Tag Archives: Type of Equity Release

Which Equity Release Company offers Maximum Equity Release from your Home?

Retirement is a difficult time in the current economic situation due to inflation, the ending of the recession, and lower wages. While the economy is repairing itself, many families in retirement or about to retire do not have enough savings to last until death. There is a solution in retirement products including equity release. To gain the maximum equity release from your home there are a few factors that will matter: property value and age of homeowners.

Examining the Factors
Your property’s value determines what you have available in equity. Equity is usually defined as the total value of your home minus any existing loans. Therefore, if you have no loan and the value is £300,000, you have £300,000 in equity.

No mortgage company is going to offer 100% loan to value. They will offer a percentage of the loan to value based on the type of equity release you choose. A standard equity loan has monthly repayments with interest. A lifetime mortgage equity release scheme holds the repayment until the end, including interest you may owe. The interest compounds onto the back of the loan, so in 10 to 12 years, the initial lump sum you received for the loan could double. If you take out £100,000 then it could become £200,000 in 10 or 12 years.

The next part of this retirement product is age. A qualification of most companies offering lifetime mortgages requires any borrower to be 55 years of age at least. There are a few companies requiring an age of 65. In the case of dual ownership, with a spouse or civil partner, the lender will look at the age of the youngest borrower to determine the amount of the loan and if you qualify at all. The idea is the youngest borrower will live longer and will compound interest longer; therefore, the total loan amount needs to reflect the time the loan is outstanding and gaining interest.

Specialist Equity Release Companies
There are companies which target this niche market as a way to provide the maximum equity release to you. Aviva Lump Sum Max, Pure Retirement, and Just Retirement are three such companies offering the maximum amount possible. Aviva’s Lump Sum Max is currently at 5.63% with a fixed interest rate. Pure Retirement offers a product at a fixed base rate of 6.55%. Just Retirement is higher at a fixed interest rate of 6.75%. Aviva and Pure Retirement are two companies offering an incentive for retirees to sign up.

It is up to you, the borrower, to determine which product is best for you and your family. Each company has specific details, which tend to target consumers specifically. One company may not be best for all ages i.e. they may be better for older individuals, versus those just entering retirement.

Independent Advice and Due Diligence
Given the different products on the market, it is up to you to conduct due diligence by finding an independent adviser who can help you research the market and provide you with an equity calculator UK. By using a calculator it is possible to determine the maximum amount available to you. Remember, this is just to give you an idea of potential options. The company still has a say in whether they lend the maximum amount based on your qualifications. An equity release broker is ultimately going to determine the maximum release they will provide.

Also, there is a potential that your ill health could help you receive a larger than typical maximum. If you suffer from an illness, there is a product that provides an increase over the standard terms allowable to most retirees. Companies use theory of mortality tables to determine if someone will potentially die earlier than the average person, thus some of the newer schemes take this into account and will revise the maximum they are willing to offer you.

Aviva, Just Retirement, More2Life and Partnership provide variable levels of enhancement to offer you the maximum equity release possible if you have ill health. By checking with an independent adviser you can conduct research, examine their information, and determine what might be best for you and your family.

Even if you do not have ill health it is possible to get the maximum allowable for your age in a standard product. There are disadvantages with this product. Be aware of these negatives before signing a contract. It is another area your independent adviser can help you with. As always, when looking at financial products, start out with research, calculating possibilities, and then find a product that suits you rather than the lender.

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What Facts Exist About Interest Only Lifetime Mortgage Calculators?

The Facts – Interest Only Lifetime Mortgage Calculators

An lifetime interest only mortgage calculator can be used to establish the maximum release possible from an ever increasingly popular type of equity release mortgage plan.

To recap, a lifetime interest only mortgage is a type of equity release scheme where you can actually make monthly or ad-hoc interest repayments. The principle loan amount does not need to be repaid each month and is only recovered at the end of the mortgage term, which is at the end of life, or when you move into permanent long-term care. At this point the property is sold, and the lender recovers the balance which usually should be within a 12 month period.

Interest only lifetime mortgages are becoming an increasingly popular type of equity release scheme due to the increasingly savvy over 55-year-old age group. Having grown up with a lifetime of mortgage debt, baby boomers reaching retirement now have much experience in how to manage mortgage debt & the associated monthly payments. Therefore, why when one gets to retirement why should this potential form of finance be pulled from their resources?

How does the interest only lifetime mortgage work?

Since you only need to repay the interest, these interest only lifetime mortgages work out to be more affordable for many people than regular residential mortgages. Another important factor that contributes to their popularity is that providing you make regular and full interest payments each month, the final balance on an interest only lifetime mortgage can remain level throughout the term of the loan. Great news for the kids!

Interest only lifetime mortgages, like regular equity release schemes, have no fixed term and involve no capital repayment. As such, the interest only calculations that decide the feasibility of such mortgages are quite different from regular equity release mortgages. As with any equity release plan or mortgage, there are certain fixed eligibility criteria for interest only lifetime mortgages with respect to age, valuation of property and affordability. These are the factors which are used to underwrite a loan of this type. While there are a number of websites offering equity release calculators, interest only lifetime mortgage calculators are only featured by companies offering niche products and advice who can invest in a specialist application such as this.

Interest only lifetime mortgage rates

An interest only lifetime mortgage calculator allows you to work out how much your mortgage would cost you, based on relevant variables including your age, property value, loan requirement, single or joint application and affordability of the applicants. The older you become the more you can borrow on the schemes with a maximum release of 50% of the property value. There are currently four providers in the market which offer interest only lifetime mortgages. These are Stonehaven, Hodge Lifetime, Holmesdale Building Society, and more2life. Obviously, each company has its own lending criteria, including minimum age for single applicants, joint applicants, minimum property value, minimum monthly payment, and each lifetime mortgage has different rates of interest starting from just 4.75% (5.1% APR) which is the Hodge Retirement Mortgage Plan.

The current minimum applicant age for Stonehaven, Hodge Lifetime and more2life interest only lifetime mortgages is 55 years, with a minimum property valuation starting from £70,000. The minimum age is 70 years for the Holmesdale Building Society lifetime mortgage. Since these are the set criteria for the mortgages, these also apply to their interest only lifetime mortgage calculators.

So, if you are looking into the possibility of equity release don’t always assume that your only option is a roll-up lifetime mortgage scheme. Has your adviser even asked whether you would like to make some form of monthly repayments? In fact Stonehaven & more2life even allow you to set your on monthly payment from as little as £25pm which helps fit in with monthly budgets. Remember to sit back & take stock before deciding.

Seek ALL available options as many people are these days are considering interest only lifetime mortgages or a retirement mortgage more commonly. If unsure & would like advice on your interest only lifetime mortgage options call 0800 471 4796.