Equity Release Mortgage | Equity Release Plans

Searching for an equity release calculator for the under 55s is unfortunately not going to produce the results you hope for. Yet, many people do conduct a search online for this tool, which is one reason many websites and articles use the keyword to get your attention. There are some important facts you need to understand about equity release for retirees. The first is that equity release (ER) is for individuals over 55. Since it is a minimum age, there is not going to be a calculator that provides a calculation for an individual who is younger than this. One of the reasons the phrase is still used and targeted is because of planning.

People who want to plan for their retirement can find the calculator useful as they plan for their retirement day. The calculator can certainly provide some details that will help with the planning.

What ER Calculators Provide
As an equity release calculator for the under 55s does not exist, you will need to use a standard equity release mortgage calculator. It can still provide you with helpful information. You can also look for such options as the impaired equity release calculator that provides results for potential ill health issues. Impaired health allows you to gain a larger lump sum of tax-free cash than a healthier retiree. Of course, if you do not need a bigger sum of cash, it is best to stick with the standard ER. You also have calculators specifically for interest only lifetime mortgage products and home reversion.

An interest only lifetime mortgage provides you with a capital lump sum where you pay interest off each month to keep that sum the same throughout the life of the loan. Every lifetime mortgage will have interest and the entire amount is due at death or a move to a long term care facility. Basically, when you move from your home you need to pay it back. With interest only it is more affordable and leaves an inheritance behind if you pay off the interest, versus a loan that accrues until death, leaving a large sum to be repaid.

With appreciation and depreciation a home value can change and wipe out any inheritance if you have interest adding to the loan too.

Home reversion is different because it is a sale of all or part of your home. With the sale you still live rent free under a lifetime tenancy agreement, you can stay until death or until you decide to move to long term care, and only at the end is the rest of the house sold to the buyer. Any home left to sell is converted to cash for your beneficiaries. Buyers are investing in the appreciation of the home as a way to make their money.

ER calculators will be able to provide you with a potential maximum amount you can be lent, along with figures for what you may owe in the end. This gives you an idea of whether the option is affordable for you or not.

Possible Products
The market is flooded with products as more people begin to retire. Also changes to the regulations of these loans have meant a change in availability of certain products. The calculator uses the age of the person, plus the home value, to determine the maximum amount allowable. A loan to value percentage is the maximum amount for a specific age a person can obtain.

For example, Aviva is offering a product to 55 year olds where you receive 20.5% of your home value in an ER loan. Stonehaven’s Interest Select Max (interest only loan) provides 19% of the home value.

The older you are the higher your loan to value ratio will be on the assumption the loan will not be outstanding for as long. Thus, someone 65 years of age from Aviva can receive 30% of the home value in an ER. The Stonehaven ISM plan offers 29%. If you go with Aviva and are 65 years of age with a home value of £100K you would receive £30,000 in a maximum amount.

You should be aware that not all providers offer 55 year olds ERs. For example Just Retirement, LV=, New Life, and Pure Retirement require you to be 60 years old at least. This will change the calculations you receive from the ER calculator. As no equity release calculator for under 55s exists, just make certain you use an independent calculator that can provide accurate results for your situation.

There are a lot of pensioners who are suffering from mortgage debt and some of them are still making monthly repayments, even when their sole income is coming from their state pension. The Financial Services Authority, now the Financial Conduct Authority, has recently been highlighting the number of people who are planning to retire and still have some mortgage to pay. Some of these retired homeowners may have suffered from the failure of an investment such as an endowment, which is their way of paying for the loan. There is a solution in a remortgage equity release plan.

Answering the Question
The question for all these people left in the lurch is how they can get themselves out of the hole they may have dug for themselves. One such answer could lay in the use of equity release schemes in order to repay the mortgage debt, thus removing the future worry about struggling to meet the unaffordable mortgage payments.

Likewise, pensioners who have previously taken out an equity release mortgage from their home in the past can now take advantage of a remortgage equity release plan. Many people have experienced a remortgage of some form in the past and the reasons behind this course of action may have been many. One of the main reasons could be due to interest rates falling since the original equity release plan was taken out. By switching equity release schemes can therefore make savings of £1000’s in the long term. In 2004, the fixed rate for an equity release was around 8%; however, companies such as Equity Release Supermarket can today show rates starting from 5.57% annual.

Getting Proper Advice
To remortgage an equity release scheme is a very important decision that you have to make. In order to help in understanding more about this scheme then you can read some guides on the internet or you can hire the services of an independent equity release adviser. These guides will clearly explain how equity release really works.

Lifetime Mortgage Commitment
When you are taking on a lifetime mortgage commitments then you don’t have to make any repayments. Instead you will be charged with interest until such time that you die and the total amount which comprises the released money and the interest will simply be deducted from the value of your estate.

Please note there are different lifetime mortgages that can be used to remortgage a current loan. You have interest only products as stated above in that the interest is paid throughout your life. You also have a lump sum. This product offers you a lump sum of cash, but the interest is added to the principle sum and both are due at the end of your mortgage. For many this works out better since they will not need to have a payment each month.

Another choice is drawdown lifetime mortgage, but this only works if the remortgage need is very small. This is due to the mortgage offering a small lump sum in the beginning and then money to take as you need it. For some it could work, but be sure that you will not be in a more difficult position later.

Home Reversion versus Remortgage
In other types of equity release such as the home reversion method, part of your home will be sold to the reversion company and at the time of your death, they will at that point, claim their share. It is very important for people to consider remortgaging since their changes may have changed since the original plan was taken out. Health and family are factors that cannot ever be guaranteed and could therefore influence your future decisions and this render the original plan inappropriate or uncompetitive.

Talk with Family
You already know you need to speak with an adviser who can help you plan correctly. You should also make sure your family is part of the decision. It is your family’s inheritance that you are playing with when you take out new financial products. If you want to leave something behind they should at least be aware of what will occur with the family home. You can definitely leave inheritance depending on the product of choice. They can also be a second pair of eyes to help you read the fine print.

Before making a decision to remortgage equity release schemes, you should compute everything in order to verify whether this option is financially viable. You should also consider potential repayment charges as well as the plan set up costs when making this important decision.

The primary definition of equity release can be explained as any loan that is taken against your home as security. While this is increasingly becoming a popular practice, it is always advisable to exercise caution while using this form of home equity loan as it may leave your beneficiaries with no inheritance if advised incorrectly. For example weigh your options for how to use your equity release for retirement such as being careful about how to use equity release for a holiday versus another purpose.

Ways to Use the Loan
Home equity loans are usually provided as an option to homeowners who want to use their property as collateral to get a lump sum of money against the value of their home. Since a home equity release lets the person have a set amount of money, most people who use this option generally use the money to pay off debts such as a mortgage, unsecured loans or overspending on credit cards.

Using equity release for debt consolidation can be considered to be a wise option as usually the interest rate on the equity release schemes are lower than the ridiculous interest penalties applied by the credit card companies, usually in excess of 20%. While many people use the equity release to pay off their debts, there are some who use equity release for a holiday too. Such people are looking for a lifestyle enhancement here. The opinion of these people is that when they have worked all their lives, they deserve a nice holiday with their loved ones to relax and recharge the batteries. These people take a release of equity in order to improve their lifestyle.

This has been the biggest growth area in the equity release marketplace as it is not a need fuelled by necessity, but one of aspiration. That one off luxury purchase is also something that most people look at using the equity release. This could be buying their dream car or going on an once-in-a-lifetime cruise which is becoming increasingly popular these days.

Another common use of equity release that is evident in today’s economic climate is to help the children. Parents usually opted for a home equity release to help their grandchildren with education or launch their career. Times have changed and rather than skipping a generation, the need has been driven back towards their children in helping them get onto the property ladder or keeping their business afloat.

Specifics of Equity Release Products
You know how you can use these products, but what is the process for attaining such a loan? How old do you need to be? Are there any disadvantages to these financial products?

These are questions that need answered if you want to obtain a product that works best for you. The first answer is that you need to find a mortgage company that deals in lifetime mortgages or equity releases for retirees. You can then look over their specific qualifications. One of these is being at least 55 years of age, where some companies may require you to be 65. As long as you are of age, you own your home or can use the lifetime mortgage to pay off the loan, and have good credit you can apply for this financial product.

Disadvantages to Lifetime Mortgages
The third question asked above needs its own heading. These are important notes to remember. First, if you use equity in your home by obtaining a loan you must repay the loan. The good news is the money is tax free and you do not owe a monthly payment. The interest can be paid in a monthly payment with an interest only lifetime mortgage, but otherwise the interest and principle balance is repaid upon death. It can also be repaid if you decide to sell the home and move to a new one or into a retirement community.

Depending on the amount you borrow you may reduce the size of inheritance or take it away completely.
A home equity release plan may seem to be an easy option but this money should be spent wisely. These forms of equity release mortgages which are arranged are usually advisable for retirees seeking for an easier and more comfortable retirement. There are several schemes that make equity release beneficial for people over the age of 55. This is the reason why pensioners are believed to be the biggest group of people who reap the benefits of home equity release plans even to use equity release for a holiday.

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