All posts tagged Conventional Mortgage

Life tends to be a bit harder financially for those who are aged over fifty-five. Based on the fact that they are nearing their retirement and may even be no longer a part of the active workforce, fewer opportunities are made available to them. This is especially true where loans and mortgages are concerned. It is very difficult for those who are over fifty-five to obtain a mortgage or similar finance that will need to stretch into their retirement. However, there is a new breed of financial companies such as Stonehaven who are working hard to change this.

The equity release plans offered by Stonehaven are all geared at helping those who are over fifty-five years old to release equity that is constrained within their property. The equity release process is quite simple to understand. When you own a property, it has a certain value to it. That value can literally turn into tax free cash, which you can spend to meet any need or want.

Many of the older population feel that their age is against them under many circumstances and that can be quite true. There are things that they want to do but cannot because they cannot obtain the finance assistance that they need to do so. Also, when they want to move from one home to the next, they may have difficulties obtaining the necessary finances to do so. But, with the range of equity release plans offered by Stonehaven, particularly the interest only lifetime mortgage range called the Interest Select Plans, they can potentially make all of their dreams and wishes come true.

A most attractive equity release plan offered by Stonehaven is the Interest Select Plan – Lite, which is an example of an interest only lifetime mortgage with a fixed interest rate of just 5.99%. The Interest Select Plan is an interest only lifetime mortgage, hence it will run for the remaining duration of one’s life and the interest charged will always remain the same.

The fact is that Stonehaven’s range of Interest Select Products can bridge any mortgage shortfall like a conventional mortgage would. It is also geared towards your current age nearing retirement making it easier to plan for some fun in life.

Hence, if looking to purchase a new house and need the funds to complete the purchase, you could apply for a Stonehaven equity release plan to bridge the shortfall in money. It therefore acts in exactly the same way as a residential mortgage – but this is for the over 55’s and runs throughout their retirement with NO proof of income necessary.

Many people think equity release is always completed on the house they are currently living in. This is quite correct; however, there are other instances when it can also be used to move up the property ladder.

If someone lives in an unencumbered property with no outstanding finance secured upon it and now wishes to buy a more expensive house, how could they achieve this goal? Simple. They apply for the Stonehaven equity release on the property they are buying to cover the amount they need to put towards the sales proceeds of their existing house. Both the equity release and the sale proceeds added together will give the sum of money to buy the new and more expensive property.

You do not have to enter into a complicated scheme like increasing your property size. You can also reduce your property size and keep the interest only mortgage with you. You downsize, have a lower value in the property, but money from the sale of the property you had can cover much of the mortgage, interest, and perhaps leave an inheritance. It all depends on your situation. You may find things work out best with a different type of release scheme than interest-only.

If is all dependent on the funds you have on a monthly basis. For some they do not have disposable income, which can take away some advantages through Stonehaven. Of course there are other options like drawdown lifetime mortgages that give you a sum to draw on when you require money.

If you wish to discuss further how equity release schemes can move you UP the property ladder in retirement call 0800 678 5159 and talk to independent equity release advisers who specialise in the range of Stonehaven products. It is often best to speak with an adviser to make certain you understand what you are getting into and all the ins and outs.

Equity release is now one of the most popular methods of raising a cash lump sum. The schemes allow people aged over fifty five to leverage the equity in their home to raise cash through a lifetime mortgage scheme or home reversion plan. The initial concern of most people is “what is the maximum equity release”, and while this is an important factor, it should not be your only deciding concern.


What is the Maximum Equity Release Available?

In order to understand what is the maximum equity release available, you will need to be aware of how the lender assesses an application. Equity release schemes can be divided into two different types of plans and each will have different criteria.

  • Lifetime mortgages: These schemes are similar to a conventional mortgage with the exception that there is no monthly payment needed. Instead the interest on the loan is compounded onto the loan balance each year. For this reason, the amount of loan available is dependent on factors such as your age, gender and medical health.
  • Home reversion: This type of plan is less common and allows home owners to sell all or a part of their home while retaining the right of lifetime residency. These schemes are only available to people aged over sixty five.


Calculating what is the Maximum Equity Release

Calculating what is the maximum equity release is dependent on a number of qualification criteria. Generally, those people who are older will be offered a greater percentage of equity release. Most people will be offered between thirty and fifty percent of the value of their home as a maximum equity release sum. However, this is dependent on a number of other variables.

There are a number of equity release calculators which have been pre-programmed to determine what is the maximum equity release for the specific circumstances of each individual. These are online and free tools which require you to answer questions about yourself and your property. The calculator will then apply this information to a set formula to determine if you qualify and what is the maximum equity release available to you.


Factors Affecting the Maximum Equity Release

There are a number of factors considered by equity release lenders. These include:

  • The value of your home: This is used together with the balance of any existing secured loans or mortgage to determine the amount of equity which is available to release. There is a specific loan to value ratio used by the lender to determine eligibility. The lender will also consider how much interest is likely to accrue and ensure that there is sufficient equity to cover this and the initial release sum. This is why equity release sums are restricted to approximately fifty percent of the value, since the compound interest has the potential to double the balance of the loan approximately every eleven years.
  • Your age: This information in addition to your gender is used to calculate your potential lifespan and therefore the anticipated duration of the loan. Older people are offered a higher percentage of release as they are deemed to have a shorter lifespan than someone younger. Gender is also a factor since the national averages show that men have a shorter expected lifespan than women.
  • Your health: Some schemes will also consider your health. There are enhanced plans offered to those with a serious or terminal medical condition which allow a higher rate of equity release due to the impaired expected lifespan of the applicant.
  • The other applicant: In joint applications, the other applicant will also have a dramatic impact on the maximum sum offered. Joint applications are usually based on the information of the youngest applicant since it is estimated that they would outlive their partner. Since equity release offers lifetime residency, even if one party passes away, the other party is still entitled to live in the home for the remainder of their lifetime. Both parties must meet the minimum age criteria of fifty five in order to be eligible.


If you are interested in equity release, what is the maximum equity release sum, is bound to be a question you have already asked. However, it should not be the only deciding factor. In some cases, it may be more beneficial to take a smaller sum or investigate the possibility of draw down schemes which offer an initial sum with a draw down facility if it is required later. This could save you a great deal in the long term in interest payments. It is always worth discussing your options with a specialist adviser who can assist you in assessing the advantages and disadvantages of specific schemes and help you in moving forward.

Many retired people have heard the term equity release, but a great number are unfamiliar with the financial concept. In order to understand what is equity release, you will need to be aware of the basic principles.


What is Equity Release?

Equity release is an umbrella term for a number of financial products. Equity release schemes are designed to allow people aged over fifty five to release the equity which is tied up in their home. The home owner can borrow against the value of their property, but unlike a conventional mortgage or secured loan there is no monthly payment or fixed term.

Equity release schemes are designed to be in place for the remainder of your lifetime. Since there are no repayments, the interest accrued is compounded on the balance of the loan. This balance is only due for repayment if the home owner goes into long term care or when they pass away. At this point, the home is sold and the proceeds used to repay the balance. Any remaining monies are distributed to the estate beneficiaries as normal.


What is Equity Release Used for?

Equity release schemes offer a lump sum, additional income or a combination of both. These funds are tax free and can be used for any purpose. Many people use equity release funds to supplement their pension, improve their home, take a holiday of a lifetime, purchase a holiday home or even plan their estate.

The funds from equity release can be spent, invested or given away. Many retired people may not have the liquid assets to assist their family but have a great deal of equity tied up in their home. With the current economic climate, many pensioners are using equity release to supplement their income and assist their children or grandchildren to purchase their own house. Since equity release schemes guarantee the right to reside in their home for the rest of their lives, this can be achieved without compromising their own home.


What is Equity Release Qualification Criteria?

Since equity release schemes are a little more complex than a conventional mortgage or secured loan, the qualification criteria is a little more detailed. There is a minimum age restriction of fifty five and the property must have a market value of at least £50,000. The amount of release offered can vary from thirty to fifty per cent of the value of the property. This will depend on a number of factors including your age and gender, the value of your home, the balance of any mortgage and in some cases your medical health status.

In order to determine the potential duration of the scheme, the lender will need to estimate your anticipated life expectancy. The longer the potential duration of the loan, the smaller the amount that will be offered initially. For example, a woman aged fifty five is going to be offered a far smaller percentage of equity release than a man aged eighty. This is because it is almost certain that the woman will outlive the man. In cases of joint applications, the age of the younger party is used for the calculation. Some lenders do offer enhanced plans which offer larger release percentages based on life impairing conditions. For example, if you have a severe condition which will compromise your life expectancy, they will offer you a larger sum than someone with the same qualification criteria who is in perfect health.


What is an Equity Release Calculator?

Simply because the qualification criteria can be a little complex, there are a number of online tools called equity release calculators. These tools are free to use and take the information you supply and apply it to a formula set by the lender. This will determine whether you are eligible for equity release and the equity release sum which would apply to your circumstances. These tools are confidential and allow home owners to research their options in the comfort of their own home without feeling any sales pressure. It is recommended that in order to gauge the market place fully, you make use of several different equity release calculators. This will enable you to gain a good perspective of the schemes which are available and suited to your circumstances. This can enable you to have the information necessary to make an informed choice about proceeding further and seeking out professional advice.

If you are interested in what is equity release and whether it would meet your financial requirements, it is worth taking a little time to research your options. There are numerous online calculator tools available and a number of brokers and advisers who specialise in equity release, offering impartial advice. Equity release can be a great financial solution for many retired people, but it is important to understand the basics and any restrictions or limitations which may apply. This will help you to proceed, confident that it is the right choice.