Tag Archives: Equity Release Plans

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!

Will an Equity Release or Interest Only Lifetime Mortgage Calculator Provide the Biggest Lump Sum?

Experience shows that when it comes to finding out which scheme offers the maximum equity release, confusion reigns over whether it’s the roll-up equity release plan or an interest only lifetime mortgage. With equity release schemes becoming very popular in recent years, more people than ever are conducting their own research before approaching an equity release broker to implement their plans.

Roll-up and interest only lifetime mortgages give homeowners the option of releasing some of the equity tied up into their property, without the need to sell the home and move out. The cost of living during retirement is on the rise, and with shrinking pension funds, poor annuity rates and increasing costs for care, many retirees are looking for flexible ways to optimise their financial assets. There are many different equity release plans available today, and which equity release mortgage suits you will depend on what exactly you need.

For instance, someone may need an extra cash injection for a one-off expense, while someone else may need a regular income to supplement their retirement income. Someone may want to release equity while also protecting some of the equity for their beneficiaries, while someone else may find it more important to understand what is the maximum equity release cash lump sum? Which equity release plan works for you will therefore depend on what it is you need and one of the ways of establishing this is with the use of equity release calculators.

If you need to release a maximum equity release lump sum from your property, roll-up equity release plans generally come out on top, when compared with interest only lifetime mortgages. While the exact terms of the plan depend on which equity release plan you look at, generally speaking roll up equity release plans can afford to allow for a bigger lump sum release than interest only mortgages, and you can see this by checking with different equity release calculators.

Stonehaven enters the maximum calculation

One exception to this would be the Stonehaven Interest Select Max Plan, which allows for maximum borrowing. Stonehaven’s Interest Select plans offer a viable alternative to roll up type equity release schemes, in which equity release can either be done on an interest only or roll-up basis. Any interest repayments are considered to be contributions towards the repayments, so you are free to pay as much or as little as you wish each month. It is also possible to stop payments altogether and convert the plan into a roll up equity release plan. This is a great safety net for those who require security of tenure and peace of mind.

The Stonehaven Interest Select Max option allows for the maximum lump sum release, at a fixed interest rate for the entire length of the plan. For instance, for a male applicant aged 65 years, with a property valuation of £200,000, with the maximum select option, you could release as much as 29% of the property value. This works out to £58,000, which is comparable to if not higher than some roll up equity release plans. However, this still doesn’t result in the maximum equity release.

Absolute maximum enhanced calculation

A recent innovation in the field of lifetime mortgages is the enhanced lifetime mortgage plan. Effectively using health as a factor influencing the loan-to-value, equity release underwriters will gather information on one’s health and lifestyle via a questionnaire. How severe the health of the individual(s) is will affect the size of the maximum lump sum. Therefore, someone who is overweight, a smoker, maybe suffered a heart attack, diabetes or cancer could find their health has actually helped them attain a bigger lump sum. Therefore, to get an accurate idea of the maximum lump sum ensure you have access to an enhanced lifetime mortgage calculator aswell as the standard devices.

Which equity release scheme allows you to release maximum equity depends on your individual circumstances, including age, property valuation and now health. Enhanced lifetime mortgage plans will usually offer the greatest lump sum, but on certain occasions, Stonehaven’s Interest Select Max option can prove to be a more viable alternative should you have the disposable income to make monthly payments and thereby protecting your next generation’s inheritance.

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.

What are the Top 5 Equity Release Calculators?

Review of the Top 5 Equity Release Calculators

A good equity release calculator is one that is free, simple to use, transparent and offers impartial results. While there are numerous websites offering equity release calculators, only a good and truly objective calculator can help you get a fair idea of how much you could release. Here’s a list of the top 5 equity release calculators available today: –

1. Equity Release Supermarket – are one of the original independent equity release companies offering advice and guidance about the different equity release schemes available in the UK. In fact, this was one of the first websites to develop the basis of the equity release calculator for users to calculate the maximum release. The calculator itself is simple to use, well designed and gives quick and comprehensive results every time. Two results are published by this company, which is more than most. Equity Release Supermarket not only provides the standard maximum equity release, but also will provide the figures for an enhanced lifetime mortgage.

This means that if you have poor health you also receive a higher calculation figure which could be applicable. As always they state this is acts as a guide & should endeavour to contact their advisory service on 0800 028 3104 to obtain an accurate quotation. Equity Release Supermarket has an extensive database of providers and plans and its comparison tools let you search the entire equity release market to find the most suitable deal. Once you calculate the maximum release you are provided with the option of whether you wish to submit your details to receive further advice & ensure qualification for any of the lifetime mortgages available in the whole of the market.

Mark Gregory is their founder & can be contacted at mark@equityreleasesupermarket.co.uk

2. Compare Equity Release – CompareEquityRelease.com is one of the best comparison sites in the equity release sector, offering information and guidance about all the different equity release & home reversion products currently available in the market.

The website is easy to use, well designed, with a convenient equity release calculator app that lets you answer the most important question that anyone has while considering equity release – ‘how much can you borrow?’

Compare equity release is the only website that goes one step further than providing a standard & enhanced lifetime mortgage calculation. Not only has a free lifetime mortgage calculator, but also a free interest only lifetime mortgage calculator. It is one of the few websites that compares between all available equity release plans to come up with the maximum potential release for any given age. The style of the two calculators is modern & in keeping with today’s internet savvy silver surfers.

CompareEquityRelease.com can be contacted on Freephone 0800 028 3104 or by email at admin@compareequityrelease.com

3. Equity Release Calculator – EquityReleaseCalculator.net is an independent calculation website that provides useful information on all matters relative to an equity release calculator. Therefore, if you require further knowledge on how these calculators work, plus the pros and cons of an equity release calculator, then this site holds a mass of information on the subject.

The site also features many articles on the subject of how to release equity and what is equity release. So there is plenty of information abound on the calculating of the maximum equity release.

4. Equity Release2go – EquityRelease2go.com is a relatively new independent equity release website that offers a free equity release calculator. The website itself is simple to navigate and the calculator is easy to use if somewhat difficult to locate on the website. Additionally, EquityRelease2go.com have a separate section detailing the best equity release deals available including cashbacks, free valuations & reduced interest rates available to its customers.

Being a relatively new website, certain features are set to follow which given the message the site provides should be soon!

However, they can be contacted on 0800 028 3104 or by visiting their contact page here – http://www.equityrelease2go.com/contact

5. Aviva Equity Release – their equity release eligibility calculator performs many functions; qualifies your age, property value and property type. In addition you have the option of inputting an inheritance protection percentage which will affect the ultimate result.

This level of options can be afforded as the Aviva equity release calculator only works its calculations based on its own products which are the Lifestyle Flexible Option and the Aviva Lump Sum Max.

Therefore, the results shown are only relevant to Aviva’s own equity release plans & do not represent the whole of the market. If you are looking for the maximum equity release from the whole of the market there may be companies that offer larger releases of equity out there.

These are some of the most objective, impartial and easy to use equity release calculators. They are free and can offer an instant quote of the maximum release for your age and property valuation. The more established and reputable the company, the more reliable they are likely to be!

Where Can I Find Companies That Provide Equity Release Solutions?

Which Companies Can Provide Equity Release Solutions?

Equity release has seen a massive surge in popularity in the past few years. This growing demand has fuelled the sector and today we have more providers, with a wider portfolio of more flexible equity release plans than ever before. While equity release is not suitable for everyone, the variety of equity release plans means that it is certainly likely to be a suitable solution for a lot more people today than ever before.

Recent surveys have shown that a large number of pensioners are homeowners with a size-able amount of equity tied up in their homes are suffering from a credit crunch and are unable to fund their day-to-day expenditures or have no money for that big one-off expense. In other words, there are numerous people around the UK, who are property rich, but cash poor.

Such equity release solutions allow them a way to release some of the equity in their home in the form of conveniently usable cash. This money can be released either as a lump sum or in the form of irregular installments. The uniquely attractive feature of equity release plans is that they allow you to tap into the value in your home without the need to move out or sell the property. Irrespective of what type of equity release you choose, you can continue to live in your home until you die or move into long-term care.

Types of equity release solutions

There are two main types of equity release plans – home reversion schemes and lifetime mortgages. Home reversion involves selling a percentage of the house to the lender in exchange for the money. At the moment companies offering home reversion plans are Newlife Mortgages, Bridgewater Flexible Release Plan and Hodge’s Shared Growth option.

Lifetime mortgages offer the other type of equity release solutions – wherein instead of selling a part of the house, the lender sets up a secured 1^st legal charge on the property. There are also interest only lifetime mortgages where you can repay the interest monthly, thus maintaining a level balance on the loan. Such companies offering the interest only lifetime mortgage solution is Stonehaven with its range of Interest Select plans or more2life’s interest choice plan.

Latest product development

A recent innovation in this domain of interest repayment is from Hodge Lifetime with its flexible repayment lifetime mortgage. Although the repayments of interest cannot be on a monthly basis, Hodge Lifetime do allow upto 10% of the original amount borrowed to be repaid each year without penalty. Becoming a serious player now in the equity release marketplace, Hodge Lifetime have set down the gauntlet to other companies lacking in ingenuity and ideas with their current and future plans.

The most common form of equity release are the roll-up lifetime mortgages where the interest is added to the principle amount and compounded over time. This means that the debt effectively rises yearly for the rest of your life, until you either die or move into long-term care. Hence, before entering into one of these contracts you should always discuss your intentions with your family first & then arrange an Equity Release Adviser.

There are other types of equity release schemes which do include the drawdown lifetime mortgage such as Aviva’s Lifestyle Flexible Option, designed for those who want to have the option of borrowing more in the future without any obligations. For those who want the biggest lump sum, enhanced mortgages such as more2life’s Enhanced Lifetime Mortgage may be suitable, providing they meet the health & lifestyle questionnaire.

These are some examples of equity release solutions designed to suit different needs, and some companies that offer these products. There are, of course, many more providers within each sector. The best way to find a suitable deal is to compare different equity release plans, and seek independent advice from a qualified equity release adviser.

How Can I Use an Equity Release Calculator to Find the Best Lifetime Mortgage?

Equity release plans are a type of loan that allows property owners to withdraw money from their residential home. These loans, in previous years, were just for property owners that were over 65 years of age and older. However, today, the equity release providers have tended to offer the loans to property owners of 55 or more.

Equity release schemes are a great means to acquire a lump sum of money or monthly payments. The advantage of the equity release loan is that typically, it does not have to be paid back until the time of the sale of the property, or the 2nd borrower passes away.

There are various sources to help property owners find the best equity release providers that offer the most competitive rates in the industry. Online is one of the simplest and most convenient means to find the many lifetime mortgage lenders. Some of these equity release providers utilise innovative tools for the property owner such as equity release calculators, which are a simple means to determine just how much equity you can withdraw from your main residence. The advantage of the equity release calculators on the various websites is that you are able to shop, compare equity release deals and get a general idea of the maximum release of equity lenders will offer.

How do equity release calculators work?

Equity release calculators are convenient and completely confidential. The better equity release calculators can provide two maximum lump sum calculations. The reason being that the roll-up lifetime mortgages can be based on a healthy & an enhanced lifetime mortgage rate.

For example a single male, age 65 & in good health would be able to raise a maximum of 30% of the property value with Aviva on their Lump Sum Max plan. However, should the same male suffer from a history of poor health such as high blood pressure, taking mediation, heart trouble or cancer then the maximum release could rise to 38.5%. On a property value of £250,000 this could equate to an additional £21,250 in borrowing power.

Beware of imitations

A good equity release calculator will provide these two figures accurately & under no obligation. So beware of some equity release brokers offering a calculator where they will try & request your personal details in order for some sales person to then contact you. These calculations should provide you with answers not have to necessarily having to come from an adviser.

The mechanics of an equity release calculator

The calculators are very simple to use. The property owner is only required to input simple information that is specific to their existing property, such as their ages, current property value, and any outstanding mortgage amount. Within seconds of submitting these details the results should be published. Websites such as EquityReleaseCalculator.net provide equity release calculators that can offer three sets of results on their one site: –

Standard roll-up lifetime mortgage maximum lump sum
Enhanced (impaired life) maximum roll-up lifetime mortgage
Interest only lifetime mortgage maximum lump sum

When a homeowner decides on a UK equity release scheme, they should ensure that the lender they are dealing with is Financial Conduct Authority (FCA) accredited and that the loans that they offer meet the FCA guidelines and regulations. This provides the property owner with the assurance that they receive a safe and fair loan and that the company is trained in FCA regulations. Additionally, all schemes they deal with should be members of the Equity Release Council (formerly SHIP) which provides extra safeguards such as the no-negative equity guarantee, early repayment ability & moving house option.

Summary

If you are at the early stages of equity release research & looking for the best deals, you need to now firstly whether you can actually borrow the amount required. Look for an independent equity release adviser such as the Compare Equity Release company with nationwide financial advisers. Once the optimum lump sum is established they can then source the best equity release deals in the whole of the market.

If you wish for a calculation then Compare Equity Release are available on 0800 678 5169.