Do not be intimidated or confused by the name ‘Halifax Retirement Home Plan’. This is just an interest only equity release lifetime mortgage scheme that lets people make use of the equity that is tied up in their home. Halifax equity release is great for people who do wish to release tax free cash from their home and have good disposable income to cover the monthly payments. Plus, there is an added inheritance protection guarantee with certain plans.
The retirement home plan may be a better option for the kids as well. The plan is a good alternative to the conventional roll-up equity release schemes. If inheritance is an issue and concern for the beneficiaries, with the stability of the Halifax mortgage balance over the life of the loan it will provide inheritance protection guarantee for them. For some of the older generation whose attitude to risk is extremely low and averse to borrowing in the traditional sense then the Halifax Retirement Home Plan has proved to be an excellent measure.
Pensioner mortgages (found on this website) require a stable source of income from retirees in the later years of their life. The one advantage pensioners have in the realms of affordability is stability of income. Additionally more often than not is the amount of equity residing in their property. Given the majority of elderly people have lived in their properties for many years they would have paid what is in today's terms a meagre value for their main residence.
From paying £2,000 for a bungalow in the North West in the mid 1960's, experience has shown that this can now have escalated in value to over £200,000. Assuming any mortgage has now been paid off prior to retirement it clearly illustrates the amount of equity that has built up within those four walls. So after all the hard times and seeing the children successfully move on, now is the time to reap those deserved hard earned benefits. This is where the Halifax Retirement Home Plan enters the fray and helps pensioners release this built up equity in the home.
People can use the proceeds of the Halifax interest only lifetime mortgage on anything they want; be it home improvements, paying off debts or generally to support a lifestyle after retirement.
How Much Equity Release is Possible?
The Halifax Retirement Home Plan offers a minimum equity release of £15,000. If you are not really sure about the amount you can get, you can use an affordability calculator. These lifetime mortgage calculators will assess the exact amount that can be borrowed by collating information such as income, number of applicants, credit status and outstanding credit commitments.
A person can also take professional help from expert financial advisors who will be able to guide them through the whole process. The maximum equity release cannot however exceed more than seventy-five percent of the total value of the property. This is subject to income criteria and can only be based upon retirement income and additional state benefits that may be in payment.
It is always advisable to seek the guidance of an independent financial advisor if you have any doubts about equity release schemes.
Pitfalls of Interest Only Lifetime Mortgages
You have a worry about leaving behind inheritance for your family. With the interest only product you know the only amount of repayment left upon your death or move to a long term care facility is the principle lump sum you attained.
The downside or pitfall is that you have to have income you can spend on the mortgage. Most individuals take out a lifetime mortgage in order to cover their expenses because their income is not enough. Therefore, it may not make sense to take out a mortgage that you need to make payments on. The only advantage in this is that the interest rate may be low enough that you can afford the payments without significant issues.
You may not want to use the money for that ultra special holiday, but you could certainly use it for home improvements that would increase the value in your home equity.
In more recent interest only plans there are certain restrictions for how long you can keep the principle balance unpaid. Typically, you have 10 years before repayment is necessary. It can detract from the product’s appeal. On the other hand, you do have the inheritance protection guarantee that on the sale of the house your beneficiaries will receive any amount that is above the payment amount owed.
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