Tag Archives: Types of Equity Release Plans

What is an Equity Release Eligibility Calculator?

As equity release has become more and more popular in recent times and the interest in equity release plans has increased, new tools are emerging to help users make sense of whether people meet the eligibility test to meet the wide variety of equity release plans available. Every bit of help is needed when trying to find the best equity release plan that could suit them and the first port of call would be to establish eligibility.

Equity release is a potentially life changing financial concept, so it is always best to seek advice from a qualified independent equity release adviser. But before you do that, let’s look at the many convenient tools that could help you negotiate your way around the world of equity release schemes.

There are two main types of equity release plans: lifetime mortgages and home reversion plans. Different plans have different eligibility criteria and terms of lending. An equity release eligibility calculator is an application that, based on the information you provide, can quickly work out whether you are eligible to apply for a certain equity release plan.

For instance, a lifetime mortgage eligibility calculator can help you understand if you are eligible to apply for a lifetime mortgage, and if so, the maximum amount you could potentially release from your home. Eligibility for a lifetime mortgage is based on the applicant’s age and property value. The longer the term of the loan, the more the value would need to be. The shorter the expected term, the lower the value of the property can be. Therefore, in general, the younger the applicant, the higher the property value will need to be.

Who offers an equity release eligibility calculator?

Let’s look at the Aviva lifetime mortgage as an example. The minimum age to apply for this is 55 years, and the minimum property valuation is £75,000. Aviva’s lifetime mortgage eligibility calculator requires the user to enter their age, the value of the property, whether it is a single or joint application, certain details about the property, and whether you want to set any percentage of the equity as an inheritance.

Based on these details the eligibility calculator can tell you not only if you are eligible to apply for this lifetime mortgage but it also works as an equity release calculator and can tell you the maximum amount you could release through a lifetime mortgage. An equity release eligibility calculator is therefore simply a quick and convenient way to find out if you qualify to apply for a certain equity release scheme, and if so, how much you could potentially release.

Another equity release eligibility calculator is offered by another of the prominent equity release companies – Hodge Lifetime. They provide an equity release eligibility calculation to provide information on whether they could qualify for any of the Hodge Lifetime flexible lifetime mortgage products. Additionally, the calculator will provide not only the amount one can borrow, but also what the future balance is likely to be. This is ideal if you wish to see the effect the compounding yearly interest will have on your inheritance when the house is eventually sold.

For a free check to establish eligibility for any of the current range of equity release schemes from the whole of the market, call Freephone 0800 471 4796.

What Are Your Top Key Retirement Solutions?

The Top 18 Equity Release Key Retirement Solutions

As people live for longer and the cost of living increases, it is becoming more and more common for retirees to have financial difficulties during old age. However, a lot of these issues actually arose many years prior to this event, blatantly due to lack of financial planning prior to retirement.

As such, financial planning during retirement has become more important than ever before as managing on a limited budget, fault or no fault of one’s own is a harsh reality for many baby boomers. Therefore, an increasing number of people are looking for flexible ways to get the best value from their existing financial assets in order to address this retirement issue.

The rising popularity of equity release schemes illustrate how much of a growing problem financial insecurity is for many people in retirement. These type of home equity loans offer exactly this type of key retirement solutions many people seek as they usually have no effect on their monthly outgoings.

Let’s look at some of the most significant facts surrounding an equity release mortgage:

Equity release plans allow you to release some of the equity built into your home as usable cash. Both home reversion & lifetime mortgages allow you to do this without the need to sell the house or move out. So, even as you use some of the value of your property, you can continue to live in the house until the end of life, or until you move into a long-term care home
There are two main types of equity release plans – lifetime mortgages and home reversion plans. Lifetime mortgages are like regular mortgages, but only available to people over the age of 55, and have no fixed term. They allow you to release a lump sum of equity from your property which even then remains 100% in your own name. There are usually no monthly payments and the interest charged is added to loan & compounds on a monthly or annual basis. This differs from a home reversion plan where you actually sell a percentage of the property to the reversion provider. In return they provide a tax-free lump sum & a lifetime tenancy agreement is made. Both mortgages will then run on until the end of life, or until you move into care. Most lenders provide a window of 12 months to then sell the property so that the equity release mortgage can be paid off.
A home equity loan calculator can be useful to find out how much equity will be built into your home after a certain period of time. A home equity loan calculator can be useful in a variety of scenarios and is available on a number of financial, comparison and advice websites. A home equity loan calculator is not the same as an equity release calculator and is designed to give you a slightly different information calculus.
A home equity calculator will need some basic information about your property, including the current value of the property, its location, and the yearly rise and fall in the property, in order to work out the equity built into your home. A home equity calculator is therefore a way to calculate simply the amount of equity expected to be built into your home over a certain period of time.
However, an online equity release calculator is a different tool in that it can calculate how much equity one could potentially release from their property. An online equity release calculator UK therefore needs to work out the maximum amount an equity release mortgage provider could potentially afford to lend, based on the expected term of the loan, and the value of your home.
A free equity release calculator is therefore likely to require some basic information about you and your property in order to provide such a calculation. This includes, the age of the youngest enquirer and the current valuation of the property. The free equity release calculator can use this information and based on its database of equity release plans available, can give you a fairly good idea of the maximum release available to you.
An equity release calculator is an application designed specifically to calculate maximum potential release of equity, but there are many other financial tools designed to calculate different things. For instance, there are mortgage repayment calculators that, based on the loan amount, the rate of interest, and term of the loan can calculate how much your payments will be.
There is also a general lifetime mortgage calculator based on the age and income of the enquirer which can work out how much they could potentially borrow. Newer calculus allows some more advanced equity release brokerage’s to offer the interest only mortgage calculator which requires slightly more information such as income details, and details of any adverse credit, in order to ascertain eligibility.
A lifetime mortgage calculator is therefore just one of the many calculation tools available today within the mortgage sector. Depending on what type of application you are using, you may be needed to enter different information relating to your age, health and property, which is relevant to that particular calculation.
Home equity loans provide one of the key retirement solutions to happiness in retirement. There are different borrowing allowances from all the equity release companies, therefore always consult a home loans specialist who can advise on the many forms of home equity mortgages available.
Home reversion equity release plans involve selling a proportion of your home to the equity release lender. There are no monthly repayments with home reversion plans, and the entire amount is recovered when the house is sold, when the proportional share of the equity goes to the lender.
All equity release plans today come with a no negative equity guarantee, which means that your beneficiaries never have to pay anything to the lender even if the equity release loan gets bigger than the property value. This no negative equity guarantee is provided free of charge by the equity release companies, however it is costed into the overall costs and charges of the plan. Should the guarantee not be provided however, the interest rates would be lower on equity release schemes. Therefore any implication of it being free is not entirely true.
Equity release plans are regulated by the FCA (Financial Conduct Authority) and the Equity Release Council (ERC) is the industry trade body that represents everyone that works in the sector, including qualified advisers, providers, lawyers, solicitors etc. Membership of the FCA is mandatory as they provide the licence upon which advisers are able to provide equity release advice. However, membership of the Equity Release Council is not mandatory for advisers or solicitors, however it is for the mortgage providers who offer lifetime mortgage & home reversion products.
Recent research has shown that over 80% of the country’s wealth belongs to people over the age of 60, with over £1 trillion in untapped equity. It also shows that many homeowners over the age of 60 have cash flow problems, and are in fact unable to meet their daily costs. The simple equation for their key retirement solutions lies in the equity tied up in their home. Equity release schemes therefore provides one type of solution, however many such as downsizing property still remain & consequently should always be considered.
According to a recent study by the leading charity Age UK, the two most common ways that people were using their released equity were – home repair or maintenance projects at 46% and paying off existing debts at 35%. Following this statistic come the other lesser reasons to release equity in retirement. These would include holidays, new car, caravan, holiday home, financial assistance for the children, long-term care costs or to create an emergency fund in the bank.
Equity release plans have become increasingly popular after the Financial Services Authority (now FCA) started regulating the equity release sector. This initially started with the regulation of lifetime mortgages in 2004, which later then incorporated home reversion plans from April 2007. All advisers practicing in equity release must have the appropriate qualifications either through the CII (The Chartered Insurance Institute) or the IFS (Institute of Financial Services).
There are a number of independent and comparison websites that offer qualified advice about equity release products, and help users understand which equity release plan could suit them best. Search engines, such as Google, Bing or Yahoo will help you search for any related equity release information needed to enable you to conduct your own research. However, even if you decide which equity release scheme you require you would be unable to go direct to the lender as plans can only be completed by qualified advisers. This offers protection to the lenders to ensure the correct plan is taken out.
The latest type of new equity release mortgage to be invented is the enhanced lifetime mortgage where health can affect the maximum loan you can borrow. Therefore, equity release underwriters assess an enhanced lifetime mortgage as they do with an enhanced annuity plan where a health and lifestyle questionnaire is completed. Depending on the answers & severity of the health conditions, will determine the amount they will lend out. Simply put, the worse the state of health, the greater the maximum release.

There are many facts on equity release offering more concepts for key retirement solutions, as well as about how and why equity release plans have become so popular recently. They also talk about different types of equity release plans that are currently available. For more information visit independent advice websites or consult a qualified equity release adviser.

Where Can I Find Companies That Provide Equity Release Solutions?

Which Companies Can Provide Equity Release Solutions?

Equity release has seen a massive surge in popularity in the past few years. This growing demand has fuelled the sector and today we have more providers, with a wider portfolio of more flexible equity release plans than ever before. While equity release is not suitable for everyone, the variety of equity release plans means that it is certainly likely to be a suitable solution for a lot more people today than ever before.

Recent surveys have shown that a large number of pensioners are homeowners with a size-able amount of equity tied up in their homes are suffering from a credit crunch and are unable to fund their day-to-day expenditures or have no money for that big one-off expense. In other words, there are numerous people around the UK, who are property rich, but cash poor.

Such equity release solutions allow them a way to release some of the equity in their home in the form of conveniently usable cash. This money can be released either as a lump sum or in the form of irregular installments. The uniquely attractive feature of equity release plans is that they allow you to tap into the value in your home without the need to move out or sell the property. Irrespective of what type of equity release you choose, you can continue to live in your home until you die or move into long-term care.

Types of equity release solutions

There are two main types of equity release plans – home reversion schemes and lifetime mortgages. Home reversion involves selling a percentage of the house to the lender in exchange for the money. At the moment companies offering home reversion plans are Newlife Mortgages, Bridgewater Flexible Release Plan and Hodge’s Shared Growth option.

Lifetime mortgages offer the other type of equity release solutions – wherein instead of selling a part of the house, the lender sets up a secured 1^st legal charge on the property. There are also interest only lifetime mortgages where you can repay the interest monthly, thus maintaining a level balance on the loan. Such companies offering the interest only lifetime mortgage solution is Stonehaven with its range of Interest Select plans or more2life’s interest choice plan.

Latest product development

A recent innovation in this domain of interest repayment is from Hodge Lifetime with its flexible repayment lifetime mortgage. Although the repayments of interest cannot be on a monthly basis, Hodge Lifetime do allow upto 10% of the original amount borrowed to be repaid each year without penalty. Becoming a serious player now in the equity release marketplace, Hodge Lifetime have set down the gauntlet to other companies lacking in ingenuity and ideas with their current and future plans.

The most common form of equity release are the roll-up lifetime mortgages where the interest is added to the principle amount and compounded over time. This means that the debt effectively rises yearly for the rest of your life, until you either die or move into long-term care. Hence, before entering into one of these contracts you should always discuss your intentions with your family first & then arrange an Equity Release Adviser.

There are other types of equity release schemes which do include the drawdown lifetime mortgage such as Aviva’s Lifestyle Flexible Option, designed for those who want to have the option of borrowing more in the future without any obligations. For those who want the biggest lump sum, enhanced mortgages such as more2life’s Enhanced Lifetime Mortgage may be suitable, providing they meet the health & lifestyle questionnaire.

These are some examples of equity release solutions designed to suit different needs, and some companies that offer these products. There are, of course, many more providers within each sector. The best way to find a suitable deal is to compare different equity release plans, and seek independent advice from a qualified equity release adviser.