Tag Archives: Equity Release Lender

What Are Your Top Key Retirement Solutions?

The Top 18 Equity Release Key Retirement Solutions

As people live for longer and the cost of living increases, it is becoming more and more common for retirees to have financial difficulties during old age. However, a lot of these issues actually arose many years prior to this event, blatantly due to lack of financial planning prior to retirement.

As such, financial planning during retirement has become more important than ever before as managing on a limited budget, fault or no fault of one’s own is a harsh reality for many baby boomers. Therefore, an increasing number of people are looking for flexible ways to get the best value from their existing financial assets in order to address this retirement issue.

The rising popularity of equity release schemes illustrate how much of a growing problem financial insecurity is for many people in retirement. These type of home equity loans offer exactly this type of key retirement solutions many people seek as they usually have no effect on their monthly outgoings.

Let’s look at some of the most significant facts surrounding an equity release mortgage:

Equity release plans allow you to release some of the equity built into your home as usable cash. Both home reversion & lifetime mortgages allow you to do this without the need to sell the house or move out. So, even as you use some of the value of your property, you can continue to live in the house until the end of life, or until you move into a long-term care home
There are two main types of equity release plans – lifetime mortgages and home reversion plans. Lifetime mortgages are like regular mortgages, but only available to people over the age of 55, and have no fixed term. They allow you to release a lump sum of equity from your property which even then remains 100% in your own name. There are usually no monthly payments and the interest charged is added to loan & compounds on a monthly or annual basis. This differs from a home reversion plan where you actually sell a percentage of the property to the reversion provider. In return they provide a tax-free lump sum & a lifetime tenancy agreement is made. Both mortgages will then run on until the end of life, or until you move into care. Most lenders provide a window of 12 months to then sell the property so that the equity release mortgage can be paid off.
A home equity loan calculator can be useful to find out how much equity will be built into your home after a certain period of time. A home equity loan calculator can be useful in a variety of scenarios and is available on a number of financial, comparison and advice websites. A home equity loan calculator is not the same as an equity release calculator and is designed to give you a slightly different information calculus.
A home equity calculator will need some basic information about your property, including the current value of the property, its location, and the yearly rise and fall in the property, in order to work out the equity built into your home. A home equity calculator is therefore a way to calculate simply the amount of equity expected to be built into your home over a certain period of time.
However, an online equity release calculator is a different tool in that it can calculate how much equity one could potentially release from their property. An online equity release calculator UK therefore needs to work out the maximum amount an equity release mortgage provider could potentially afford to lend, based on the expected term of the loan, and the value of your home.
A free equity release calculator is therefore likely to require some basic information about you and your property in order to provide such a calculation. This includes, the age of the youngest enquirer and the current valuation of the property. The free equity release calculator can use this information and based on its database of equity release plans available, can give you a fairly good idea of the maximum release available to you.
An equity release calculator is an application designed specifically to calculate maximum potential release of equity, but there are many other financial tools designed to calculate different things. For instance, there are mortgage repayment calculators that, based on the loan amount, the rate of interest, and term of the loan can calculate how much your payments will be.
There is also a general lifetime mortgage calculator based on the age and income of the enquirer which can work out how much they could potentially borrow. Newer calculus allows some more advanced equity release brokerage’s to offer the interest only mortgage calculator which requires slightly more information such as income details, and details of any adverse credit, in order to ascertain eligibility.
A lifetime mortgage calculator is therefore just one of the many calculation tools available today within the mortgage sector. Depending on what type of application you are using, you may be needed to enter different information relating to your age, health and property, which is relevant to that particular calculation.
Home equity loans provide one of the key retirement solutions to happiness in retirement. There are different borrowing allowances from all the equity release companies, therefore always consult a home loans specialist who can advise on the many forms of home equity mortgages available.
Home reversion equity release plans involve selling a proportion of your home to the equity release lender. There are no monthly repayments with home reversion plans, and the entire amount is recovered when the house is sold, when the proportional share of the equity goes to the lender.
All equity release plans today come with a no negative equity guarantee, which means that your beneficiaries never have to pay anything to the lender even if the equity release loan gets bigger than the property value. This no negative equity guarantee is provided free of charge by the equity release companies, however it is costed into the overall costs and charges of the plan. Should the guarantee not be provided however, the interest rates would be lower on equity release schemes. Therefore any implication of it being free is not entirely true.
Equity release plans are regulated by the FCA (Financial Conduct Authority) and the Equity Release Council (ERC) is the industry trade body that represents everyone that works in the sector, including qualified advisers, providers, lawyers, solicitors etc. Membership of the FCA is mandatory as they provide the licence upon which advisers are able to provide equity release advice. However, membership of the Equity Release Council is not mandatory for advisers or solicitors, however it is for the mortgage providers who offer lifetime mortgage & home reversion products.
Recent research has shown that over 80% of the country’s wealth belongs to people over the age of 60, with over £1 trillion in untapped equity. It also shows that many homeowners over the age of 60 have cash flow problems, and are in fact unable to meet their daily costs. The simple equation for their key retirement solutions lies in the equity tied up in their home. Equity release schemes therefore provides one type of solution, however many such as downsizing property still remain & consequently should always be considered.
According to a recent study by the leading charity Age UK, the two most common ways that people were using their released equity were – home repair or maintenance projects at 46% and paying off existing debts at 35%. Following this statistic come the other lesser reasons to release equity in retirement. These would include holidays, new car, caravan, holiday home, financial assistance for the children, long-term care costs or to create an emergency fund in the bank.
Equity release plans have become increasingly popular after the Financial Services Authority (now FCA) started regulating the equity release sector. This initially started with the regulation of lifetime mortgages in 2004, which later then incorporated home reversion plans from April 2007. All advisers practicing in equity release must have the appropriate qualifications either through the CII (The Chartered Insurance Institute) or the IFS (Institute of Financial Services).
There are a number of independent and comparison websites that offer qualified advice about equity release products, and help users understand which equity release plan could suit them best. Search engines, such as Google, Bing or Yahoo will help you search for any related equity release information needed to enable you to conduct your own research. However, even if you decide which equity release scheme you require you would be unable to go direct to the lender as plans can only be completed by qualified advisers. This offers protection to the lenders to ensure the correct plan is taken out.
The latest type of new equity release mortgage to be invented is the enhanced lifetime mortgage where health can affect the maximum loan you can borrow. Therefore, equity release underwriters assess an enhanced lifetime mortgage as they do with an enhanced annuity plan where a health and lifestyle questionnaire is completed. Depending on the answers & severity of the health conditions, will determine the amount they will lend out. Simply put, the worse the state of health, the greater the maximum release.

There are many facts on equity release offering more concepts for key retirement solutions, as well as about how and why equity release plans have become so popular recently. They also talk about different types of equity release plans that are currently available. For more information visit independent advice websites or consult a qualified equity release adviser.

Where Can I Find the Prudential Equity Release Calculator for Existing Plan Holders?

Is There a Prudential Equity Release Calculator for Existing Plan Holders?

Prudential is no longer offering lifetime mortgages to new customers. However, Prudential had one of the most successful lifetime mortgage schemes at the time, so there are currently plenty of existing plan holders who still have a Prudential lifetime mortgage plan.

So, can existing customers release additional equity from their property? And if so, is there a Prudential equity release calculator that can help existing plan holders understand how much they could release?

The short answer is that there isn’t a Prudential equity release calculator for existing customers. However, there is way for customers to find out if they can release additional equity from their property and also find out how much, without the need for an equity release calculator! By following some simple steps, it is possible for existing Prudential equity release customers to have additional funds in their bank in as little as two weeks.

Prudential offered their lifetime mortgage in two forms – a fixed single lump sum lifetime mortgage and a more flexible drawdown lifetime mortgage which allowed for more than one equity release lump sum. For those who have a single lump sum mortgage from Prudential, releasing additional funds on the same mortgage may not be possible.

For those who have a drawdown lifetime mortgage with Prudential, there is no need for an equity release calculator to find out how much they can release again. If they have sufficient equity left in the property they can easily release it by making a drawdown request. But first they will need to find out how much they can release.

Check your Prudential annual statement

To do this, it is necessary to check the last annual account statement from Prudential. The statement will outline how much equity is left in the property. If you’re unsure about whether you have a single lump sum or a drawdown mortgage, your statement will also clarify this or contact your local equity release adviser.

The figure you are looking for is the remaining funds left in your drawdown facility. These are unused funds that were set aside from inception of the Prudential lifetime mortgage plan. The basic calculation for remaining fund availability is:-

Total reserve facility from outset – capital withdrawn to date = cash available now

Once you have made sure you can release more funds, you can simply make a request to do so directly from the provider or with the help of an equity release adviser. The drawdown request can be made by filling in a form online, or over the phone by calling the provider.

An equity release calculator tells users if they are eligible to release more equity and how much they can release. For existing customers for the Prudential lifetime mortgage, this is exactly what your annual statement will tell you. You can consult an equity release expert or the provider if you are unsure about the type of mortgage, or need further advice about additional release.

Consider switching plans if unsuccessful

Should you be unsuccessful in your goal to raise further funds with a Prudential equity release, then you will need to consider the alternatives. It will have been over 4 years ago that the last Prudential lifetime mortgage scheme also known as the Property Value Release Plan was written.

If Prudential’s equity release calculation ‘says no’ and you do need extra cash funds then consider an equity release remortgage and analyse whether it would be worth swapping a lifetime mortgage scheme. With interest rates as low as they have ever been, it may not be a bad idea anyway!

However, before you even consider switching equity release schemes, remember the Prudential early repayment charges were linked to the Bank of England base rate which currently is only 0.5%. The latter Prudential Property Release Plans were taken when the base rate was still at 0.5% so they could effectively remortgage without any early repayment charges (ERC’s). However, early plans could have been taken out when the base rate was 4-5%, thus meaning a penalty would arise if the scheme was transferred.

Summary

It would be prudent to seek the advice of equity release remortgage professionals on this basis, as the ERC’s would need building into the switch plans calculation. However, there are analysis tools available on the internet which can do a switch plans analysis for you. This will check your break-even point & highlight the whether it maybe worthwhile to remortgage to a new equity release lender or not, should Prudential not allow additional borrowing.

For a free analysis contact Compare Equity Release on 0800 678 5169 or visit their site by clicking here for their unique switch plans tool page.

Do Your Maths and Equity Release Schemes Will Add Up!

Equity release schemes have become more and more popular in the past few years. But it is also a fact that equity release schemes still ring alarm bells in the minds of many. The main concern that people have with equity release is that it can erode your estate and leave little equity for your beneficiaries.

Another alarming scenario is where the loan could become bigger than the sale value of the property resulting in ‘negative equity’, where you could potentially owe money to the equity release provider. While these were legitimate worries until some years ago, equity release schemes today involve far fewer risks.

Equity release and regulation

All equity release schemes come with a no negative equity guarantee as schemes these days are incorporated into the Equity Release Council rules & regulations check list. This protects consumers from ever owing more than the value of their house, even if the loan did surpass the current valuation. Basically, the lender will waive any excess, with the worse case scenario being no equity for the children.

Equity release today can be used as a flexible tool to optimise your financial assets to support you during retirement. The fact is that equity release offers a way for older homeowners to access the value that has built into their home, without having to sell their property and move out. Rising costs of living, rising costs of care and ever shrinking pension funds are making it difficult for many pensioners to support their lifestyle during old age.

What can equity release be spent on?

Retirement is seen as the golden period of life, when one should be free to enjoy the fruits of their lifelong labour. Whether it is for a one-off expense such as a holiday, or a home extension, a cash gift to children or grandchildren, or a regular income supplement, many people are turning to equity release as a way to access the cash in their home without having to sell and downsize.

So, are there risks involved with equity release schemes? As with any financial product, it is important to understand the full implications of releasing equity from your home. By releasing cash from the value of the property, you essentially devalue it to a certain extent, and this is bound to have implications for your beneficiaries. However, unlike equity release schemes of the yore, no matter how large your debt, your beneficiaries will never owe anything personally to the equity release lender.

There are various equity release plans designed to suit people in varying circumstances and with different needs. It is important to understand your own needs and priorities and use your financial acumen to find out which type of equity release product suits you best. An equity release calculator can help you work out the numbers with respect to different equity release plans, and consulting an equity release expert can help you understand how different plans can work for you.

The maths can add up to the solution you are looking for, but as ever it is the details you input in the first place the determine the end result. Caveat emptor as they say!

How Much Equity Release Should I Borrow?

5 Q&A’s – How Much Equity Release Should I Borrow?

The crucial decision with any equity release application is deciding on how much tax-free cash you should take. In order to obtain the correct advice with regards to these lending decisions you should certainly consult with a qualified equity release adviser.

By discussing your capital requirements, both immediate & in the future, you can assess which type of lifetime mortgage would be favourable for you & how much cash you should apply for.

Five important questions you should therefore be asking yourself are:-

What are you spending plans for the first 12 months?
Do I really need all the money upfront, or can I postpone some until a later date?
Should I add the set up costs to the loan, if so, what impact with this have?
Should I leave the release of equity until I am older, so I can take more cash?
If I decide to do a drawdown plan, what impact will rising interest rates have?

These questions will provide a solid platform from which your decision can be made and for the right equity release reasons. So why are more & more people seeking this type of lifetime mortgage nowadays? First let’s look a bit deeper into equity release schemes themselves.

So what is the point of an equity release plan?

An equity release plan allows you to turn some of the equity built into your home into usable cash. While selling the home and downsizing is one way to do this, equity release schemes offer a way to access the cash without the need to sell the property and move out. Remember, equity release schemes should always be considered a mortgage of last resort, once all other alternatives such as downsizing have been discussed with your adviser.

People use equity release for various reasons. Some may need a cash lump sum for a one-off expense, while others may use equity release to supplement their income and support their lifestyle during retirement. Additionally, and more recently, we have seen an exodus from the lifestyle reasons for releasing equity. More people are now releasing equity for family reasons such as gifting to children, or repayment of mortgages that sold the interest only mortgage time bomb. The reason for borrowing and the amount, will ultimately determine what equity release plan will offer the best value for you.

There are a number of different equity release schemes available on the market today. Finding the right equity release can be confusing but thankfully there are comparison and advice websites that offer impartial advice about different plans, as well as useful tools such as the equity release calculator. Equity release calculators can help you get an idea of how much you could borrow and how much it would cost you based on your age, property value and any inheritance protection you may want.

Analyse your spending plans carefully

While using such calculators, they can help you find out the maximum amount you could borrow, it is not necessarily how much you should in fact borrow! Borrowing the maximum is of no use if you do not need the money straight away. An equity release plan is essentially a loan, and you need to pay interest on the amount released. It makes no sense to borrow a large sum of money, simply to put it in the bank earning next to no interest, and pay upwards of 5% interest on the money to the equity release lender.

This is why maximum borrowing does not always make sense. The general rule of thumb is to borrow the amount that would be sufficient to carry you through for about one year. There are equity release schemes, known as drawdown schemes, which allow you to borrow money in portions, as and when you need the money. For those who do not need the maximum lump sum release, but would like to have the option of borrowing more in the future, drawdown lifetime mortgage schemes can offer the optimum solution.

An equity release plan can be a flexible and innovative way to use the equity tied into your home without selling the property. As equity release plans have become popular, they have also become more flexible in nature. Depending on how much you need to borrow, and your individual circumstances, you can find an equity release plan that can suit your needs. An equity release calculator can give you an idea of how much you could borrow, and get a picture of how different equity release schemes would work for you.

For an individual meeting to discuss how much equity release to borrow, contact the independent equity release specialists on 0800 471 4796 or email info@equityreleasecalculator.net

What are the Implications in Taking Maximum Cash from an Equity Release Calculator UK?

Implications of Taking the Maximum Lump Sum from an Equity Release Calculator UK

To understand the implications of borrowing the maximum amount that the results an equity release mortgage calculator UK give you, it is necessary to understand what an equity release does, as well as to understand how borrowing more than you need can be potentially risky.

Although equity release plans have become much safer today than many years ago, there are potential equity release problems that everyone should be aware of before releasing equity. This must always be discussed and the dangers be highlighted before pressing the buttons of the equity release mortgage calculator UK tool.

One of the most common concerns or equity release problems that people have with equity release is that the scheme could potentially erode all the value of their property, thereby affecting any inheritance they may wish to leave behind. This can be a concern for some, but not for all & therefore it is the duty of your financial adviser to establish these steps with you.

Years ago, there was also the possibility of negative equity where the beneficiaries could have to end up paying the equity release provider due to a loan that had grown bigger than the equity in the house. Today, however, this is not a possibility as all equity release plans now come under the auspices of the Equity Release Council (formerly Safe Home Income Plans –SHIP) which means they come with a no negative equity guarantee. This is kind of indemnity policy for the lender which guarantees that the beneficiaries cannot end up owing more than the value of the property. The worst case scenario is that they will receive nothing if the mortgage balance is equal to or more than the value of the property.

An equity release calculator UK can help you find out the current maximum amount available in the market that you could be able to release from your property. As such, equity release calculators give you an idea of the maximum amount of money that you could release, which is not the same as the amount you necessarily should release!

Nonsensical reasons to release equity

Releasing the maximum equity from your property when you don’t really need all the money could result in one of the most common equity release problems – complete devaluation in the equity within your property. It will mean that if the money isn’t needed just yet it will probably sit in your bank account, earning next to no interest, while you will have to pay interest on the amount to the equity release lender! The average rate of interest on roll up equity release schemes today is around 6%, whilst even the best ISA rates are little over 3%. Therefore, taking the maximum release when not fully required, is poor financial planning.

A roll up equity release plan works on the principle of compound interest. This means that the interest charged on the balance is added to the principle amount and interest is charged on the combined amount, and so the cycle continues. This means that with interest rates of around 6%, the balance on your account could potentially double in about 11 years! Care & precise financial planning are important to gauge the sensible level of borrowing should these schemes be the best option for you.

Delay for as long as possible

With this factor in mind, age can also be an important consideration in how much you take & when. We have just seen the projected equity release calculation for a UK customer. Taking equity release at age 55 will have a potentially longer term to run based on life expectancy than someone of 80 years of age. Therefore, more caution should be exhibited when applying for equity release schemes at a younger retirement age. Preferably, anyone considering equity release at age 55 should try & delay if possible to age 60 before taking a release of equity.

Releasing the maximum that an equity release calculator UK shows you may be useful and necessary for some, but it also has its dangers and can lead to some common equity release problems and bad press!

As illustrated above, it could potentially increase the debt disproportionately, erode your estate and encroach on your beneficiary’s inheritance. It is important to fully understand all the implications of an equity release plan. A qualified equity release adviser can explain the terms and consequences of each option and help you make the right decision.

NB. Don’t be afraid to say ‘no’ if now isn’t the right time, or reason to do it.

How Best to Use an Equity Release Calculator

How Best to Use an Equity Release Calculator?

With people over age 55 looking to financial products to help them to achieve their goals, it is becoming increasingly obvious that equity release calculators are achieving a fair amount of interest. For some, equity release calculators enable people over 55 to ascertain whether they can raise enough finance for a specific project or major purchase. By calculating the maximum equity release possible will help retirees ascertain whether their objectives can be fully met, or contingencies made.

Others see the benefits of an equity release calculator as a way of assessing how to supplement their pension, which has lost so much value in the past few years. With annuity rates having fallen significantly over the past years, the current return on a capital lump sum for income purposes has become a major threat as to the future of whether an annuity now provides good value for money.

Finding out how much you can borrow

Whatever the reason for wanting to find out more about equity release schemes, the best place to start is to find out how much can be borrowed. The only way to ascertain these figures is via an equity release calculator. For all these people looking towards equity release as an option then a discussion with their financial adviser is an important step toward understanding more about what an equity release plan can offer. However, by using an equity release calculator, such people can go into the conversation with a bit of additional information which might help to make the proceedings that much easier.

Enhanced lifetime mortgage calculator

Remember, if you suffer from ill-health either now or in the past then seek an equity release calculator website that offers answers on an enhanced lifetime mortgage basis aswell. If you do qualify for an enhanced equity release scheme then you will be offered a greater maximum lump sum than the norm.

Such companies offering enhanced equity release schemes are the likes of Aviva, Partnership, more2life and more recently Just Retirement with their Lump Sum Plus Plan. Check with an Equity Release Council (ERC) & Financial Conduct Authority (FCA) regulated equity release adviser for further information & whether you can qualify for the maximum lump sum, if that’s the amount you require. There are many equity release calculators on the internet. They are not like a normal mortgage calculator, but rather a form in which different parameters are set.

What factors are used in the calculation?

In order to obtain an accurate lifetime mortgage calculation the equity release lender needs the following information as a minimum: –

the value of the property
the property type (e.g. house or flat)
the age of the youngest applicant (min 55)

This data will provide the maximum cash release figure for a healthy person.

To further assist & possibly achieve a greater lump sum than standard rates, an impaired life equity release plan maybe available. If you have suffered from any of the following illnesses, then you may qualify for what’s termed an ‘enhanced’ or ‘impaired’ equity release plan:-

suffered from angina, heart attack, coronary bypass surgery or angioplasty
diagnosed with cancer, leukaemia, Hodgkin’s disease, lymphoma, tumour
diagnosed with diabetes which is controlled by medication or insulin
whether you smoke more than 10 cigarettes or rolled tobacco per day
have high blood pressure (hypertension) which requires medication
previously had a stroke (CVA)
diagnosed with MS (multiple sclerosis) or Parkinson’s disease requiring use of a walking stick or aid
taken early retirement due to ill-health?

This information is usually free & simply one click away once the information is entered.

What answers will equity release calculators provide?

The amount shown on an equity release calculator is the maximum tax-free cash lump sum possible, and this makes it a good place to start discussions about the implications of this figure and what the next steps are. Thankfully, when the results are provided there is usually also the ability to make contact with an independent financial adviser, who can then assist in making further recommendations about an appropriate equity release plan.

Note that some people might prefer to take out a smaller mortgage than what is shown to be available on the calculator, and this is possible. In fact, it is most likely going to be the case, as your equity release adviser will explain. Don’t assume you should always take the maximum release. This will erode the equity in your property quicker than by taking a lower initial amount & further top-ups in the future.

Any responsible equity release adviser will only advise you take an initial amount to cover your first 12 months of financial support. This will mean a lower amount of interest to pay in the shorter term. With the advent of drawdown equity release schemes, you can take the remaining tax-free lump sums as and when you require them. The minimum’s future drawdowns can vary between lenders, however even Aviva’s Flexi Plan now has a minimum of just £2,000 a time. This will save your estate £1000’s in the long run and also leave more in the kitty for yourselves at a later date not having paid as much interest.

Therefore, when initially making considerations about what home equity release plans can do, equity release calculators are a great place to start.