Equity Release News
Possible equity release products on the market include lifetime mortgages such as the enhanced equity release. This type of equity release is also known as an impaired or ill health lifetime mortgage. The name implies the person obtaining the loan has some sort of illness. It is the illness that can increase the maximum lump sum given by a company over that of the standard lump sum equity release. To determine if you qualify, you can use an equity release calculator. There are impaired equity release calculator tools available at independent websites, helping you find the answers you need. Prior to using this calculator you may also want to find a health and lifestyle questionnaire.
Health and Lifestyle Questionnaire
To qualify for an enhanced lifetime mortgage you need to fill out the questionnaire. It asks you a series of questions regarding possible ailments you may have. The depth of questioning will vary between equity release lenders, but on the whole, they are quite similar. An equity release calculator for enhanced equity release products is going to assume the worst case scenario about your health, which can give you a larger maximum lump sum than the actual lender may be willing to offer based on your current health conditions. It is for this reason you will need to speak with an independent broker and fill out the forms based on their suggestions of companies that might help you receive the maximum lump sum possible.
Partnership Equity Release
Partnership is one company offering an impaired equity release product. The information in this section gives you an example of some of the questions they ask with regards to their ill health lifetime mortgage.
• Your weight: in stones and pounds is required
• Your height: in feet and inches
• Have you used manufactured cigarettes, smoked 10 cigarettes or more per day in the last 10 years?
• Did you smoke rolling tobacco, if so did you smoke more than 3ozs or 85 grams per week for the last 10 years?
• Do you have a diagnosis of high blood pressure that requires ongoing medication?
• Were you hospitalised for a heart attack?
• Do you have diabetes which requires insulin or tablet treatment?
• Have you suffered from a stroke, excluding mini-strokes?
• Do you suffer from angina, where ongoing medication is needed?
• Do you have any type of cancer excluding skin cancer or benign tumours, which require surgery, radiotherapy or chemotherapy?
• Have you been diagnosed with Parkinson’s disease or multiple sclerosis?
• Are you in early retirement due to grounds of ill health?
• Are you on prescription medications for any ailment?
As you can see from the questions above many are simple yes or no answers. When you fill out this questionnaire, you need to be answering these questions for the youngest equity release applicant. Only the youngest applicant (homeowner) is able to use ill health to obtain a lifetime mortgage. In fact, for any lifetime mortgage, the youngest applicant has to be used in the equity release calculator to get proper and accurate results.
The calculator will take the results from the questionnaire you filled out and provide you with the results based on any question you answer with a yes. If there are no questions that have a yes, you will be told you do not qualify. As long as you qualify the results will be shown.
Interpreting the Results
The results are based on more than just your ill health, if you have any issues. The results will also be based on your age and property value. The youngest person must be at least 55 years of age. The older the person the more money released on the thought it will be returned quicker. This is the same premise as an enhanced equity release. Your ill health could shorten your life expectancy. Given this situation you can gain more funds from the lender.
The property value determines how much equity is actually available in the home. This determines the loan to value percentage in terms of an actual amount. If you are aged 65 and in good health, you may get up to 30% of the property value in the loan. A person with ill health could get a higher maximum. Using an equity release calculator determines how much higher the maximum lump sum might be. After gaining the results you can then go on to speak with an adviser to double check the results.
The previous success of the interest only Halifax equity release mortgage, and the void its withdrawal created, only goes to show that the need for interest only lifetime mortgage products does exist in retirement. But although there is a rise in demand for niche retirement mortgages, there is a lack of response from the mainstream mortgage market to cater to this demand. We are increasingly aware of the FSA’s stance on interest only mortgages, however retirement mortgages are a whole different proposition.
There is no single age limit that applies to all mortgages available out there, but currently interest only lifetime mortgages are only made available to people over the age of 55 years. Normally, residential interest only, or even capital and repayment mortgages can only continue to a maximum age of 70 or 75 years.
If you have a mortgage from your pre-retirement days then it would normally have been arranged to coincide with your selected retirement date, normally age 60-65. The problem has been that lenders sometimes bypassed this rule of thumb & allow a pensioner mortgage to go beyond this cut off point.
This is particularly the case right now for many reasons: –
– Repayment vehicles have not met expectations such as endowments or pension performance
– No repayment vehicle has ever been taken out, or maybe lapsed along the way unknowingly
– The state pension age has gone up and is likely to do so again in the future. People relied on property values escalating, which recently they have done the reverse assumed sale of property would be the repayment vehicle, however hasn’t materialised
Although there seems to be an obvious need for innovative lending solutions for the elderly, the regulatory authorities have become very stringent about interest only lending. This is because, if no clear repayment vehicle was ever in place interest only mortgages can often prove to be impossible to repay.
Lenders have now put stringent criteria in place for borrowers, wherein borrowers must be able to prove to the companies’ satisfaction that their income during retirement will continue to be able to support the mortgage. Income from all sources must be evidenced in order to prove that repayment terms can be met during retirement. This can be a grey area however as certain lenders will have different rules on which forms of income will be acceptable. For instance some will accept rental income, a percentage of state benefits such as permanent invalidity or investment income.
The Halifax Retirement Home Plan was a good example of these varying rules. This scheme proved interest only lifetime mortgages can prove to be highly successful. Unfortunately, this scheme was pulled by the Halifax in August 2011, partly because they were unable to cope with the high demand and the lack of other interest only mortgage competition. Although this product is no longer available to new customers, existing plan holders can still maintain these plans & take further advances or even port them over to a new property.
Furthermore, there are additional lenders outside the mainstream mortgage market that can stretch the criteria to provide effective retirement mortgages. Stonehaven is a well-established equity release provider, and their Stonehaven Interest Select Plans are now an integral part of the interest only lifetime mortgage market for people over the age of 55. Stonehaven’s equity release mortgages are very similar to the now defunct Halifax Retirement Home Plan mortgage. Likewise, Stonehaven schemes are protected by the FSA, but furthermore they are also members of the Equity Release Council (formerly SHIP).
Apart from Stonehaven there are a few building societies that offer retirement mortgages similar but do have greater restrictions on their criteria such as New Life Mortgages.
As with any financial advice, a retirement mortgage can be a complicated and therefore independent mortgage advice should be obtained. Call 0800 678 5159 to speak to a retirement mortgage specialist.
There are so many companies out there offering equity release schemes to choose from. While this gives homeowners above 55 years of age variety and plenty of companies and benefits to choose, the adverse has been that companies too are jostling for clients to sign up and entice with their new products. There are many offers on the market from equity release providers. With equity release schemes, a valuation fee is usually the only fee to be paid up front. However, with recent competition evident in this market there are now free valuation offers to be had.
In most instances, the higher the property value, the higher the valuation fee that one has to pay. A valuation or survey is important as it establishes beforehand whether the property being considered is adequate security for the equity release scheme and to the lender. It has now therefore become easily possible to acquire this very important service of valuation of your property free of charge. One however needs patience and an eye for exclusive offers by companies vying for new customers; their offers include a free valuation offer and cash back deals & in some instances companies like CompareEquityRelease.com will receive much reduced interest rates to standard mortgage advisers.
Looking out for free valuation offers is the way to go in the current economic climate we live in. It means less upfront costs & getting good value for money. Some companies offer free valuation offers in reverse by offering valuation fee refunds when signing up by a client. The bottom line remains, that you would have had your property valuated free of charge, which is an incentive and means more money in your pocket.
Equity release free valuation offers, like all special and exclusive offers are incentives to attract more clientele in a rather harsh economic climate. Homeowners can take advantage of this specific marketing and advertising strategy by large companies, to shop around and compare the different types of equity release schemes. It will also help them to determine finally which one to choose for their own financial peace of mind.
It can be said that amongst the incentives on offer by different companies offering equity release schemes, the most beneficial and the most sought-after by clients is free valuation offers. These allow homeowners to identify the best rates without having made a commitment, even more, without having parted with any of their hard-earned money. So if you’re not sure how much you can release as you are unsure about your properties value then look for equity release deals offering a free valuation from companies such as Aviva, Just Retirement & LV=.
For more information on whether you qualify for a free valuation ring 0800 678 5159.
Many retirees who own homes want to find out how much equity has built up in their home because they may want to get a cash lump sum to help them with their living expenses. There are a lot of equity release schemes out there, but you have to find the right one for you. This means you should compare equity release schemes. In order to get started, a retiree will need to go on the Internet and type in the keywords “equity release schemes” to be shown sites that could help him or her in choosing the best equity release scheme.
Look for a site that allows you to compare equity release schemes from several companies. The site may be overwhelming to you at first since you may not know which equity release scheme to choose. Contact an independent equity release adviser who can answer your questions and help you to choose the best equity release scheme.
Before you contact the independent equity release adviser, you can get an estimate on how much of a cash lump sum you could receive. You can either use the calculator on the site or click on any of the equity release schemes. To make sure that you are choosing the right equity scheme it is best to speak with an adviser.
When you speak with an independent equity release adviser, he or she may ask you a series of questions about your home, such as if you would want to leave a portion of the home to a relative when you pass away. If so, you may want to consider a home reversion. With a home reversion, you are selling a part of your home,so that the other portion will be inherited by a loved one. The loved one can always sell their portion when you pass away.
Home Reversion Explained in Detail
You should know that there are several types of programmes out there and home reversion is just one option of equity release. It has its up and down sides that you will want to analyse before you determine it is the best answer.
Home reversion sells a part of your home. You can even sell your entire home. As long as a person is over the age of 65 and living in your home they can be named as part of the home reversion plan. Once you sell a part of your home you will sign a lifetime tenancy agreement that stipulates you can remain in the house rent free until you die or decide to move out. Like the people named in the home reversion contract, you need to make certain those same people are listed in the tenancy agreement.
This is the only way to guarantee that a partner or other family member can remain in the home until everyone has died or decided to move out. Children are not given the same consideration because their life expectancy is too long.
A home reversion provider makes money only when the house is sold at current market value. Since they cannot sell the home while you still own a part of it and still live in it, they must wait. So while there is a portion that will go to your beneficiaries it has to be sold to the home reversion provider upon your death. The provider will give a lump sum for the remaining portion and make their money back from selling the house.
As long as you do not sell your entire home during your lifetime, there is a guarantee of a cash sum for your beneficiaries. This is much different than the lifetime mortgage equity release option.
Lifetime Mortgages in Detail
A lifetime mortgage is a loan that you do not make payments on until you die or sell the house. This means you live in your home without the trouble of a mortgage, but the interest builds up on the principle. It could leave your beneficiaries without any inheritance including the house.
When it comes to choosing an equity release scheme, the independent equity release adviser is going to make sure that you benefit from it. If your main concern is to just have a cash lump sum so that you can live comfortable while you are still alive, that is what the adviser will find for you. No matter which equity scheme you choose, you can still live in your home for free. Through websites that allow you to compare equity release schemes and advisers you will find the answer to your monetary needs.
Interest only lifetime mortgages – like any other financial product have certain specific terms of eligibility. These equity release mortgages are designed for older homeowners and are essentially mortgages with no fixed term, and can potentially go on for life. Interest only lifetime mortgages have proved to be highly popular within the equity release sector thanks to their flexibility. Let us look at the main qualification criteria for these equity release mortgages.
The first eligibility factor for interest only lifetime mortgages is age. These mortgages are available to over 55’s, however; some providers may have a higher age limit. For instance, Stonehaven’s Interest Select Plan is available to clients 55 years and over, while More2Life’s Interest Choice Plan and the Hodge Lifetime Flexible Release Plan both commence at 60 years. Interest only lifetime mortgages have no fixed term and are designed for older homeowners to assist in their provisions for retirement. The second criterion to qualify for interest only lifetime mortgages is the value of the property. Lifetime mortgages cannot be viable unless the property valuation is above a certain threshold. Different providers will have different thresholds. The More2Life Interest Choice Plan is currently available only on property valuations above £70,000, as are the Stonehaven Interest Select Plans. However, Hodge Lifetime insist on a minimum property valuation of £100,000, thus it is always best to seek independent equity release advice.
The minimum amount you can release on both Stonehaven & more2life products is also the same – £10,000. However, Hodge Lifetime again raise the bar with minimums of £15,000 or £20,000 dependent on whether the lump sum or drawdown lifetime mortgage option is selected.
Location of the property is also an important factor as not all providers will be available in all locations within the UK. As it stands today, only two of the three interest repayment equity release companies offer lifetime interest only mortgages throughout England, Wales and mainland Scotland. These are the Stonehaven Interest Select Plan range and Hodge Lifetime’s Flexible Lifetime Mortgage plan. Unfortunately, the more2life interest choice plan is not available in Scotland.
The maximum amount that can be borrowed depends on your individual circumstances. Each provider will work out the loan-to-value ratio based on the age (which helps determine the expected length of the loan) and the valuation of the property. This information helps lenders work out the viability of the loan and determine the maximum amount that can be potentially released. The older one is, the more each lender will potential lend as life expectancy gets shorter.
The minimum monthly repayment amount for both Stonehaven Interest Select and More2Life Interest Choice is £25. Applicants must be able to make this minimum payment. The maximum amount is the full interest amount charged which provides the template for ensuring that the lifetime mortgage will maintain a level balance. You must also be a permanent resident of the UK, and be able to show proof of history of residence for the required period.
Interest only lifetime mortgages are available subject to specific criteria. It is necessary to make sure that you meet the necessary criteria before making an application. Information provided must always be accurate and to the best of one’s knowledge to succeed. This is even more so with regards to any adverse credit you may have on your credit file. Although most lender will accept defaults and CCJ’s, they must always be stated on the application form where applicable otherwise a lender may decline on grounds of providing false information.
For any information on these interest only mortgages call 0800 678 5159.
Stonehaven currently offers some of the most innovative and flexible products in the interest only lifetime mortgage sector. At the moment, Stonehaven Interest Select happens to be one of the most popular lifetime mortgages, not least because of its flexible three tiered structure.
The Stonehaven Interest Select plan has proven to be a good alternative for the much sought after, but recently withdrawn Halifax Retirement Home Plan. Stonehaven offer their interest only lifetime mortgage in three variations in terms of the interest rate – Interest Select Lite, Interest Select Plus and Interest Select Max designed to suit people with varying priorities and needs. The minimum amount you can release with this Stonehaven equity release plan is £10,000 with a minimum property valuation of £70,000. The product is available to clients 55 years and over, upto a maximum age of 90 for the youngest applicant. The flexibility of the plan lies in the fact that while the minimum monthly repayment is £25, you can also make full interest repayments and keep your balance level.
You can choose the term of repayment and the amount to be repaid each month at the beginning of the mortgage; however, if you do not wish to continue making monthly repayments thereafter, the mortgage can be easily converted from an interest only lifetime mortgage to an interest accumulation mortgage. The resulting Stonehaven roll-up lifetime mortgage scheme then will have a 0.2% increase in its rate thereafter. However, should the date for this switch be pre-determined, then NO increase in interest rate will occur.
Depending on how much interest you choose to repay each month, the mortgage will consist of the interest payment part and the interest roll up part. The interest rates for these components are pre agreed and remain fixed providing all the loan terms are met. Stonehaven’s lifetime mortgages can be repaid in full or part at any time, but of course since they are meant to be lifetime mortgages, the company may charge an early repayment penalty/charge (ERC) if repaid within a certain period.
Currently Stonehaven charges ERCs based on the long term interest rates on the mortgage which are linked to the FTSE UK 20 year gilt yield index. They are one of the only companies that will actually specify the starting point of the gilt index on the Key Facts Illustration. From there you can monitor the movement in the gilt yield index by checking the FT or other quality tabloid.
The maximum amount you can release with Stonehaven Interest Select lifetime mortgages depends on different factors including your age, property valuation etc. You can use Stonehaven’s Maximum Release Calculator, which is a handy and quick way to get a fairly accurate idea of how much you could potentially release with this product. Find the calculator here – http://www.stonehaven-uk.com/adviser-toolbox/max-loan-calculator.
A simple tool that evaluates how much you can raise based on your age & property value. It will then provide a list of the various Stonehaven products with their interest corresponding interest rates, product name and the maximum lump sum available on that particular tier. Stonehaven Interest Select lifetime mortgages have been at the forefront of making the lifetime mortgages sector more innovative and flexible, and offer a wider range of options to offer customers full control over their mortgage.
The former Halifax interest only mortgage, known as the Halifax Retirement Home Plan, was a lifetime mortgage where the interest had to be paid monthly. The advantage of this mortgage for retirees was that the original balance remained the same for the whole term. This type of mortgage proved to be immensely successful in the equity release market. Unfortunately, its withdrawal in August 2011 created a huge void for pensioners looking to raise retirement funding.
However, one suitable alternative that people are turning to is the range of Stonehaven Interest Select plans that also provide a mortgage on an interest only lifetime basis. The Stonehaven Interest Select Plans have proved to be an excellent alternative for those that missed the boat with the Halifax Retirement Home Plan.
Stonehaven provides equity release schemes aimed at the over 55’s. The interest only mortgage option known as Stonehaven Interest Select can be a suitable option for those looking to raise funds against their home, while also looking to protect their inheritance. Interest is paid monthly by direct debit. Therefore, it does not roll-up like a conventional equity release whereby the interest charged is usually added to the principle amount. This means that like the Halifax Retirement Home Plan, as long as the interest is paid every month, the balance remains the same and can be repaid after the house is sold.
Monthly payments must be made by the applicants, even if the funds are being released for their children’s benefit and the children have opted to pay the premiums. If the children still wish to pay make the payments then they would need to transfer the funds to the parent’s bank account, from which the direct debit is collected. We have encountered many such situations whereby children have offered to help with the interest payments in order to protect their inheritance. The Stonehaven Interest Select plans can therefore be ideal equity release schemes for those who are interested in protecting their estate and leaving an inheritance for their children.
We have now seen that the Stonehaven Interest Select is an innovative product that can be quite flexible as per individual circumstances. Another instance is, if for financial reasons one wishes to convert the interest only mortgage to a roll-up equity release scheme, Stonehaven allows you to do that. In fact, the mortgage automatically gets converted to a roll up scheme upon missing two monthly interest payments. Therefore, if finances become strained in the future and it becomes a necessity, the flexibility of the Stonehaven scheme will allow you to switch from interest only to roll-up equity release.
This provides the reassurance that with Stonehaven you can never be repossessed should missed payments ever arise. Nor would this either affect your credit file. This situation however could be a potential issue for existing Halifax Retirement Home plan customers, as they could find their houses repossessed or be forced into a sale they do not want, should payments be missed.
Another facet of the Stonehaven scheme is that the interest rate is fixed for life if they remain on the interest only lifetime mortgage basis. This cannot be said for the Halifax equity release scheme. With a range of tracker & fixed rates, they could be susceptible to future hikes in interest rates and the issues associated with meeting higher monthly payments when on a fixed monthly income. Therefore, Halifax customers should consider their options in the future should higher interest rates be on the horizon. By remortgaging to Stonehaven could provide them with peace of mind knowing their monthly payment will then never change.
Stonehaven are known in the market to provide innovative solutions aimed at the over 55’s. They are members of the Equity Release Council (formerly SHIP) and are also regulated by the FSA. Stonehaven Interest Select provides a clear alternative to those who were previously interested in the Halifax interest only mortgage. The range of Stonehaven schemes could therefore suit pensioners looking to release funds while also protecting their estate.