In August of 2011, the Halifax Retirement Home Plan was withdrawn from the market. This came as a surprise to many retired borrowers since it was one of the few borrowing options they had available. This plan was quite a success amongst the older borrowers because of its “lifetime” nature. It gave them the option of releasing money that was invested in their home without having to make any repayments except the monthly interest charged by the provider. You do not have to worry though because there are other options including the interest only lifetime mortgage.
Halifax withdrew this plan because, in their opinion, this plan only represented a very small part of their overall mortgage lending. They did not see it as a core product nor were they able to fully understand the needs of the retired market so they withdrew this plan. This was actually not a smart move because this plan was a success amongst retired borrowers.
Retired borrowers do have an option. The Stonehaven's Interest Select Lite is an alternative to the Halifax Retirement Home Plan. This interest only lifetime mortgage offers retired borrowers the option of repaying some or all of the charged interest. This way they can choose an amount that fits their personal budget. There is however a minimum payment amount of £25 per month. The advantage of this plan is what actually makes it unique. It is a non-verification plan or a self-cert plan which means that Stonehaven does not require proof of income. The age and the value of the property are sufficient to determine whether or not the home owner is eligible.
If you are successful in paying the full interest amount every month, your mortgage will remain the same through the rest of the term which will make it easier for you to know the final balance. It will always be the same as it was when you took the loan so the initial loan sum will be equalled to the final balance. This makes it easier in planning. Upon the sale of the property you know which amount will go to the provider and which amount can be left as an inheritance. This is why this plan is favourable to those who would like to leave an inheritance for their beneficiaries.
Another great feature of this plan is that you can always switch to a rolled-up interest scheme at any time with no monthly payments. Now, if you do not have the full interest payment you may need to have a hybrid interest only lifetime mortgage which Stonehaven also offers.
What this plan does is ensure you make a minimum interest payment. It is a payment you decide on at the outset and it cannot change. You must make that payment. The rest of the interest that may accrue on a monthly basis based on the annual percentage rate (APR) will be rolled into the principle balance of the lifetime mortgage. In this way you have a part of interest only and a part of roll up lifetime mortgage products.
With the roll up solution only, you are not making any payments thus there is a concern of inheritance left. Even if you have the combined scheme you could end up losing the inheritance you wish to leave behind. It takes being sure that you have chosen the right product before you sign on the mortgage line.
Even though Halifax has removed its product and Stonehaven offers three options including the interest only lifetime mortgage, you do have other options. You do not have to choose from just Stonehaven although they are one of the most versatile options available on the market.
You have things like home reversion, drawdown lifetime mortgage, and enhanced lifetime mortgage from other companies (accessible here). These same companies may offer a roll up or interest only scheme. You will not know until you begin searching and comparing for the various products out there. Also make certain that you choose a product you can live with. Let your family know what you are thinking and get their help deciding. After all, it is their inheritance that may disappear if you choose the wrong product for your situation.
Speak with a financial adviser regarding the interest only lifetime mortgage and the other products available. Stonehaven has staff on hand, but an independent adviser can also be helpful in making sure the right decision is made. So while the Halifax lifetime mortgage is gone you have other choices through different providers.
Our clients are satisfied with their new lives!
National Equity Release Pension Conference, Bath Street, Bakewell, Derbyshire, DE45 1BX.
You can also contact us by phone , or you can send us a message here: