Tag Archives: Interest Only Mortgages

Which is the Best Equity Release Plan?

When it comes to deciding which is the best equity release plan that is suitable, it can be difficult without the required knowledge. It is always best to seek independent financial advice to find out which plan is the best for you. When choosing a plan, consider if you are looking for a low interest rate, the ability to make partial repayments, a guaranteed inheritance for your children, or just the maximum lump sum.

One Company Offering Comparisons
Equity Release Supermarket is an online company that will show you which equity release plans to choose from. They provide a comparison table of plans and products that will help make your search easier. The plans include drawdown, home reversion, lump sum, and interest only mortgages. In addition, they can provide an advisory service and have the facility to provide an appointment with a local adviser, either in the comfort of your own home or over the telephone, dependent upon which ever suits your requirements best.

Exploring Details of Lifetime Mortgages and Home Reversion
A drawdown equity release is similar to a lump sum lifetime mortgage, except that you only need to take only the amount of money that you will need. That way you do not eliminate all of the equity in your home at one time. A lifetime mortgage allows you to receive the maximum amount that your home is worth at one time. A home reversion allows you to borrow any amount from the equity of your home by selling a proportion of the house value. For instance, by borrowing half you will allow your children to inherit a piece of the property when you pass away.

An Alternative Lifetime Mortgage
The only equity release plan that you will need to make monthly payments while living in the home is an interest only lifetime mortgage. This type of plan is good to get if you want your children to have as much equity as possible when you pass away. One of the few companies to offer such a product is Stonehaven, who restrict borrowers to a minimum age of 55. Most other interest only lifetime mortgage lenders such as Halifax, who operated their Halifax Retirement Home Plan, have now withdrawn from the market.

How Equity Release Works In Principle
With most of the equity release plans you do not need to make monthly payments. In fact, you can live in your home for free until you pass away or go into a nursing home. The interest that accumulates on the loan for the remainder of its term and will eventually be repaid once you pass away or go in a nursing home.

You decide which product is correct for you, whether you want to make a monthly interest payment or no payment at all. The benefit is that you get the money you require now to make your retirement easier. The disadvantage is the amount of inheritance you can leave behind. This is why you should be aware of how lifetime mortgages and home reversions work.

First of all the money is tax free and can be used at your discretion for home improvements, repairs, or even holidays. Under home reversion you have already sold a portion of your home so you have less worry of paying something back and a lifetime tenancy agreement. For many this is uncomfortable, but it affords that inheritance as mentioned. You also have to be 65 to start this process, whereas lifetime mortgages can start from as early as 55.

Speaking with Family
An independent financial adviser is great, but you also need to be wary about what your family will think. As it is their inheritance and they may be able to help you keep the home in the family, it is important to get their opinion. They may see something you missed or simply help you sign a better contract.

For example, with lifetime mortgages there is a clause called a ‘no negative equity guarantee’ agreement in which the company cannot try to obtain any more than the house is worth upon your death or decision to sell. It protects you if the house loses value.

A homeowner may have an idea on which equity release plan they want, but it is still best to contact an independent financial adviser, to make sure you are making the right choice. One plan may be better for you than the others. The independent adviser will ask you a series of questions to help you choose the best plan. So, if you have any questions, ringing Equity Release Supermarket on 0800 678 5159 maybe your best option.

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Will an Equity Release or Interest Only Lifetime Mortgage Calculator Provide the Biggest Lump Sum?

Will an Equity Release or Interest Only Lifetime Mortgage Calculator Provide the Biggest Lump Sum?

Experience shows that when it comes to finding out which scheme offers the maximum equity release, confusion reigns over whether it’s the roll-up equity release plan or an interest only lifetime mortgage. With equity release schemes becoming very popular in recent years, more people than ever are conducting their own research before approaching an equity release broker to implement their plans.

Roll-up and interest only lifetime mortgages give homeowners the option of releasing some of the equity tied up into their property, without the need to sell the home and move out. The cost of living during retirement is on the rise, and with shrinking pension funds, poor annuity rates and increasing costs for care, many retirees are looking for flexible ways to optimise their financial assets. There are many different equity release plans available today, and which equity release mortgage suits you will depend on what exactly you need.

For instance, someone may need an extra cash injection for a one-off expense, while someone else may need a regular income to supplement their retirement income. Someone may want to release equity while also protecting some of the equity for their beneficiaries, while someone else may find it more important to understand what is the maximum equity release cash lump sum? Which equity release plan works for you will therefore depend on what it is you need and one of the ways of establishing this is with the use of equity release calculators.

If you need to release a maximum equity release lump sum from your property, roll-up equity release plans generally come out on top, when compared with interest only lifetime mortgages. While the exact terms of the plan depend on which equity release plan you look at, generally speaking roll up equity release plans can afford to allow for a bigger lump sum release than interest only mortgages, and you can see this by checking with different equity release calculators.

Stonehaven enters the maximum calculation

One exception to this would be the Stonehaven Interest Select Max Plan, which allows for maximum borrowing. Stonehaven’s Interest Select plans offer a viable alternative to roll up type equity release schemes, in which equity release can either be done on an interest only or roll-up basis. Any interest repayments are considered to be contributions towards the repayments, so you are free to pay as much or as little as you wish each month. It is also possible to stop payments altogether and convert the plan into a roll up equity release plan. This is a great safety net for those who require security of tenure and peace of mind.

The Stonehaven Interest Select Max option allows for the maximum lump sum release, at a fixed interest rate for the entire length of the plan. For instance, for a male applicant aged 65 years, with a property valuation of £200,000, with the maximum select option, you could release as much as 29% of the property value. This works out to £58,000, which is comparable to if not higher than some roll up equity release plans. However, this still doesn’t result in the maximum equity release.

Absolute maximum enhanced calculation

A recent innovation in the field of lifetime mortgages is the enhanced lifetime mortgage plan. Effectively using health as a factor influencing the loan-to-value, equity release underwriters will gather information on one’s health and lifestyle via a questionnaire. How severe the health of the individual(s) is will affect the size of the maximum lump sum. Therefore, someone who is overweight, a smoker, maybe suffered a heart attack, diabetes or cancer could find their health has actually helped them attain a bigger lump sum. Therefore, to get an accurate idea of the maximum lump sum ensure you have access to an enhanced lifetime mortgage calculator aswell as the standard devices.

Which equity release scheme allows you to release maximum equity depends on your individual circumstances, including age, property valuation and now health. Enhanced lifetime mortgage plans will usually offer the greatest lump sum, but on certain occasions, Stonehaven’s Interest Select Max option can prove to be a more viable alternative should you have the disposable income to make monthly payments and thereby protecting your next generation’s inheritance.