevertheless, there is a small crumb of comfort for some as the FCA statistics do show that 85% of interest only mortgage cases maturing up to 2016 will have a 39% loan-to-value, or less. We also know from their data that over 48% people are over age 55 at this point. Fortunately for them there is a mortgage solution in the form of another type of interest only mortgage. Here is where the equity release industry can come to their aid.

 

Interest Only Solutions

An interest only lifetime mortgage works on the same principle as the interest only mortgage. The difference comes in the term, as the interest only lifetime mortgage will never need repaying until the last person has died or moved into long term care. Therefore, if affordability into retirement is not an issue, then committing to a life of interest only payments could prove a solution. Given the size of the interest only epidemic due to inflict itself upon the UK mortgage population this form of lifetime interest only mortgage could prove salvation for many who wish to keep their home.

 

The enormity of the situation could therefore be of benefit to the interest only lifetime mortgage providers such as Stonehaven, more2life and Hodge Lifetime. Where the applicants are aged over 55 and the loan-to-value criteria fits, then one of these equity release providers may be able to assist. With interest rates now closer to conventional mortgage rates than ever before, the differential in pricing is not that far apart.

 

In particular, where the discipline of monthly repayments are required, then the Stonehaven Interest Select Lite provides a solution whose interest rate begins at 5.99% (6.40% APR). The Stonehaven range of plans eventually rise upto 6.81% (7.3% APR) with the Interest Select Max, but offer a higher maximum lump sum.

 

As an alternative, if a more flexible repayment approach is preferred and the youngest applicant is 60 or over, then the Hodge Lifetime Plans may suit. The Hodge Lifetime flexible repayment option allows upto 10% of the original capital borrowed. Repayments can only start after 12 months have elapsed and a maximum of two payments are allowed each year thereafter. This effectively could provide an even better solution to interest only short fallers, as should the full 10%pa be repaid off the mortgage balance, then this would prove to be a new type of equity release scheme – a capital & repayment lifetime mortgage!

 

If you are one of the thousands of interest only mortgage customers with your mortgage company demanding repayment, then contact the Equity Release Supermarket team on 0800 678 5159 today or complete our contact request form.

Are Self Cert Mortgages Available in Retirement?

Tuesday, April 23rd, 2013

Self-certification mortgages are mortgages that are available without a formal income check. Self cert mortgages can be a good option for self-employed or independent professionals who would otherwise have a hard time finding a mortgage lender. Self-certification mortgages are also now available within the retirement sector, in conjunction with the right equity release advice.

 

In fact, lifetime mortgages and pensioner mortgages where the repayment vehicle is the sale of the property are all essentially self-certification mortgages as they do not depend on the income of the applicant. The lending criteria for these pensioner mortgages are mainly the age of the applicant and the property valuation.

 

For instance, Stonehaven’s Interest Select Plan is an interest only lifetime mortgage. Clients can borrow a tax free lump sum against the value of their property. Interest can be repaid in full every month, and the principle amount of the loan is repaid when the property is sold. In fact, Stonehaven equity release will allow you to set up a partial repayment facility, if the full amount of interest is out of your budget range. Therefore, rather than all the interest being repaid, a contribution towards this amount is paid.

 

Therefore, rather than the balance remaining level for the duration of the lifetime interest only mortgage, there will be an element of roll-up interest, albeit significantly lower than if no repayments were made at all. This scenario is ideal for candidates who are risk averse and wish to control the future balance of these pensioner mortgages for their children’s inheritance.

 

Being a lifetime mortgage, there is no fixed term and the loan will continue indefinitely, which will be until sale of the property, which is usually on death or moving into long term care.

 

Self Cert 2013 Lending Criteria

The lending criteria for this loan are based on the age of the youngest applicant and the value of the property. Plans start at age 55 with a minimum property valuation to qualify of £70,000. The property can now be situated in England, Wales & mainland Scotland.

 

As long as applicants can make the minimum monthly repayment of £25, there is no question of requesting income. Stonehaven’s Interest Select plan can therefore be safely categorised as a self cert mortgage. Once the mortgage is set up however, the premiums cannot be amended, other than to stop interest payments completely and convert to a roll-up lifetime mortgage plan. This feature can be used as a safety net in case the mortgage becomes unaffordable in the future & effectively prevents a situation whereby normally repossession would ensue. Repossession for none payment of premiums cannot therefore occur with the Stonehaven Interest Select Plan.

 

Another feature that appeals in today’s economic climate is that of adverse credit or poor credit rating. These lifetime interest only mortgages have leniency towards this. They will permit arrears and defaults. Additionally, they will accept CCJ’s (County Court Judgements) upto a certain level as long as they are repaid from the proceeds and were for understandable reasons.

 

Like most equity release schemes, Stonehaven base the lending on a loan-to-value principle. Stonehaven have four tiers of loan-to-values and each comes with its own interest rate. In essence the more you borrow against the value of your house the higher the interest rate becomes. Conversely, the older you are the greater the amount that can be borrowed, hence it is important you receive independent equity release advice to assess which tiered rate of interest applies and is best for you.

 

For instance a male aged 65 with a property value of £250,000 could release the following with Stonehaven: –

 

 Product Name

Maximum Borrowing

Interest Rate

Loan-to-Value

 Interest Select Lite

£52,500

5.99%

21%

 Interest Select

£60,000

6.08%

24%

 Interest Select Plus

£67,500

6.17%

27%

 Interest Select Max

£72,500

6.81%

29%

 

Who else provides self cert lifetime mortgages on an interest only basis?

Other pensioner mortgages are becoming increasingly available such as the more2Life Interest Choice Plan. This is another self-certification mortgages whereby no income checks are made by the lender. The mortgage is only repaid once the property is sold, which is when the client dies or moves into permanent care, or decides to make an early sale for any other reason.

 

Self-certification mortgages are not very common in the regular residential mortgage sector as lenders are reluctant and wary of lending without formal income checks under FCA (Financial Conduct Authority) regulations. Interest rates are often higher and the loan to value ratio may be lower than traditional mortgages. However, they have been designed with security in mind, something which interest only mortgages of the past haven’t been.

 

Many pensioner mortgages which rely on the property sale for repayment are essentially self-certification mortgages as they don’t carry out income checks for approval. For these mortgages the main relevant criteria are the age of the applicant which helps determine the expected term of the loan and the property valuation which helps determine the loan to value ratio.

 

For a full assessment of eligibility criteria with the range of interest only lifetime mortgages that Equity Release Supermarket have available, please call Freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk.

 

Further information on the range of self cert interest only lifetime mortgages can be found on our Compare Equity Release Deals page.

Equity Release Schemes Available In Scotland

Thursday, March 28th, 2013

It’s been a long time coming, as the song goes but Scotland is at last catching up with the rest of the UK when it comes to the uptake of equity release schemes.

 

The reason the Scottish equity release market has not grown as quickly in the past as the rest of the UK is that a lot of Scottish homeowners have very close family ties and traditions and want to leave their property and estate as inheritance for their families and have been happy in the past to either down size or make do.

 

One of the common objections to equity release in Scotland was the loss of inheritance for the family. However, with the new range of equity release mortgages this loss of potential inheritance can be resigned to the past.

 

In the last year alone, many changes have taken place within the equity release market. All equity release schemes Equity Release Supermarket recommend still have the ‘SHIP’ standard – a ‘no-negative equity guarantee’ built into them. SHIP has now come under the auspices of the Equity Release Council in maintaining this important protection feature.

 

Latest equity release schemes

In addition to the no negative equity guarantee, new innovative plans have been introduced with options such as the Inheritance Protection Guarantee, where a percentage of the property value can be ring fenced to protect the family inheritance. This provides peace of mind in protecting a fixed final amount of the property value to be left as an inheritance for the family at the end of the day.

 

Hodge Lifetime have recently brought out a roll-up lifetime mortgage plan where they will allow up to 10% of the capital borrowed to be repaid each year by cheque, again a way to protect the loan from the effects of the roll up of interest. Not only can the interest be repaid, but additionally a proportion of the capital by paying the maximum 10%pa in repayments. Effectively this renders the Hodge Lifetime scheme a capital & repayment equity release mortgage!

 

Stonehaven have also moved into Scotland with an interest only lifetime mortgage. The Stonehaven Interest Select plans operate on an interest only basis with a balance that remains constant throughout the mortgage term. This continues so as long as the monthly payments are made, resulting in a loan that will never be more than the initial amount at the start of the plan.

 

These Stonehaven equity release schemes in Scotland are eventually repaid from the sale of the property. The interest rates are currently the lowest we have seen from Stonehaven since they started over 6 years ago at just 5.99%.

 

Scottish interest only mortgage enquiries

From the number of interest only lifetime mortgage enquiries Equity Release Supermarket now receive in Scotland, many people have also noticed this, and taken advantage of these low interest rates which are then fixed for life. Providing security, not only for inheritance purposes, but also in fixed lifetime monthly payments is something that the over 55’s in Scotland are looking for.

 

Equity release plans are not only weathering the economic downturn, they are offering a much needed lifeline to homeowners in this time of austerity. It may not be the best option for everyone in Scotland and by seeking independent financial advice it is important you also consider any alternatives beforehand.

 

Nevertheless, if you are sitting with a lot of equity in your home and you are over 55 years of age why deny yourself a good lifestyle in retirement, when unlocking some of the equity in the home could help make life a lot more comfortable for you, or your loved ones.

 

In this growing equity release market with new providers and new plans coming along it is more important than ever to get the correct advice from a specialist dealing in equity release such as the Equity Release Supermarket.

 

If you wish to find out more about any of the plans mentioned then do not hesitate in making contact with the author of this article – Nigel Hall who would be more than happy to help.

 

To request a free initial consultation on the range of equity release schemes available in Scotland call Nigel Hall on 07553 408010 or email nigel@equityreleasesupermarket.co.uk

 

How Does Equity Release Work?

Wednesday, March 27th, 2013

Equity release schemes have risen in the popularity stakes over the past 12 months. With regular articles in the tabloids, and increasing government awareness, lifetime mortgages have certainly raised the bar. But how does equity release actually work in the whole scheme of things, and why has it become such topical subject matter for those looking for a comfortable lifestyle in retirement?

 

Equity release workings

Primarily equity release is available to home owners where the youngest person on the deeds is at least aged 55. Equity release works by allowing eligible people to raise tax free cash from the equity tied up in their home. The amount that can be released is based on an age-related ascending percentage of the value of the home. In other words, the older you are, the more you can raise!

 

For example a single person in good health, aged 65, with a property value of £250,000 could raise a maximum of 30% of the property value. This would mean a maximum equity release of upto £75,000 with Aviva.

Even better, is the fact there are now impaired life schemes that offer ‘enhanced’ rates to people who are not as fit and healthy as they used to be and these schemes increase the percentage that can be drawn.

Therefore, if the same person was a smoker with high blood pressure, having diabetes & a history of heart attacks could now release upto £115,500 on the Partnership enhanced lifetime mortgage scheme.

 

Popular uses for equity release

The money raised from any equity release scheme can be used for any legal purpose from clearing credit card balances and existing mortgages, to helping children or grandchildren with deposits to climb onto the property ladder. However, many would be treating themselves to some lifestyle indulgences such as a new car, world cruise or home improvements.

 

Today’s equity release schemes

The modern format of Equity Release started in the mid 1990s with Hodge Lifetime (part of Julian Hodge Bank), Norwich Union (now Aviva) & Northern Rock (now Papilio UK) with a simple roll up lifetime mortgage.

 

Today there are three basic equity release schemes:-

 

1)      Roll up Lifetime Mortgage

This type of scheme has a few variations but basically the borrower takes an initial tax free lump sum, makes no monthly payments and the accrued interest is added to the loan and compounds annually.

 

The main variation to this is the “drawdown lifetime mortgage“ scheme. This is where only the immediately required amount is drawn down and a reserve cash facility is then offered with the remainder. No interest is accrued on this drawdown facility until it is taken in the future. The advantage here by taking it in smaller amounts is that interest is compounded at a much slower rate, than if it had be taken all at once.

 

Another variation of a roll up plan is offered through Hodge Lifetime on a roll-up basis. Hodge’s flexible repayment plan has an option to repay up to 10% of the original amount borrowed annually without any early repayment charges. Hodge also offer a unique ‘downsizing protection’ option whereby after five years, if the property is then sold and the owner moves & downsizes house, then no early repayment charges apply.  A great solution for many who cannot sell now, but may do so in the future.

 

 

2)      Interest Only Lifetime Mortgage Plans

There are two lenders currently offering this type of interest only scheme – Stonehaven and more2Life. Both schemes are fairly simple whereby a lump sum is withdrawn and the monthly interest is paid in order to maintain the balance outstanding level throughout the term.

 

This method has proved appealing to parents who are keen to minimise any inheritance reduction for their children. In recent times, since the withdrawal of the Halifax Retirement Home Plan lifetime interest only mortgages have become increasingly popular. Both these Equity Release Interest Only schemes have the added safety feature that should the monthly payments become too much (one applicant dying and their pension income reducing) then it can revert to a roll up equity release plan, where no payments are required thereafter.

 

3)      The Home Reversion Plan

This is now the least popular type of equity release mortgage. Nevertheless, it can prove to be the best advice in certain scenarios. The workings are that the homeowner(s) must have a minimum age of 65. They have the option of selling part, or all of their property to the reversion provider and then lives in that property, usually rent free, for the rest of their life. In truth, this is usually only appropriate when there are no beneficiaries to the estate, or they wish to leave a guaranteed percentage of the final value of the house to their children.

 

Home reversion schemes only account for less than 5% of the market these days. The market has seen a few withdrawals from the market by lenders such as Aviva and Retirement Plus. The three remaining home reversion providers are Hodge Lifetime, New Life & Bridgewater.

 

About the author

The author of this article is Barry Adnams, who is a senior equity release adviser at Equity Release Supermarket.

Barry is aware of what a monumental decision taking equity release can be. He is a traditional adviser that would always advocate a home meeting with family involvement. Barry offers an initial cost free ‘face to face’ appointment and likes to include as many family members as possible to be present to discuss whether taking equity release is the right option, or not.

 

If you want to benefit from the experience Barry has to offer and understand how equity release works further, then please contact Barry Adnams at Equity Release Supermarket, on 07989 281108 for a free initial consultation. Alternatively please email barry@equityreleasesupermarket.co.uk.

Which Equity Release Companies Accept Payments of Interest &/or Capital?

Monday, January 14th, 2013

Following on from the last article entitled – ‘Will Equity Release Providers Accept Repayments of Interest and/or Capital?‘ we now look at the three companies concerned & their equity release plans in greater detail by covering the features these schemes have brought to the marketplace.

 

Hodge Lifetime

Hodge Lifetime returned to the equity release market in 2012 with a truly innovative lifetime mortgage product which has since been improved again to include a new drawdown facility.

This lump sum lifetime mortgage is unique in that it includes a 10% flexible repayment option with absolutely no early repayment charges under certain circumstances upon downsizing.

 

Hodge Lifetime Allow 10% Overpayments

The Hodge Lifetime Lump Sum Lifetime Mortgage is basically a traditional roll-up lifetime mortgage scheme in that it allows you to borrow a lump sum with a fixed interest rate for life. The flexible repayment option allows you to make a repayment of up to 10% of the original amount borrowed, without incurring any penalties or charges. Since there are no monthly commitments, repayment is flexible and you are free to pay as and when you choose, once the first 12 months has elapsed.

 

These payments are permitted on an irregular basis with a maximum of two repayments per annum. This would ideally suit people who want to control the balance of the plan in the future and in particular want to keep a level balance, or even repay some of the capital by taking advantage of the maximum 10% overpayment rule.

 

The effect of making these 10% overpayments

The Hodge Lifetime Flexible Repayment Option Calculator (accessible via their website) shows the effect making the maximum 10%pa repayments has on borrowing £20,000 at their current rate of 5.83% monthly (6.2% APR).

Over a 10 year period, by repaying £2,000pa back to Hodge Lifetime (10% of capital amount borrowed), it would reduce the balance by almost half to £11,340. Compare this to if NO repayments were made at all and the balance would have risen to £35,778; a significant difference of £24,438!

 

Hodge also have NO early repayment charges…

A second feature that is proving extremely popular with Equity Release Supermarket customers is the favourable early repayment charges that Hodge Lifetime offer.

The plan is geared towards those clients who maybe considering downsizing in the future. Again this has always been a stumbling block for many who see equity release schemes as a solution, however have been put off by the potential size of some of the lenders early repayment charges if repaid early. With some lenders such as Aviva, these penalties can be upto a maximum of 25% of the amount borrowed.

 

Hodge Lifetime make downsizing a more attainable option by applying a sliding scale of early repayment charges (ERC’s) over the first 5 years. These ERCs descend from 5, 4, 3, 2, 1 over the first five years of downsizing. There are no early repayment charges if you downsize after 5 years.

The starting age for the Flexible Repayment Lump Sum Lifetime Mortgage is 60, and the minimum property value is £100,000 with a minimum initial borrowing of £20,000. Hodge Lifetime is a member of the Equity Release Council and all their plans follow SHIP Guidelines. Click here to request a Hodge Lifetime quote.

 

Stonehaven

Stonehaven launched their Interest Select Plans over 7 years ago and were the first of the current crop of equity release companies to offer an interest only lifetime mortgage option.

Stonehaven have been important addition to the equity release range of companies as they created the original concept of this type of interest only lifetime product, which now is starting to make in-roads into the over 55’s mortgage market.  With features unseen before in this sector of the equity release market, Stonehaven’s Interest Select range of products have been launched with the changing needs of the customer in mind.

 

Stonehaven help protect your inheritance

Like the other two flexible repayment plans, this plan is designed to suit those who wish to have more control over repayment and to protect their inheritance.

The Stonehaven Interest Select plans include the Interest Select Lite, Interest Select Plus, Interest Select and the Interest Select Max. Each plan has its own lending limits, or loan-to-value. The greater the borrowings, the higher the interest rate becomes.

 

You can select your monthly payment

All these plans offer a disciplined monthly repayment plan that maintains a level balance throughout the term of the contract. The minimum amount that needs to be repaid monthly is only £25. The client can actually elect how much of the total interest charged they wish to repay. It can be anywhere between the total amount of interest charged each month, down to this £25pm level. The interest rate charged depends on which interest select option you choose.

 

If only partial repayment is made then the Interest Select loans have two parts – the interest payment part, and the interest roll up part. The part of the loan on which you make interest repayments is the interest payment part. If you are not paying all of the interest, then the roll up part is included and this element will accrue over time depending on how much of the total payment is being made.

 

Stonehaven give you the option from the outset to choose how long you wish to make these monthly payments for. Most people will select over their lifetime. However, if there is to be a significant event arising in the future, then you can elect to fix a term for the payments. The interest rate is fixed for the term you will be making interest payments, but cannot extend it later.

 

Protection against repossession

Stonehaven also include a protection feature that is unique to the equity release market. In the future, should you ever fall upon difficult times, then the monthly payments can always be stopped and the plan is automatically converted into a roll-up lifetime mortgage. No further repayments are then requested. There are no actual penalties for this, however if this has been done without prior notification then Stonehaven will increase the future interest rate by just 0.2%

 

What are the Stonehaven Interest Rates?

The monthly rates of interest for the Lite, Select, Plus and Max options vary, and are currently as follows –

 

Interest Select Lite – 5.99%

Interest Select – 6.08%

Interest Select Plus – 6.17%

Interest Select Max – 6.81%

 

The selection of each product is determined by the loan-to-value of the application. The lower the loan-to-value the better the interest rate offered by Stonehaven is.

An example of borrowing £20,000 on their interest select lite plan would result in monthly payments of £103.08 (6.4% APR).

 

Stonehaven are also a member of the Equity Release Council and all their plans follow SHIP Guidelines. Their plans start at a lower age of 55 with a minimum property valuation of £70,000 and a minimum initial release of just £10,000. Click this link to request a Stonehaven Interest Select quote.

 

more2life

more2life which is part owned by Key Retirement Solutions, has recently launched their Interest Choice Plan with a fixed lifetime interest rate.

 

This is a flexible drawdown interest only lifetime equity release plan, and allows applicants the option to repay between upto 100% of the monthly interest. The minimum amount that needs to be repaid is £25. The drawdown facility however, is provided only on a roll-up basis, not an interest only basis.

 

Plans start at age 60, with a minimum property value of £70,000 in England & Wales and with a minimum initial release of just £10,000.

If you wish to request a quote from more2life follow this link.

 

For additional information on any of these interest only lifetime mortgage schemes call freephone 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

What Are My Options if I Still Have a Mortgage When I Reach Retirement Age?

Monday, November 12th, 2012

Retirement mortgages are becoming a rare breed. Nevertheless, with good research provided by an experienced equity release adviser, there are still such products available for the over 55’s. Products such as the Stonehaven Interest Select Plan are a good alternative to the now withdrawn Halifax Retirement Home Plan mortgage. If you have a pre-existing mortgage when you reach retirement age, there are certainly some options that are still available for you to consider.

 

Firstly, it is important to consider the changes in your income when you reach retirement. If your income during retirement still allows you to sustain the pre existing mortgage then the mortgage can be continued for a period. This will however be determined by the term of your existing mortgage and the attitude of your mortgagee. We have recently seen that since the FSA report into interest only mortgages, that residential mortgage lenders have revised their terms and attitude towards this sector of the mortgage market.

 

The repayment vehicle is where the issue has fallen down. Many people have taken interest only mortgages and for one reason or another never taken out the repayment vehicle that was meant to have provided the funds to repay the mortgage with at the end of the term. This has left a time bomb waiting to go off due to the sheer numbers of people with interest only mortgages now hitting their retirement years.

 

Affordability going into retirement is the one aspect of retirement planning most people do not look ahead for. Their income will fall as full time employment will usually cease and pensions as we all know have not performed as the quotes originally showed when personal pensions were originally take out.

 

Therefore, upon attaining retirement age, if you are unable to afford the mortgage, it is necessary to take the correct steps to remedy the situation. Your existing lender should allow you to switch to another interest only mortgage provider, should one be suitable to meet your requirements. To be able to do this, the loan-to-value ratio will be key as to what options will be available upon remortgaging outstanding. Now that the Halifax Retirement Home Plan mortgage has been taken out of service, what options actually remain to switch to?

 

By considering switching to an interest only lifetime mortgage can allow you to make monthly interest payments; the balance remains the same, which is repaid once the property is sold. The question to ask yourself is whether you require the mortgage to run for the rest of your life or to tie in with future plans, such as downsizing, or you only want the mortgage to run for a fixed number of years. Remember, selling your property and moving to a smaller property and paying off the balance is an option worth considering. The answer to these questions will determine the correct retirement solutions for you.

 

Equity Release Supermarket currently has two interest only lifetime mortgage plans available. Therefore, if your current lender does not provide this option, and you wish to remortgage then find an equity release adviser who can provide details. We can advise on both the Stonehaven range of interest select plans, or the recently launched more2life Interest Choice plan on 1st November 2012.

*UPDATE 1/8/21013 – Equity Release Supermarket has today obtained access to the new innovative Hodge Lifetime Retirement Mortgage Plan – for further details click here

However, always look at the options before pledging your future to an interest only lifetime mortgage product. You could be entitled to retirement benefits that can help you cope with the existing mortgage. For instance you could be entitled to council tax benefit or pension credit which could have an impact on your income & mortgage affordability. Certain organisations such as Shelter can provide mortgage interest advice and support to those who are eligible. It is worth exploring these options that can help with making payments.

 

There may be other residential mortgages that you can consider switching to. However, these companies such as Leeds Building Society may only provide a temporary reprieve due to the limited term permitted. Most lenders will usually want full & final repayment by a maximum age of 70-75.

 

It is therefore important to seek professional advice in order to make a well informed and well researched choice. Switching to an interest only lifetime mortgage such as the Stonehaven Interest Select Lite is one such option, wherein you make monthly interest payments for life and the balance on your mortgage remains the same. With Stonehaven interest rates now only starting from 5.99% monthly and thereafter fixed for the whole duration, for those that qualify this is an excellent & secure option available to people over age 55.

 

If you wish to cease making any payments towards the mortgage, maybe as you have no children or close relatives, then roll-up equity release schemes may also be a good option for you. A roll up equity release is where no monthly payments are required as instead the interest gets added to the balance. The equity release deals from some roll-up companies are excellent at the moment with the incentives to help with set up costs. For instance, the Aviva Flexible lifetime mortgage starts with rates as low as 5.57%, depending on personal requirements and this is coupled with free valuations and three cashback options.

 

However, if the thought of your inheritance disappearing before your eyes when you receive your annual roll-up lifetime mortgage statement arrives then its worth looking at companies like Stonehaven and more2life. You should know that interest rates are currently the lowest ever for Stonehaven in their six year history. From the number of interest only enquiries we now have, many people have also noticed and taken advantage of tying themselves into today’s lowest interest rates and fixing them & their futures up for the rest of their lives.

 

To discuss your equity release options at retirement call the equity Release Supermarket team on 0800 678 5159 today.

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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