When considering equity release, it is understandable to become a little overwhelmed by the sheer choice of options available. Many people are unsure about the type of scheme they should choose, while others are concerned about whether a fixed or tracker interest rate would represent the best option. Equity release mortgage interest rates can be a major factor in choosing a scheme, with some schemes offering very attractive rates through either a fixed or tracker plan. However, in order to determine which option is the best suited to your circumstances, you should have a basic understanding of the differences.
The mortgage interest rates set by your equity release company will be either fixed or tracker based. Fixed interest rates are set at a certain level for a set period of time. Whereas tracker interest rates will track the Bank of England base rate and adjust accordingly. There are a number of advantages and disadvantages associated with either type of plan.
• Fixed equity release mortgage interest rate: The main advantage of this type of scheme is that you know exactly what charges will be applied over the term of the plan. With a roll up lifetime mortgage, you will have comprehensive documentation which would detail the balance changes as the duration of the plan extends. This can give you a very good idea of the amount of equity which would be needed to repay the total balance when you pass away and how much would potentially be left for your beneficiaries. The main disadvantage of this type of plan is that the interest is fixed, regardless of whether the Bank of England base rate goes up or down. If the rate rises, you may consider yourself lucky to have secured such a great deal. However, if the rate drops significantly, you may spend several years feeling aggrieved at paying a far higher rate for an indeterminate period of time.
• Tracker equity release mortgage rates: The main advantage to this type of scheme is that it fluctuates according to the market and Bank of England base rate. However, this can mean that your interest charges go up as well as down. It can be far more difficult to keep an eye on the balance of your equity release scheme and you are likely to be reliant on annual or bi annual statements from your provider. Many people think that a tracker mortgage interest rate will offer a better deal but since they are usually set at a certain percentage above the Bank of England base rate, they can be a little risky in an uncertain economic climate.
In order to choose the best possible equity release option for your circumstances, you will need to conduct a little research by accessing expert websites. You should use online tools and calculators to explore the implications of the fixed mortgage interest rates and how it would differ from a tracker interest rate scheme. There are usually differences in the rates charged, therefore you should explore the restrictions and limitations offered with each individual scheme. For example, some schemes have very high early repayment charges which makes switching to another scheme very financially impractical. In cases where the scheme is set to a tracker interest rate, this could be a significant financial gamble.
Usually the choice between fixed or tracker mortgage interest rates is down to personal preference. However, it is worth speaking to your equity release adviser if you are unsure of your options. They can assist you in weighing the advantages and disadvantages of specific schemes to determine which represents the best possible option for you. They will also supply you with financial illustrations so you can determine the long term cost of the equity release scheme regardless of whether it is on a fixed or tracker interest rate. This can enable you to have all the information necessary to make an informed decision when moving forward. They will also take the information you have provided to determine your attitude to risk and advise which type of scheme they feel is best suited to your requirements and circumstances.
If you are interested in equity release, researching the mortgage interest rates and types of schemes available is a good starting point. It is worthwhile making use of the free online tools and calculators to determine if you would like to proceed and speak to a professional and specialist adviser. The calculations offered by these tools can provide a good basis for comparison and ensure that you feel confident that your adviser has found you the best possible deal and you are happy to proceed.
Whether you are interested in purchasing a property to let with a short-hold tenancy agreement or have not fully considered your buy to let options, you are probably aware of the restrictions which are currently being imposed by a great number of lenders. There are a great number of lenders who have now totally withdrawn their interest only mortgage options, while other lenders are imposing a great deal of restrictions on new applications. This could have a huge impact on the buy to let consumer.
Interest only mortgages have received a great deal of bad press in the past. In years gone by they were readily accessible and offered as a sound financial arrangement. However, there were a great number of people who took out interest only mortgages in the 1980's and 90's without an adequate repayment vehicle, who are now facing the prospect of attempting to pay back the capital on their loan without losing their home.
Next year, it is anticipated that there will be a number of enhanced affordability checks which will come into force for the lending market. Many lenders appear to be anticipating these changes and are changing their lending policies accordingly. This could potentially impact those planning on buying a property to let it on a shorthold tenancy agreement.
Interest only mortgages represent a method of financing a property with a lower monthly payment. Since the monthly payment does not include any percentage of capital repayment, it is simply set at a level to cover the interest charges which are accruing on the loan. This can seem like a great idea if you are considering a buy to let arrangement. However, it is a good idea to have a repayment vehicle in place even in these cases. This is because in the past, a great number of people have been hit with a negative equity situation where the property value has dropped below the level of the loan. This can be a very dangerous situation for any mortgage holder but especially in interest only cases. This is because there is no change to the balance of the loan regardless of how much of the term has passed. This can mean that you may find yourself with a rental property which holds a lower value than the mortgage with no means to repay the difference.
Many older people who are stuck in this type of quandary are turning to equity release schemes as a way to retain their home and pay off the outstanding mortgage balance. Many equity release companies will allow home owners to release sufficient equity in order to repay their outstanding mortgage and possibly receive an additional sum. However, this option is not possible for properties which were specifically purchased to let out with a shorthold tenancy agreement.
Although a great number of financial institutions have withdrawn their interest only mortgage products, there are still options available. However, in most cases a suitable repayment vehicle would need to be proven or established. Many lenders will no longer consider regular savings into an ISA or potential inheritancesums as these options do not provide sufficient hard evidence that the funds would be available at the end of the mortgage term. Buy to let mortgage providers may offer some flexibility with regards to a repayment vehicle, but most will still encourage some form of vehicle to be in place should the value of the property drop. Although the lenders do tend to appreciate that a buy to let property is usually a medium to long term investment, they also need assurance that you will be financially stable enough to cover the costs in the circumstances of your tenant breaking their shorthold tenancy agreement or the property being left vacant for a period of time. Since most landlords use the rent they receive to cover the interest repayment each month, the lenders will generally require proof that you could manage in case of unforeseen circumstances.
If you are considering purchasing a property to lease out on a shorthold tenancy agreement, an interest only mortgage may seem like the perfect finance solution. However, it is important to reduce the risk of incurring an unpaid debt at the end of the mortgage term by arranging a suitable repayment vehicle. This means that you are more likely to secure an interest only deal. However, you should be prepared for the lender criteria changes which could potentially affect your eligibility.
Many people considering equity release have worried about whether the range of products including interest only mortgages can survive the recent cull from the FCA and the various mortgage providers. Obviously with any mortgage, pros and cons are applicable and should be fully assessed. However, the equity release market is very heavily regulated by the FCA.
When equity release schemes were first introduced in the United Kingdom, they were unregulated and developed a dubious reputation. This compromised the integrity of the schemes and many were found to be poorly planned out. This meant that a great number of people were ill advised and suffered financial consequences of taking out an equity release scheme.
However, the industry has evolved a great deal since those early days. In a bid to ensure that consumers are protected the Financial Conduct Authority has classified all equity release schemes as financial products with a high risk factor. This level of risk is due to the long term implications which are attached to equity release. This categorisation of risk means that the FCA insist that all people receive proper advice and guidance before taking out an equity release scheme. Part of this guidance includes a full explanation of the key facts of the specific scheme in addition to any restrictions or limitations being documented. This enables applicants to explore the advantages and disadvantages associated with their chosen scheme, which helps to assure them of their options and the affects which may be experienced by themselves and their beneficiaries.
Although they are no longer the most popular choice of equity release, there are still a number of interest only schemes which are available in the equity release marketplace. Obviously, they will still fall under the same FCA rules and regulations. However, when assessing mortgage pros and cons, these products can still represent a good option for certain circumstances. While conventional interest only mortgages have received some negative press, in the equity release industry they can allow the home owner a greater control over the balance of their loan. This is because instead of the interest rolling up and compounding on to the balance, the interest charges can be covered by a monthly payment.
In fact, some plans offer a great degree of flexibility with regards to interest payments allowing the home owner to make a full or partial payment to cover the interest and minimise the increases on their balance. With a typical roll up lifetime mortgage balance doubling approximately every eleven years, this option can allow the home owner to take control of their equity release scheme and manage their potential estate for their beneficiaries. Some family members of equity release home owners have actually assisted their relatives in covering the interest charges in order to protect their future inheritance. With this degree of flexibility, it is certain that there will be interest only lifetime mortgages available in the future.
It is important to recognise that interest only lifetime mortgages are just a percentage of the deals and schemes available. If you are considering equity release, it is important to explore the other options which are open to you. This could include:
• Home reversion plans: This is a type of scheme which is not very commonly used in the equity release market. It allows home owners to sell all or part of their home to the reversion company while retaining the right to live in the property for the remainder of their lifetime.
• Roll up lifetime mortgages: This is a similar financial product to an interest only lifetime mortgage with the exception that no monthly payments are required. Instead the interest charges are compounded on to the balance of the loan. This can be a good option for those with limited disposable income who are not concerned about leaving a great deal of equity available for their beneficiaries.
• Draw down lifetime mortgages: These products offer the home owner the option of having a draw down limit on their scheme rather than taking a large initial sum. The funds are available to be called down as and when they are required up to the draw down limit. However, interest is only begun to be charged once the funds have been released, which can allow a great deal of flexibility and financial reassurance without paying interest from day one.
If you are interested in equity release, it is important to assess the scheme or mortgage pros and cons. This will provide all the information that you need to make an informed decision in order to proceed with assurance and confidence that it is the option best suited to your needs.
With the current UK national debt, economic climate and interest rates, many people who are about to reach retirement are worried about their financial options. Many people are worried about their existing debt and managing on a fixed income once they retire. However, there are a number of equity release options available.
The increased competition in the equity release industry and increased demand caused in part by the UK national debt and financial climate have allowed for a wide variety of schemes and plans to be developed. These plans can usually be classified as one of the following:
• Home reversion plans: This is one of the least common equity release schemes which offer home owners the option to sell all or part of their home to the home reversion company while retaining the right of residency. The agreement is planned in advance to allow a lump sum to be released in exchange for ownership of a proportion of the property being transferred. The property only passes to the company upon the death of the applicant or should they move into a long term care facility. This type of plan is best suited to those who are reluctant to enter into a scheme with interest being accrued or would like a greater degree of control over their estate.
• Lifetime mortgages: This is one of the most popular types of equity release scheme. They are similar to a conventional mortgage with the exception that the balance of the loan is only repaid when the property is sold after the home owner has passed away or taken up residency in a long term facility.
There is a wide variety of lifetime mortgage schemes available. These are usually one of three options:
• Roll up: These lifetime mortgages allow for the interest to be accrued and compounded on to the balance of the loan. This means that there are no monthly repayments but the balance of the loan will significantly increase over time. It is estimated that the balance on a typical roll up lifetime mortgage will double approximately every eleven years.
• Interest only: This type of lifetime mortgage allows the home owner to make a monthly payment to cover the interest on the loan. This ensures that the balance of the loan remains fixed and allows for a greater degree of control over estate planning. The disadvantage of this type of scheme is that you would need sufficient income to cover the monthly interest payment and some equity release companies would require proof of income. However, there are some schemes which allow a greater flexibility to make a monthly payment to cover all or only part of the interest. This allows for more control but without committing to a full payment every month.
• Drawdown: This type of lifetime mortgage allows for the home owner to receive a smaller lump sum initially with a draw down limit for further funds should they be required. This can be an excellent way of obtaining financial security but you would only pay interest on the funds which have been released. This can be beneficial for those who don't require a large lump sum initially or are concerned about their qualification for means tested benefits or assistance programs.
There are a number of advantages and disadvantages associated with all the different types of equity release and lifetime mortgage. However, in order to determine the options which are best suited to your personal circumstances or requirements, you would need to further explore your options. There are a number of online calculator tools which can assess your qualification or you could consult with an independent equity release adviser. They will be able to assess the feasibility of a great number of equity release schemes to determine which is best suited to your requirements.
Many of the calculator programs will be able to take your basic personal information details such as your age and gender, and the details of your property to determine which scheme would potentially suit your circumstances. This will enable you to confirm whether a lifetime mortgage would suit your needs and which type of lifetime mortgage would be the most applicable.
If you are facing retirement and concerned about the economic climate and UK national debt, equity release can present a great way to boost your financial security. As with any financial decision, it is important to assess your options fully to enable you to make an informed decision about proceeding forward with an equity release application.
Many people considering equity release may have come across the Stonehaven Interest Select Lifetime Mortgage. This represents a plan with enhanced annuities which may seem like a great deal. However, it is important to understand the advantages and disadvantages fully.
The Stonehaven Interest Select Lifetime Mortgage offers a number of great advantages. These include:
• Increased flexibility: Where conventional equity release products offer the option for an income or enhanced annuities with no monthly repayment and most interest only lifetime mortgages require a monthly payment to cover the interest, the Stonehaven Interest Select offers a greater degree of flexibility. The home owner can choose to make interest payments and can declare how much they would like to repay each month. This can negate the potential disadvantage of having the balance of the loan increasing dramatically. Since the balance of standard equity release schemes are estimated to double every eleven years due to the compound interest, this can be an excellent way to counteract this without being committed to a payment schedule which can become difficult on a fixed income.
• Reduced early repayment fees: Many equity release schemes have a number of fees and early repayment charges which are applied in the event that the loan is repaid early. This can cause difficulty if your circumstances change and you have the funds to repay the loan early or if you would like to move house. In some cases the fees can add up to one or two percent of the loan balance which can have a significant financial impact on your plans.
• Self-certified: Unlike many conventional mortgage products which require proof of income, the Stonehaven Interest Select plan allows for the home owner to self-certify their income. This can allow a little more flexibility as Stonehaven conduct no income checks whatsoever during the application process.
• Attractive Interest Rate: The Interest Select plan offers one of the most attractive interest rates in the marketplace. This particular plan offers the lowest rate in all of the Stonehaven schemes, which encourages home owners to pay the maximum possible amount. The minimum payment is £25 per month and the payments can be made by the home owner or even by their children to protect their potential inheritance.
Of course, like any other financial product, there are disadvantages which should be considered. These include:
• Low loan to value ratio: Possibly because of the attractive interest rate, the Interest Select plan has one of the lowest loan to value ratios on the market. This could be restrictive for those who currently have an existing mortgage which has compromised the level of equity in their home.
• Low maximum equity release percentage: The maximum percentage of equity release available with this plan is 44%. This is the maximum option depending on the applicant's age, gender and personal circumstances. There is also set criteria of a minimum property value of £70,000 with a minimum loan of £10,000. The standard minimum age of fifty five is also applicable.
• Minimum monthly payment: Although flexible, some may consider the minimum monthly payment to be a disadvantage. The payment is needed via direct debit and made each month, which could potentially present difficulties for those on a fixed income in circumstances where funds may be especially restricted in one or two months of the year. The home owner would need to plan in advance for leaner months and ensure that they still have the funds needed for the minimum monthly payment.
It is important to consider the advantages and disadvantages of any product. While the Stonehaven plan may seem like an ideal solution, it is important to consider all the other available options. Your equity release adviser will be able to assist you in assessing the feasibility of the options available and whether they would represent a better choice for your specific needs and circumstances. An independent adviser could offer a greater representation of the products and schemes which are available in the marketplace to ensure that the Stonehaven plan is best suited to your needs.
If you are considering equity release but are concerned about the value of your property covering the potential balance of the loan and leaving money to your loved ones, then a flexible lifetime mortgage such as the Stonehaven plan may represent the best solution for enhanced annuities. However, it is important to ensure you have fully researched your options and can proceed confident in your decision.
If you are considering an equity release scheme, you may have seen LV= equity release advertisements and wonder about the details of drawdown equity release schemes and whether they would be beneficial in your specific circumstances. In order to fully assess the advantages, it is important that you have a basic understanding of the equity release schemes which are available.
Many people who considered equity release in the past are pleasantly surprised by the equity release marketplace today. In the past, there were relatively few equity release providers offering a very limited selection of plans and schemes. However, with the introduction of a number of different and household name companies such as LV=, equity release is now an extremely competitive market which is beneficial for home owners. The introduction of more equity release providers has increased the pressure on financial institutions to provide a wider variety of attractive packages and schemes.
The increased demand and activity in the equity release market has caused a number of different types of schemes to be established. Most equity release schemes can still be divided into one of two categories:
• Lifetime mortgages: These are designed to provide life-long finance, allowing home owners to leverage against the value of their property without needing to make monthly payments. Instead the interest on the capital for the loan is compounded on to the balance of the loan. This balance is only repaid after the death of the home owner or in the event that they move into a long term care residency. At this point, the property is sold and the proceeds used to pay off the loan.
• Home reversion plans: This is a more basic form of equity release which allows the home owner to sell all or part of their home to the company. Like other equity release schemes, the home owner retains the right of occupancy until their death or movement into long term care. However, they need not worry about loan interest as they are fully aware of exactly what proportion of their home has been sold.
With a great number of providers such as LV=, equity release is even more attractive. Some of the companies now offer draw down lifetime mortgages. These are very similar to standard lifetime mortgages, allowing home owners to borrow funds and compound the interest on to the balance of the loan. However, the primary difference is that rather than receiving a lump sum or income, with a draw down lifetime mortgage, the home owner has a draw down limit. This allows them to call down funds as and when they require them up to their draw down limit. This has a number of advantages, including:
• Lower interest payments: Unlike standard lifetime mortgages where interest begins to accrue on the lump sum payment immediately, with a draw down lifetime mortgage the interest rate is only charged on the funds which have already been called down. This can save a great deal on interest charges in the long term.
• Reduced lump sum liability: Although the funds from equity release are tax free, having a lump sum of money sat in your bank or savings account can have a number of financial implications. For example, some people could face losing their qualification for certain benefits or assistance plans which are means tested due to having excess money categorised as an asset.
• More control: The ability to draw down funds as and when they are required can provide a greater degree of control. Rather than needing to make a decision about whether you should take the maximum equity release possible, you can have the reassurance of having the funds you need for your plans in the short term with a reserve fund which can be called down if needed. This can be extremely helpful to those retired people who find their circumstances have changed and they need extra funds quickly.
If you are interested in equity release but have no immediate need for a large cash lump sum, a draw down lifetime mortgage may represent the best possible solution for your needs. There are a number of established companies offering this type of product and scheme including LV=. Equity release providers will often have a flexible scheme available which offers draw down options, so it is worth taking a little time to explore your options with your equity release adviser. This will enable you to proceed forward, knowing that you can take full advantages of the benefits a draw down scheme has to offer.
For many people, the concept of equity release and lifetime mortgages can be a little overwhelming. However, there have been a number of products on the market in the recent past, which have bridged the gap between conventional and equity release mortgages. The Halifax Retirement Home Plan reviews have been instrumental in helping home owners to understand the concepts behind lifetime mortgages.
When reading Halifax Retirement Home Plan reviews, you may be unaware of the specific details of the product. This now withdrawn product was offered by the High Street Bank the Halifax. It was specifically designed for retired people and allowed for borrowing against the value of their property. However, unlike a number of equity release schemes, the Home Plan allowed for home owners to maintain a greater control of the balance of the loan by making interest only payments each month. This is similar to a conventional mortgage in which the home owner makes a monthly payment to cover the interest and any capital repayment. The term of the mortgage could extend to up to forty years, which allowed for a greater degree of flexibility, allowing the loan to be repaid when the property was sold. This could be upon the death of the home owner or in other circumstances such as the home owner selling the property and downsizing to another home.
There are a great number of equity release schemes and plans, with one of the most common being a lifetime mortgage. With the Halifax Retirement Home Plan reviews, many people are able to grasp a deeper understanding of the terminology and restrictions which are present in many lifetime mortgages. Many plans now offer interest only options which are similar to the Home Plan. Therefore, by reading the reviews which are generally written in easy to understand language, you can obtain a good grasp of how a lifetime interest only mortgage would work.
While each plan would have different limitations and terms, these reviews can be extremely helpful in assisting home owners with limited knowledge of financial services terminology to understand the concept of equity release. Of course, an interest only lifetime mortgage may not represent the best option for your circumstances. For example, you would need to consider whether you have sufficient disposable income available to cover an interest payment.
Many people consider equity release to boost their quality of life during retirement, which may be negated if you are required to fund a monthly payment. If you are unconcerned about leaving equity in your property for your beneficiaries, you may be better suited to a roll up lifetime mortgage or other equity release scheme. These require no monthly repayments and allow the interest to be rolled up and compounded on to the balance of the loan. This can increase the balance of the loan significantly over time, but if you are unconcerned by ensuring that you have sufficient equity to cover the loan and provide some funds for your estate, it may provide a better option.
If you are considering any form of equity release, it is important that you assess all the options available to you. There are hundreds of different schemes and plans which can be suited to your specific circumstances. There are a number of online tools which can assess your qualification for specific schemes and independent advisers can provide a number of options which would be suitable for your circumstances. It is important to consider all the schemes that you would qualify for in order to determine the best possible option for your specific requirements and circumstances.
If you are interested in an interest only lifetime mortgage but are unsure about the concepts and fundamentals, the Halifax Retirement Home Plan reviews can be a good starting point. Don’t be put off considering the reviews, simply because this particular product is no longer available for new customers, as the reviews can provide a good foundation of knowledge. This will enable you to move forward with your decision about equity release, confident that a lifetime mortgage is the option which is best suited to your needs. However, it is important to check that you understand the specific conditions of your chosen scheme fully before you commit to proceed. This will ensure that you are fully aware of the implications of equity release and assured that it is your best option.
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