Tag Archives: Equity

Can Equity Release Be Taken with No Advice?

There is a simple answer to this question: No!

Protecting your equity
The Financial Conduct Authority (FCA) oversees the equity release industry, and many other aspects of the financial consumer market. It is their job to protect consumers. They have ruled that as equity release schemes are primarily aimed at a potentially vulnerable age group, anyone looking to make use of this service must receive full and impartial advice before they can go ahead.

As such, companies such as Equity Release Supermarket will always provide a full equity release advisory service, meeting all the rules and regulations and seeing that they are implemented. In addition, ERSupermarket only recommends schemes from companies that are members of the Equity Release Council (ERC).

Giving you peace of mind
Taking out something like an equity release scheme on your home can be a daunting task. You don’t want to make a simple mistake and end up locked into a deal which financially damages yourself or your loved ones. That is why all independent brokers will work closely with both the FCA and the ERC to provide the assurance that you will receive the standard legally required to give you security and peace of mind.

Working with you in mind
The benefits of arranging your equity release deal through an independent advisor are that you do not have to worry about them having any ulterior motives. When buying direct all the advice you receive, while matching all the legal requirements, will always lean towards getting you to buy that company’s products.

Knowing that the advice you receive meets with the regulations set down by the FCA is important, but you also want to know that it is inclusive of all your options. No one wants to have that nagging feeling that there might have been something better out there. Once you have shopped around and found the independent advisor with the best reputation, you can trust that the deals that they provide for you are going to be the absolute best for you and drawn from the entire market.

Don’t accept second best
When it comes down to it, equity release firms are required to give you all the necessary advice to ensure you know what you are doing. You might as well make sure that the company you choose has absolutely no prejudices, and will be able to get you the best possible deal out there.

Latest News from the Equity Release Market

In the recent past, the Equity Release market has been significantly earning popularity. Going by the latest trends in the market, there are signs that it is going to even grow massively in the years to come based on the increasing demand by a number of retirees. In order for you to find out more on why this product is becoming very popular in the market today, keep reading and click here for further details.

Equity Release as a product is gaining so much love from many people today since it offers home owners an essential way of tapping into the value of their homes or property without having to put them up for sale. It gives retirees who own homes the accessibility of the equity in those homes in the form of cash that they can use while in need. You can click here for further details and learn more about what these schemes can offer. It is a great tool that enables home owners to optimise the value of their homes.

Reasons for Increased Popularity

1. Equity release plans are gaining in popularity mainly due to the availability of such plans.
2. The Internet and commercials help bring these plans to the forefront engaging retirees.
3. The more recent recessions have also made it difficult to live solely on one’s pension, so retirees are seeking alternative options they might not have considered before.
4. People are also living longer, which in turn means more income is necessary and statistics from The Guardian, BBC, and other newspapers show most retirees have insufficient pension plans for their longer life.
5. Popularity is also due to the increase in the number of retirees. The generation coming up for retirement is one of the biggest generations in terms of population meaning there are currently more retirees than the last generation and even the generations to come. It is a result of WWII, when many men returned home to start their families.

Exploring Types of Equity Release

Over the period that Equity Release has been in existence, there are several types that have been designed. As a result of this, retirees are offered the freedom of choosing the ideal type that can suit their personal interests. All these types are flexible and have got different merits such that home owners can always get the best plans for themselves. The two main types available in the market today include Home Reversion plans and Lifetime mortgages.

The re-launch of a special buy-to-let equity release plan is among those statistics that you can rely on in order to know that indeed, the Equity Release market is growing by the day. The plan known as Landlord Lifetime Mortgage has been designed to enable home owners to release equity from the portfolios of their buy-to-let property. Landlords do not need to sell their homes in order to raise the cash.

Extension of the theme of the 2nd property equity release to cover holiday cottages and holiday homes is yet another statistic indicating that the product is gaining demand in the market. The extension covers those cottages and homes for holidays that are used by families. All these types enhance the strength, variation and flexibility in the mortgage market for retirees.

While these newer products to the market and resurgence of the buy-to-let concept are gaining in popularity the other traditional home equity release options are still as popular as ever.

Home reversion allows a homeowner to remain in their property under a lifetime tenancy agreement. In this situation there is no need to repay mortgage costs or interests. It is the original concept of home equity release. Homeowners are given an out to remain in their beloved home, while enjoying extra funds for their daily lives.

With lifetime mortgages there are also options from drawdown that gives you a chance to take money out as you need it to interest only lifetime mortgages where you pay the interest as you go, lessening the amount owed later on.

Click here for further details about the various home equity release schemes. Always keep up to date about what might be changing or coming into the market too. You never know when a better plan might enter the market. Financial markets like equity release are ever-changing to ensure the product works for retirees who might need a little help. With the latest news from the market you will be armed with ideas for what to do next as you approach retirement age or an age in which you need some extra capital.

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.