Tag Archives: Lifetime Mortgage

What is the Maximum I Can Borrow?

When thinking of equity release, it is natural to ask “what is the maximum I can borrow?” For many people the amount available to borrow can be a major deciding factor as to whether they should pursue equity release or explore another avenue of finance. However, there are other considerations which should be given some thought in order to be sure that you are making the right decision for your circumstances.

What is the Maximum I Can Borrow?

There are a number of online and free equity release calculators which can answer the question of “what is the maximum I can borrow”. This figure will be based on the age of the applicants, gender, value of the property, amount of outstanding mortgage secured on the property and in some cases the health condition of the applicant(s). This information will be used to calculate the anticipated duration of a lifetime mortgage. You should expect to release between thirty and fifty per cent of the value of your property, depending on your particular circumstances.

When “What is the Maximum I Can Borrow” Should Not Be the Only consideration

Although the maximum amount may be important for your financial requirements, it may not necessarily be the best idea to opt for a plan which offers the maximum possible release. There are a number of occasions when it can be more beneficial in the long term to consider another alternative. This includes:

• If there is a more attractive interest rate: The interest on a lifetime mortgage accrues and is compounded onto the loan balance, since there are no monthly payments to balance this. Although some schemes may offer you a larger amount, it may be at a higher interest rate. Even a one per cent higher rate can have a dramatic effect on the balance of your loan in the long term. It is calculated that the balance of an equity release loan will double approximately every eleven or twelve years. While you may gain an additional few hundred pounds in the short term, it could cost thousands in the long term.
• When you don’t need all the money initially: If you have an immediate need for the funds, you may be interested in obtaining as much as possible. However, if you are asking “what it the maximum I can borrow” to simply get the best deal, there could be a better alternative. There are a number of equity release products which can present a better deal in these circumstances. For example, draw down lifetime mortgages. These offer a draw down facility rather than providing a lump sum. This allows you to draw down funds as and when you require them. Not only can this prove beneficial for those who may lose their eligibility for means tested state assistance, but you will only begin to accrue interest on the funds which have been drawn down. This could save you a great deal of money in the long term.

Factors Which Affect “What is the Maximum I Can Borrow”

The amount of equity in the property is one of the primary considerations for a lender. This is the value of your property less any existing mortgage. However, there is a very specific loan to value ratio to which the lenders will adhere. Simply because you have the equity sum in your property, does not mean that you will be able to borrow this amount.

Generally, the age and gender will be deciding factors for the amount of money borrowed through equity release. These are used to estimate life expectancy based on average trends. However, there are a number of companies offering enhanced deals for those suffering from poor health or a terminal condition. In these cases, the company will consider the impaired lifespan of the applicant and may release additional funds. In these cases a person in poor health can receive a far larger sum than someone of the same age and gender but in good health.

Generally, “what is the maximum I can borrow” is not a good starting point for an equity release. It is better to consider how much you actually need for your plans. This will enable you to be more objective about the specific plans when deciding which is best suited to your needs. Equity release calculators can provide the maximum amount which you would qualify for, but if this sum is in excess of your requirements, you may be best speaking to your specialist adviser or equity release broker about the possibility of a draw down lifetime mortgage. This will enable you to have the funds you require with a reserve, should you need it later.

Why is Stonehaven Becoming Such a Dominant Equity Release Provider?

The Halifax Retirement Home Plan allowed those over 65 years to borrow a maximum of 75% of the value of their home. They were required to only pay the interest. The amount borrowed was repaid when the property was sold after their death. Halifax however stopped this plan due to the fact that it was just a small percentage of its intermediary business. Since Halifax withdrew their Retirement Home Plan, a massive void has been created for pensioners who are seeking interest only lifetime mortgages. Some pensioners are still searching online for the Halifax Retirement Home Plan. There is now an answer in Stonehaven equity release plans.

Stonehaven equity release plans have been able to fill this void. The equity release schemes offered by Stonehaven are very similar to the Halifax Retirement Home Plan; however, these plans are available to those who are over 55 years. Stonehaven is currently one of the most popular equity release providers due to the benefits it provides to home owners. The amount they lend on interest only is solely based on age and property value. NO income requirement is made; therefore, it could be classed as a self cert mortgage, rare in today’s times.

First of all, Stonehaven guarantees no negative equity. This means that your property will be sold for the best price obtainable to repay the initial loan amount. However, if the amount obtained for the property is not sufficient to repay the initial loan amount and the solicitor’s fee, Stonehaven will not ask your beneficiaries to pay the extra costs. You are therefore guaranteed to never have to pay more than the value of your property, a major relief for your beneficiaries.

Stonehaven also guarantees portability which means that if you move to a new property which meets the requirements of Stonehaven equity release plans, your existing equity release plan with the same terms and conditions can be transferred to your new property. If your new property is lower in value compared to your previous property, you will have to repay a portion of the loan. However, if your new property is higher in value than your previous property, you can choose to increase your loan.

Other benefits the equity release schemes of Stonehaven are:

• One fixed interest rate for the entire duration of the loan
• Repayment is only required after your death or after you have moved into long-term care
• You retain full ownership of your property until it is sold

Stonehaven is not the only mortgage provider for equity release schemes. You have a variety of other options; however, they may not offer these same benefits. The fact that they have an interest only mortgage where other companies may not makes them an interesting party in the lifetime mortgage industry.

Stonehaven certainly filled a void in the interest only sphere. In most cases when you come across an interest only mortgage you have to pay the interest back with disposable income. It means unless you can prove you have extra income that you can use towards the mortgage you may be denied for the plan.

In the event you find some worrying disadvantages with the Stonehaven plan or you do not like the interest only option, you have other plans to choose from. Stonehaven equity release plans provide you a myriad of choices from standard equity releases for retirees to drawdown plans. With these options you either take a lump sum paying no interest until the end of your life or removal to a care facility, or you take money as needed with the same benefit of paying after death with the sale of your home or when you move out to a long term care location.

As you shop around, compare, and search for the plan that seems most helpful to your situation, consider the inheritance you will leave for families. Your family may want to keep the family home or they may appreciate cash upon your demise. If your family is really attached to your home they may not appreciate you selling it for a retirement mortgage like the Stonehaven equity release plans in discussion here. They may want to move in with you or supply you with funds during your retirement to ensure your home remains in the family.

These options might not be open to you and your family. It is still a good idea to discuss what you might do financially to ensure they understand the potential burden they will face. Speak with a financial adviser at Stonehaven too as a way of finding out more about Stonehaven equity release plans.