All posts tagged Interest Only Lifetime Mortgage

There are numerous types of calculators available online to help you get answers to your questions including options for mortgages and equity release products. There are always going to be distinct differences when it comes to how these various calculators work, so you need to be clear on what they do and whether they are the same because the names are similar or not. In the case of an equity release calculator and equity calculator, you have two different types of calculators designed to give you two different answers, even when the names or keywords sound the same. In fact, you might run into a site that uses both phrases only to find out there is just one type of calculator available to you.

Unfortunately, some websites are misleading in order to get all consumers to visit, and most particularly those that can use their products. It is a long story but basically it goes back to the original concept of marketing for consumers with the new Internet. Now we are more refined and get into niches to ensure proper targeting. As long as you keep this in mind, you can search properly for exactly what you want.

Equity Release
An equity release calculator is specifically designed to target lifetime mortgages and home reversion. It is for individuals who are over 55. This is because the market for these equity releases is for those who are over 55 and heading into or already in retirement. These products provide money to supplement what used to be incoming from a job. It keeps you in the lifestyle you enjoy without making major changes.

An equity calculator is for residential mortgages, secured loans, and similar products designed more for individuals who are under the age of 55. As long as you have a steady income and can prove the income, you are able to get these types of loans. In recent years certain mortgages like interest only have not been offered above certain ages such as 65 because they are due to be paid at 75, when the person will be in retirement and may not have the funds to make the monthly repayments of interest. This is also different from the interest only lifetime mortgage which allows for interest repayment, but has the cap of a lifetime for the individual. Again, lifetime mortgages are for those aged 55 and over versus the interest only product that is not.

Understanding the Differences
Now that you know the calculators are for different age groups, it is possible to discuss the generic details of each in more context. An equity release schemes calculator is designed to use your age and the home value to tell you a maximum allowable lump sum. The older you are, the more money you can unlock from your home’s equity. This is on the assumption the money will be paid back sooner because you are closer to your death or needing long term care in a facility, versus living in the home. The more value in the home, the more you can obtain in a loan as well. Equity release works on the concept of loan to value percentage, where you get a certain per cent of the home based on the accrual of compounding interest over your expected lifetime.

With standard mortgages for the under 55s, mortgages are set on a fixed term. For interest only it is usually 10 years, where the principle balance must be paid in a balloon payment at the end of those 10 years. The interest is paid monthly. A 30 year fixed loan obviously has all payments in by the 30 year mark, although many refinance and thus extend the terms for another 30 years. The point is you are making payments throughout the mortgage as a means of dwindling the amount owed at the end.

With equity release you are not, so you pay interest in full plus the capital sum in full at the very end. It makes for one very large payment. The calculator for simple equity loans has to account for the length of term you will have the loan for such as 10, 15, 20, 25 or 30 years. It also accounts for the value of the property based on the amount you need to get the loan and pay for the property or to take equity out. You can usually release up to 85% although sometimes only 75%. Thus when you look for an equity release calculator you do not want an equity calculator to give you results and vice versa.

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.

Lifetime mortgages are probably the most popular equity release schemes. These are loans that home owners take against their properties. The loans, or equities, are usually paid in tax free lump sums or regular income depending on one’s preference. The home owner need not pay anything. The loan amount, which includes the interest, is recovered by selling the property once the owner dies or moves into home care permanently. There are several forms of the lifetime mortgage plans that are open to people who are 55 years and above.

Enhanced lifetime mortgage plan is available to all seniors who suffer from life threatening conditions or lifestyles. In this scheme, one produces evidence of such ailments as heart condition, hypertension, cancer, or any other condition that can considerably shorten the life expectancy. The assumption that one will receive the equity release over a shorter period raises the lump sum payable to the ailing home owner.

Drawdown lifetime mortgage is another option. In this plan, one is entitled to a specific amount, depending on the value of the house and a few other factors, which can be paid in lump sum or as steady income. However, the home owner only pays interest on the amount he receives, and the rest is put in the reserve facility. The amount in reserve does not attract any interest.

In the interest only lifetime mortgage, the home owner chooses to pay back only the interest on a monthly basis. The plan allows the borrower to decide the percentage of the interest s/he wishes to pay. It also allows you to switch to another plan should you find the monthly payments financially demanding. The good thing about this plan is that the amount the home owner owes the lender does not increase with time since the interest is offset every month.

In a fixed repayment lifetime mortgage plan, the home owner receives an interest-free lump sum. However, one is required to pay to the lender a predetermined amount of money once the property is sold. In this plan, you can keep the property as long as you want, so long as you pay back the agreed amount once you sell it.

The type of lifetime mortgage scheme you choose should be tailored to fit your current financial situation and plans. It is, therefore, advisable to talk to a financial advisor to determine which plan suits you.