If you already have a mortgage taken out with Halifax before you retire, the company will take into consideration how you will afford the mortgage once you retire. All mortgages agreed to by Halifax must now end before you turn 75. However, the Halifax equity release retirement mortgages under the Halifax Retirement Home Plan have been withdrawn as of 17 August 2011. This means that Halifax now only provides interest only mortgages under their traditional mortgage book.
The Halifax Retirement Home Plan was a service provided for Halifax retirement mortgages schemes. This product was a form of lifetime mortgage specifically geared to retired people with sufficient pensionable income. Customers who have an existing Halifax Retirement Home Plan are still able to move homes under these Halifax retirement mortgages and are still able to borrow additional money if they meet the designated criteria. The difference now though is Halifax no longer providing advice on existing plans. This is now outsourced to Scottish Widows & their range of schemes which have left some customers frustrated.
As an alternative to the previous Halifax Retirement Home Plan, new customers can choose to take out Halifax retirement mortgages in the form of lifetime mortgage schemes with alternative lenders, which are very similar to the Halifax Retirement Home Plan. Such specialist lenders are sure to emerge on the back of the success of the Halifax's pensioner mortgage
Because the Halifax Retirement Home Plan was the most popular of Halifax retirement loans, the company was unable to keep up with the volume of applicants for the loan. The administration required was putting too much strain on the business, so they decided to pull the plug on the plan. In fact, the company was forced to compensate customers for a number of errors they had made due to excess volume of work. The plan gained popularity in that unlike a roll-up scheme, the interest of the Halifax Retirement Home Plan worked like a lifetime mortgage in that interest was not compounded. This therefore protected any inheritance that was destined for the children
These days, the amount of interest only pensioner mortgages are declining, and most lenders now insist that mortgages expire once the customer reaches the age of 75. The Halifax Retirement Home Plan mortgage was no different. There are a number of other companies who now offer interest only pensioner mortgages, but they often do so with caution as the criteria to qualify for such a loan become stricter. One such lender is Stonehaven who are the only lender to offer a fixed interest rate for life. Further articles on the Stonehaven interest select plan will follow or follow this link here.
Retirement plans exist in a variety of forms, but you might not consider all the options. Stonehaven has an interest only mortgage plan for retirees which offers less of a pensioner mortgage and more of a traditional mortgage except for one thing. Their mortgage can last a lifetime instead of a certain term.
You also have other lifetime mortgages that might be attractive to you now that Halifax is restricting some of the offerings they have had in previous years. A lifetime mortgage works by giving you a payment of funds tax free. This money can be used as you wish even for holidays. There is no monthly repayment unless you select an interest only plan. For all other plans you will gain interest on the principle amount that continues to add on until you decide to move your home or death occurs, hence the name lifetime.
The good news is the fact that you do not make a mortgage payment; however, some retirees have found that their entire inheritance is gone even with the sale of the home later on. Part of this happened with devaluations of the home during the mortgage crisis, but a majority of it has to do with the accrual of interest on the loan. This is why the drawdown mortgage has become one of the most popular options as the Halifax plan left the market. A drawdown mortgage gives you a line of credit. You take an initial lump sum and then you draw on the account as you need it. Interest is only paid on the amount of money you use and not what is in your account.
Halifax equity release retirement mortgages might not be around anymore; however, you do have retirement options. Always conduct proper research to determine the best product for your situation and the ability you have to repay the loan. Interest only products help keep the inheritance for your family and are worthy of study.
The word Mortgage is often used to refer Mortgage Loan for buying a real estate item from a lender; mostly a bank. Here we will discuss pension mortgages which are a common interest-only mortgage type mostly common in United Kingdom.
A Pension Mortgage borrower is only subject to a payment of interest only throughout the lifetime of mortgage. Does not it sound too good to be true? The fact is that all pension mortgages can be backed with an additional investment plan in the form of borrower’s personal pension; a stock market based investment subject to tax exemption and tax relief at the end of the retirement. To be precise, a pensioner will gain two things at the end of his retirement. Firstly, a lump sum handsome and tax free amount called personal pension, which is mostly used to pay off the mortgage at the end of the retirement. Secondly, a monthly taxable income which the pensioner might use for his survival for whatsoever life he has left! However, since the 2014 budget, the compulsory nature of buying an annuity with the remaining 75% is under scrutiny. Particularly, the rules for personal pensions & occupational money purchase schemes have seen a sea change!
Maybe a resurgence in pension mortgage will now be seen given the fact that someone can take the whole pension now as a lump sum, but subject to taxation.
The only advantage seen in pension mortgages is the tax exemption at the end of the retirement on personal pension but one only benefits from that if he falls under the higher end of taxable income. The lesser the income, the lower the tax exemption and benefit of a pension mortgage.
Given the pension amount inflates in the stock market and does not meet stock market bazaar nature, a pension mortgage might benefit the borrower at the end of the term. But the way stock market rates fluctuate nowadays, it is a tough call. Depending on your age, mortgage period can prove to be longer than expected, subjecting you to interest only payments for a longer than expected period. Also, age limit for pension mortgage is 60 years and above, during which your total mortgage debt remains the same.
An interest-only pensioner mortgage is not the only choice open to you in retirement or as you edge closer to retirement. In fact if you do not have enough in your pension account to pay for your pension mortgage there is an option. You can enter into some of the retirement mortgage options like lifetime mortgage. This would help clear any outstanding shortfall if one existed.
A retirement mortgage such as the likes of Hodge Lifetime offer, leaves the payment until the end of your life or you move to a care facility. Interest still adds on to this type of loan; however, the payment is not made until the end for interest either. The way this works is by using the equity in your home. You can use this equity to pay off any existing mortgage that might have dried out your pension or will dry it out.
Under a lifetime mortgage you still obtain tax free cash. You can use this cash as you wish and you can always set up a savings account to help repay it in the end. The main importance is that this type of loan is set up for retirees. It is designed to ensure you can afford your home throughout your life and enjoy your retirement.
Pension mortgages have their uses. They are also harder and harder to find due to the troubling economic situation. Lifetime mortgages are becoming more common. They do not use a savings fund to make payments in the end, but you can always set up an account and let it grow interest.
With equity release you can be 55 or older. This can be advantageous if you are about to retire and still have a mortgage payment you wish to get rid of.
Pension mortgage options as you read above have to repaid usually by 60-70, which can mean you enter retirement with full repayment of the mortgage.
You have to decide what is right for you and your family. You may end up having to sell your home. The pension mortgage can help guarantee the home sale is the last resort where lifetime mortgages cannot.
From this end of the table, we can confidently suggest that opt for a pension mortgages only if you can constantly monitor your pension fund’s performance because at the end of the mortgage term your personal pension is your only source to pay off the mortgage and maintain a lifestyle during retirement.
People are still weighing up their options after the 50% tax levied on high income earners was revised, and bank base rates increased too with a few lenders. Everyone is literally looking for the best option to evade the tax man by assuring themselves a better future free of taxes. One ideal way of ensuring this happens is through early retirement, but the most commonly used trend is a pensioner mortgage. Experts are not very much for these plans but they remain popular options to some individuals due to the significant tax breaks they enjoy.
Pensioner mortgages are still available, albeit limited, to those in retirement and what better borrowers could a lender wants? They have more equity, better credit historyand treat credit with respect. People under retirement age generally are not so careful, so why don’t lenders offer more options for someone who needs a equity release maybe? Definitely lenders will have their interests at heart before executing any plan and that remains a fact.
The initial stage of a mortgage will be the interest only mortgage where a unified amount is paid up from a small portion of your income, while at the same time you are servicing your personal pension scheme for the sake of your future. The account is bound to grow according to the amount invested and payment habits if regularly made. Additionally, fund performance is paramount in assuring the best returns are achieved in a stock market that is still volatile to some degree. The mortgage balance is eventually repaid in full upon retirement, normally at 65, from the tax free lump sum generated at maturity.
However, this plan may not be the best option when it comes to interest accumulation. Indeed it saves much on taxes but the downside is that the interest is in most cases very low and insignificant. If it happens that the interest on your pension is less than the interest paid for mortgage, then less interest is paid with a repayment mortgage. This has resulted to most pension plans being reinvested in the stock market. It can make the payment during each month difficult and in the end there may not be enough funds to make the final payment.
A pensioner loan in which you pay into an account and save up the balloon payment at the end is just one option you have. If you want a retirement mortgage that might work better for your situation you have a choice in lifetime mortgages that do not include an interest payment to be made.
Rather this type of mortgage tacks the interest onto the loan amount. It compounds for the life of the loan ensuring that the only repayment is at the end of the mortgage rather than throughout. The downside is that interest accumulates and it could wipe out the inheritance you wish to leave behind. Despite this challenge there are ways around it. As with the interest only mortgage, you can set aside some funds to gain interest on; it might not be enough to cover the full amount but at least your lump sum payment and interest is slightly paid.
There are different lifetime mortgages like interest only and the lump sum. You also have a drawdown option in which you take a smaller amount of funds, but you can withdraw your money when you want. The interest only adds to the portion of money that you used.
Mortgage products are not always the best option for you. Sometimes you might decide that selling a home in part is better than owing any money on a mortgage. Even this option exists in home reversion. As you search around for the right financial product, speak with a representative of financial products. They can help you understand the various advantages and drawbacks to the retirement mortgages.
Your family is also best included as you consider taking a mortgage into retirement. It is your family that will end up with paying the mortgage by home sale. They may be able to help you out to keep the home from being sold.
Pensioner mortgage issues could be very tricky and they should be handled professionally. Many people have lost a lot of their money due to making rush and improper decisions. Where the law is clear or there is at least a document outlining terms, there is certainly no compromise and you have to abide to the letter, failure to which a bad credit cold possibly follow.
Owning your own property is definitely something that most people in the comparison aspire to. There are over 11.2 million loans at the moment, according to the Council of Mortgage Lenders. This means across these mortgages, there is £1.2 trillion invested in mortgages. It is clear that getting a mortgage is still popular among the UK population because it is not only a sign of financial stability but it creates a strong foundation for the future. With numerous options including interest only lifetime mortgage there is no shortage of products either.
An interest only lifetime mortgage is one option that more elderly buyers are researching into so that they can have plenty of options available. The unique feature of these types of pensioner mortgages is the interest rates are fixed, which means they do not fluctuate. This is perfect for retired people who are on a tight budget and can only allocate a certain amount each month to paying back their mortgage. You need to look for the term “lifetime” to ensure the interest only loan is a fixed interest rate.
The nuts and bolts of interest only lifetime mortgage are simple to understand. Here is a sneak peek of what to expect if you decide to go down this route:
Eligibility: Interest only mortgages are available to re-mortgagers or buyers over the age of 55 so that they can have a cash lump sum. You may want a cash lump sum for all sorts of reasons ranging from health to planning that dream holiday. Obtaining this cash lump sum would be thanks to interest only lifetime mortgage plans.
Ownership: The good thing about these mortgage plans is that you still keep ownership rights over your home, which is bound to come as good news to buyers who hope to pass on ownership entitlement through estate planning to family members.
Suits fixed lifestyles: Mortgage plans that keep you in your home are perfect if you love the area that you live in for what it gives you in lifestyle and quality of life. Interest only lifetime mortgages allow you to focus on what matters most in life which is spending time with your family once you have retired and enjoying what life has to offer.
The most important thing to remember is interest only lifetime mortgage plans are a method to release equity from your property for something that you need which is important. Only release equity from your property if you know what the risks are you should only withdraw the amount you need.
One drawback is the fact that you make a payment on the account. Money can dry up in retirement due to issues with investments and pensions. You might be unable to make the interest payment later in life.
While eligibility is 55 there is also a cap at 75. This means if you are already 76 you will be unable to get this mortgage plan.
Devaluation of a home happens. In most instances your mortgage lender will protect against this; however, if they do not you might have a high principle amount that wipes out any inheritance you were planning on providing your family.
Alternatives to Such Choices
Interest only is one type of lifetime mortgage. As it is not your only option for money during retirement you should assess the parameters to find what works best for you. Lump sum mortgages compound interest onto the principle so that all of the interest and lump sum is due at the end of your life. Interest only as you recall means only the principle is left. There is even less likelihood that a lump sum mortgage will leave an inheritance versus the potential with interest only loans.
Drawdown offers the potential for inheritance, but again it depends on the amount you borrow and the interest that compounds. If you only take out a small portion of equity you might leave an inheritance behind. The good part about drawdown is the fact is interest only accrues on the amount you withdraw from the account not what is available in your withdrawal account.
Interest only lifetime mortgage is a great product, but it does not work for all mortgagers. Study, research, and plan what is going to be best for you and your family, as the end matters to everyone involved.
Mortgages have gained immense popularity among the people these days with the number of loan options they offer. The interest only mortgage loan is one of the best options in terms of mortgages. But what is an interest only mortgage. Here you will be paying only for the interest part of the loan for the initial few years. This will help in reducing the monthly payment of the mortgage for the first few months. However, it will be recovered by the lender during the later stages of the loan payment.
Answering the Question in Detail
What is an interest only mortgage and why it is popular is one question in the mind of most people. As the name suggests, the interest only mortgage will involve the payment of the interest part only. This will help in reduction in the total monthly instalments to be paid initially. The later years will require you to pay a larger amount, this way the loan amount and the interest on the loan will be adjusted. In other words interest does not add onto the loan, yet the principle balance of the loan still remains at the end. Typically it takes 10 years. You pay interest for 10 years and then a balloon payment is made.
This is a great boon for people who aren’t earning enough amounts to make for the monthly payments of the loan amount. The last payments of the loan will be higher than the initial payments of the monthly instalments. Once the period of the interest only mortgage is over, then you will have to make both the payments of the principal amount as well as the interest. In other words you settle up the account.
There are situations in which you might not be able to pay the balloon payment at the end. Depending on your age there are different options. You can rollover your interest only mortgage into a traditional 30 year fixed mortgage by remortgaging your home. In this instance, you have to pay a monthly payment that includes interest and principle money. It might be ideal in ten years depending on your financial situation. For some selling the home and downsizing is another choice.
What if you are retiring and still have the mortgage?
For a situation in which you have retired, but still have a mortgage with a payment coming due there is a solution called lifetime mortgage. In fact you even have an interest only lifetime mortgage option. For a remortgage due to already having a mortgage you would need to rollover to a lump sum lifetime mortgage in which you pay no interest and no principle on the mortgage. Instead, at death the entire payment becomes due. At this point you must then sell the home, well your family will, and if there is any money left after paying the mortgage it is inheritance.
You may also be able to get a drawdown mortgage that has no payment. In this situation you still have equity you can tap in your home even though you are also paying off a different loan. With this you can withdraw funds as you need and the interest tacks on to the principle amount to be repaid at death.
The people who are eligible for the interest only mortgage loan are those people who invest money and are well aware of their returns expected in the future. In essence, the interest only mortgage loan is for those people who are very much sure of the returns from their investments and have an assurance that they will have a higher cash flow in the future that will cover the higher payments.
It is indeed a great idea to make lower payments initially and yet be able to get the house for your family that you always dreamt of using the interest only mortgage for your home loan. The interest only mortgage will also help in getting a huge deduction in the tax while letting you have that extra money in your pocket. One great advantage with the interest only loans is the flexibility to make the monthly instalments than the standard loan payments. Each monthly payment can be the interest amount only or only the principal. These advantages make the interest only mortgage loan very popular among the people these days.
Now you know what is an interest only mortgage, how it works, and your alternatives at the end of the agreement. Further information can be found on the Equity Review Website.
Interest only mortgages are fast becoming one of the most popular news items in the tabloids. With daily updates from lenders amending their terms and conditions, the interest only loan is becoming a rare breed of mortgage lending. It all started with trouble in the 2000s with the banks and their mortgage practices. Things got worse due to misunderstandings and many people losing their homes.
As the name suggests, an interest only mortgage will require you to pay only the interest part of the loan in monthly instalments. This will be for an agreed period of time. At the end of the term, you will have to pay the entire capital amount minus the interest.
In an Interest Only Mortgage you only have to pay the interest of the loan, therefore, it will work out cheaper per month on this scheme as opposed to a usual mortgage where you would have to pay off the interest plus part of the capital per month. This is mostly preferred by people who can’t make the monthly payments of huge amounts but have an investment which will give them a large sum at the end of the agreement. Interest only mortgages are ideal for people who are absolutely sure that they can make the payment of the entire capital at the end of the loan period from their own means.
In most cases, people have savings created by themselves through a number of plans which will hopefully give them the best interest rates as well as being tax efficient. Such plans can be enumerated as the ISA savings, repayment mortgage, endowments etc. Most people also consider it a great option to make use of their second home by selling it for making the final capital payment.
One of the greatest advantages to an interest only mortgage loan is that you will have more money available to spend each month. Many people also used to claim the tax on the mortgage interest which in turn helps them in paying off the capital amount at the end of the loan tenure. However, it is a risky option for those people who are unsure of the returns or savings created by their plans.
Other Means of Repayment
It needs to be mentioned that most mortgages of this type allow you to pay additional funds if you have them so that you pay off the principle a little. However, larger payments or paying it off early can lead to penalties.
If you enter into a situation in which you cannot pay the mortgage off at the end, you still need to make the payment. So it is sell the house or come up with a remortgage. Consider a retiree. They might have an interest only loan and it has come due. The person has no funds to repay, so they could remortgage for a lifetime mortgage.
The payment rolls over into a lifetime mortgage with the potential of taking out more equity depending on the situation. A payment is made on the original loan and yet the person is now in a better position. This is because while payment is made, they are not in a situation of actually coming up with the money in full. Instead, the equity paid for the loan and their repayment is not due until death or move out of the house.
When the home is sold the lifetime mortgage is repaid and any leftover funds go to the home owner or in the event of death the family. It is just another way of paying off a mortgage someone might have, but of course you need to be 55 in order to take out a lifetime mortgage. It does not work for everyone.
Again if you find that you are at retirement with a mortgage like the interest only solution you do not have to worry about repayment if you decide to take on a different financial opportunity. Any retiree who is 65 years of age or older can decide to get home reversion.
In this situation the home is sold in part. The funds are used to pay the mortgage off and the person is living rent free in their home without worry.
The outstanding debt to be paid at the end of interest only mortgages is a huge amount and there is no other way to get rid of it other than making the payment. It is of prime importance to monitor the monthly payments as well as the amount that is saved by yourself. This will help in the overall success of the mortgage as well as being reasonable for your lifestyle!
Thinking of getting an interest only lifetime mortgage can seem to be a good idea when you are trying to make the best of your retirement years. With interest-only lifetime mortgages, borrowers have the option to pay only the interest and not the whole capital amount back.
If you have chosen a plan that will still give an approval to the mortgage interest only equity release plan, you have the option of only paying interest to the lender for the full term of the loan, at the end of which you would owe exactly the amount you borrowed. Obviously to reach this goal of maintaining the same balance of
The interest-only lifetime mortgage scheme contains many advantages such as people can now afford cheaper mortgage repayments in times of financial hardship. This loan is considered to be flexible enough in that it provides applicants with their own choice of repayment vehicle. There is an option of repaying the mortgage early any existing investments prove a success or could downsize in the future if their existing property becomes too much to manage. An interest only mortgage can be a cheaper option than selling up as an option and deciding instead to rent a high value property.
First time property buyers can no longer benefit from an interest only loan owing to the fact First time buyers have now been helped with the introduction of the governments help to buy scheme which allows them to source a lower deposit in order to get them on the housing ladder quicker, albeit’s fueling the economic recovery which we’d rather have as a more sustained & gradual, rather than the boom & bust of the past. Therefore, first time buyers must repay the whole capital off during the lifetime of the loan.
Furthermore, it has been left to the elder generation to benefit from the interest only loans. Afterall, they are the ones who have shown a good repayment record and tend to have the greatest amount of equity to act as security for the loan.
Some disadvantages of the interest only mortgages are that there is no capital ever repaid unless and until the investment vehicle is taken out. Investments also have the chance to underperform and this may lead to a loss upon repayment. The mortgage lenders are being pressurized by the FCA to offer capital and a repayment mortgages. In case that the property value of your house dips down, there are chances that you may end up with a negative equity situation. Alternatively, if interest rates rise, you would never happen to take the investment vehicle out.
Certainly as a first time buyer you might find the help to buy mortgage more than helpful. In fact for first time buyers looking to use a mortgage to fund a property purchase we recommend on visiting Equity Review first for free independent advice. It ensures that you pay off the loan over a 25-30 year period. However, if you are already in retirement then you’re usually not looking at a mortgage to pay for a new home in most instances.
Instead, you might be looking at an option that allows you to pay off your existing mortgage so that you have fewer expenses and a lower monthly payment on a mortgage. You may also be looking to gain funds for your retirement for that special holiday you never went on. If this is the case then lifetime mortgages with interest repayment options can work best.
The interest payment lifetime mortgage is the same as the traditional loan in which you only pay interest on the account. The difference is that you have the rest of your lifetime to pay the principle balance. In fact you have until death. This means you pay interest and then at death the balance is due. Your family then sells the home. Your family gains the funds to pay the mortgage and what is leftover is given to your family as inheritance. It is a guaranteed inheritance and you have funds to spend during retirement.
You have to be 55 years of age at least to qualify for an interest only lifetime mortgage. You can also take out this type of mortgage past the age of 75 unlike conventional residential mortgages. As long as your property is above £70,000 with little or no existing mortgage then qualification for an interest only lifetime mortgage should be a breeze.
There are other lifetime mortgages that require no repayment until the end including paying interest. This is because the interest adds up until the mortgage is paid off. It can work great for those who have no disposable income. The downside is that inheritance might be called into question. You may not be able to sell the home at death for enough value that pays for the mortgage, interest, and leaves inheritance behind.
Retirement options are not limited to mortgages, as stated on the Equity Releases Website. If you are not a first time buyer, but actually a retiree with a home consider home reversion in which you sell part of the home. You get funds to live with, but there is no need to repay as the home is sold at the end and all portions of the home remaining are sold, where the money is given as inheritance.
Like everything in life, these mortgages have their advantages and disadvantages. It is up to you to decide if the advantages outweigh the disadvantages. But on an overall basis, these interest only mortgages provide a great source of income for the retired and are one of the best ways for them to spend their last few years on earth comfortably.
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