All posts tagged Home Reversion Plans

Two pieces of information are used for the equity release calculation, your age and the value of your home. It seems pretty straightforward and easy to enter correct data and receive an accurate result; however, there are actually a lot of factors that can hinder accuracy when using an equity release calculator on your own.

Age of the Youngest
An example of how someone can skew their results when using a calculator is the age you provide the calculator. The calculator does not have any idea how old each person in your home is. It has no way of knowing if the age you input is the one the equity release company is going to use.

• The youngest homeowner must be age 55 for lifetime mortgages and age 65 for home reversion plans.

A homeowner is defined by the property title. If the person is not in the property title and cannot sign for a loan, they do not qualify as part of the new loan; therefore, the youngest person on the property title is the person’s age you need to use in the calculator. Many consumers do not know this and may use their own age which could be older than the youngest person by a few years.

The calculator shows the results based on age and home value, thus if the age is not the one the equity release company will use, the results can show a larger maximum amount for the tax free lump sum than is actually going to be provided.

Valuing your Home
Did you hire an appraiser to tell you the value of your home? When you conduct online research for equity release schemes you probably are not ready to spend the money it takes for an appraisal. Plus there are equity release companies willing to offer free valuations. This means the number you use as the home value may be inaccurate in the current market.

Factors that apply include changes in the stability of the economy, particularly in the housing market where houses can start to appreciate. Recessions depreciate home values, which is why it turns into a select buyers’ market. A sellers’ market is where you have the upper hand because demand for your home drives the price up.

The more value in your home the more you can get released from equity. In your equity release calculation if you based the number of an appraisal you had when you bought the home 30 years ago the result will be skewed. You may find you could get double what your home was worth 30 years ago.

There are ways around this situation though. Nationwide offers an online tool that takes an old valuation, your home’s location, and will provide you with an estimate of its current value. Zoopla is also an option as you can find out about properties that have recently sold, pending sales, and homes on the market. By finding a comparable house in size and style in your area you can use their sale price as the home value.

But you are working off of an estimation, which means the results are an estimation: a guide and not to be used as a set in stone amount.

Brokers Narrow it Down
With equity release calculator results used as a guide, you will want to speak with an independent broker who is qualified and properly regulated. They can offer you the best products on the market for your situation by taking your information. You saved yourself some time in learning if it is possible to release some equity from your home. Now you need an experienced person to help you narrow down the best equity release for your needs.

They can do this by asking more pointed questions than the simple online equity release calculator. For example, if you have had ill health you may be asked to fill out a health and lifestyle questionnaire that would lead to a larger maximum amount available to you.

They may steer you more towards the drawdown mortgage if you have few expenses in the first 12 months of taking out the release in order to preserve funds for further into your retirement. It all starts with the equity release calculation and moves on from there. Armed with your guide as a cash sum number, you can decide if you want to take less, find a different product, or simply downsize to avoid lifetime mortgage products.

Everybody wants to lead a comfortable life in terms of finances after they have retired. But, very few people can transform this dream into reality because of the increase in the price of various commodities. Retired people often struggle to make ends meet with the meagre sum of money that their pension amount offers. Equity release schemes are a wonderful way with which retired people can supplement their income. But, it is imperative to compare equity release schemes before contacting a lending agency, so that you can avail a good deal in the market.

Economic changes determine how well retirement will go. You understand that inflation can raise rates. Struggling economies can take away some of your invested funds. It all comes back to needing some way to supplement this income and for those lucky enough to own a home you have options. As long as you own your home free and clear comparing different equity products on the market is your best way to determine if you have cash you can access.

One needs to collect information about the various schemes that are available for equity release, so that they can analyse the plans which will offer them a viable deal. Interest rate is a very important factor which tends to help people to pick a particular equity release scheme. In most of the schemes, the rate of interest generally remains fixed, but it is still advisable to clarify all your doubts with the lender as well as to compare equity release products.

The interest rate is only charged to people who opt for lifetime mortgages. With home reversion plans, one does not need to worry about the interest rates because the lenders have legal ownership over the property portion that has been sold off. In terms of repayment for lifetime mortgages, people to have to pay an additional charge if they wish to pay off the loan early, but in home reversion plans there is no opportunity for paying off the loan.

The opportunity that does not exist in home reversion is due to no loan. If you have no loan then you have nothing to pay off. The money given to you under home reversion is for the exchange of a product, in this case your home. You sell a portion of your home, but retain partial ownership. With this method your family will lose the opportunity to keep the home unless they can pay full value for the home. It is rare that someone can pay full value for the home or the part sold in home reversion, but you do have that option.

With lifetime mortgages, homeowners can have legal ownership over their property and if they can repay back the loan then the rights can get transferred to their estate. But in the case of home reversion plans, homeowners cannot exercise the option of inheritance for their children in terms of the house. Home reversion allows for inheritance in cash form. Since you sell the property but not all of the property, any part that is left is sold to the provider. The provider gives the cash to your beneficiaries and there is the inheritance. If you sell the entire estate before you pass on or move to a new location and use up that cash you attained then inheritance is not an option. Just remember in this kind of scheme it depends on how you use the money as to whether there is inheritance left.

Many lifetime mortgages that you compare will have no option for inheritance. This is because the interest adds up sucking away the cash available on the sale of the home. The only way to get inheritance with lifetime mortgages is for your children to repay the loan in full.

Based on your requirements, you need to choose equity release schemes that work for you. One can also get the help of equity release experts about the various schemes that are available in the market and then decide which plan can give them the maximum amount of benefit. People often commit the blunder of taking the plunge with a particular equity release scheme without gauging its pros and cons, and eventually they might have to regret their decision. Therefore, it is extremely necessary to assess the market scenario and choose your equity release scheme with care. Compare equity release schemes appropriately to avoid making a mistake. Check out all your options and ensure your family is aware of the choice you are about to make.