Peace of Mind

Details
Category: equity release
Published: 22 November 2013
Hits: 22716

SHIP ('Safe Home Income Plans') was formed in 1991 in an attempt to improve the equity release market and its previous poor reputation. The SHIP guarantees include a guaranteed right to remain living in the property which is the subject of the equity release, either for life or until entry into long term care. In addition there is a vital No Negative Equity Guarantee - which essentially guarantees that the amount to repay the equity release plan on death or entry into long term care can never exceed the value of the property itself, and so no debt can ever be left behind for beneficiaries of the equity release borrower. In 2012, SHIP rebranded as the Equity Release Council (ERC) and extended its reach to Equity Release advisers as well as product providers.

The current members of the Equity Release Council include Aviva, Bridgewater, Hodge Lifetime, Just Retirement, LV=, More 2 Life, New Life, Partnership, Retirement Plus and Stonehaven.

What is Equity Release

Equity release is a way of releasing some of the money that's tied up in your home, providing you with a cash lump sum.

You can continue to live in your home and use the money to get more from your retirement. Whether it's to top up your income, make home improvements, buy a new car or even take a special holiday - it's up to you how you spend it.

Taking a lump sum, plus the costs, will reduce the value you have in your home, and therefore the amount of any inheritance you leave. Your tax position and any entitlement to welfare benefits may also be affected.

Equity release isn't right for everyone, so it's important to understand the features and risks.

Equity Release can take the form of a Lifetime Mortgage or a Home Reversion Scheme.

Lifetime mortgages are available to homeowners aged 55 and over. The amount you can release will depend on a number of factors including your age, value of property and type of property.

A home reversion scheme allows you to sell part or all of your property to a provider in return for either a lump sum or income and a lifetime right to remain living in your property.  Your home, or the part of it you sell, will then belongs to someone else, but you are allowed to carry on living in it until you die or move out and you or your estate will retain the value of any share not sold.

Whilst under these schemes you sell the ownership, you will still  be responsible for the property and bills relating to it.

You can sell up to 100% of the value of your property but will only receive a heavily discounted sum of money which could be as low as 25% of the current market value at age 65 which is typically the minimum age for home reversion plans.

Peace of Mind

SHIP ('Safe Home Income Plans') was formed in 1991 in an attempt to improve the equity release market and its previous poor reputation. The SHIP guarantees include a guaranteed right to remain living in the property which is the subject of the equity release, either for life or until entry into long term care. In addition there is a vital No Negative Equity Guarantee - which essentially guarantees that the amount to repay the equity release plan on death or entry into long term care can never exceed the value of the property itself, and so no debt can ever be left behind for beneficiaries of the equity release borrower. In 2012, SHIP rebranded as the Equity Release Council (ERC) and extended its reach to Equity Release advisers as well as product providers.

The current members of the Equity Release Council include Aviva, Bridgewater, Hodge Lifetime, Just Retirement, LV=, More 2 Life, New Life, Partnership, Retirement Plus and Stonehaven.

TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONALISED ILLUSTRATION. AN EQUITY RELEASE PLAN WILL REDUCE THE VALUE OF YOUR ESTATE, WILL NOT BE SUITABLE FOR EVERYONE AND MAY AFFECT YOUR ENTITLEMENT TO STATE BENEFIT

Professional Mortgage Services does not advise on lifetime mortgages and  equity release for the over 55's but has partnership arrangements with specialist equity release brokers and if you require further assistance will be happy to introdfuce to our equity release associates.

Want to know more? please fill in the form here and we'll be in touch.

 

 

With a reversion part or all of the property is sold in exchange for a tax-free cash lump sum. Home reversion plans guarantee a lifetime lease with no monthly repayments to meet. When the house is sold due to death or entry into long-term care the reversion company receives its share of the sale price. The main drawback to home reversion plans is that you will not receive the full market value for the share you sell.

 A home reversion scheme allows you to sell part or all of your property to a provider in return for either a lump sum or income and a lifetime right to remain living in your property.  Your home, or the part of it you sell, will then belongs to someone else, but you are allowed to carry on living in it until you die or move out and you or your estate will retain the value of any share not sold.

Whilst under these schemes you sell the ownership, you will still  be responsible for the property and bills relating to it.

You can sell up to 100% of the value of your property but will only receive a heavily discounted sum of money which could be as low as 25% of the current market value at age 65 which is typically the minimum age for home reversion plans.

Professional Mortgage Services does not advise on lifetime mortgages and  equity release for the over 55's but has partnership arrangements with specialist equity release brokers and if you require further assistance will be happy to introdfuce to our equity release associates.

Want to know more? please fill in the form here and we'll be in touch.

Lifetime Mortgages

Unlock some of the equity in your home.


The Lifetime Mortgage is a special kind of loan for homeowners aged 55 and over. Although it’s secured on your property, there are no monthly payments to make and it is designed to help you remain in your home for as long as you wish.

A Lifetime Mortgage allows you to benefit from the financial investment you’ve made in your house with absolutely no worries of having to give it up.

Interest will be added to your loan and the full amount is paid back when your home is eventually sold following your death (or the death of the second borrower if it is a joint application) or if you move into long-term care or sheltered accommodation.

How they work: Lifetime mortgages

A lifetime mortgage gives you a cash lump sum now, or regular income for the rest of your life. You take out a loan secured against your property. Interest is charged on this loan, but it 'rolls up' - that means it is accumulated over time, and is not repaid until the house is sold when you die or move into long-term care.
The amount you can borrow depends on your age, and the value of your property. A lifetime mortgage is a long-term commitment, and if you change your mind you will have to pay an early repayment charge, which could run to thousands of pounds. So it is important that you know exactly what you're doing before you sign on the dotted line.
And bear in mind that, if you receive means-tested benefits, for example, the cash injection you get from a lifetime mortgage could render you ineligible.
As a result, most lifetime mortgage providers recommend that you take legal advice before proceeding, and also that you seek independent financial advice. Also using equity release will have a major impact on your estate, so it can make sense to discuss the matter with your family before going ahead.

How Much Can You Borrow with a Lifetime Mortgage?

• The amount offered by different Equity Release providers varies depending on your age (or youngest age if joint) and the amount of interest charged
• Typically schemes offer between 15% - 35% of the value of the home at age 55 or under going as high as 50%-60% if the person is over 70-75
• Built into most schemes is the potential ability to receive further payment as you get older.

Lifetime mortgages — A loan secured against the property, which accrues interest until the loan plus interest is repaid when the property is sold. This is usually on entry into long-term care or when the last remaining owner passes away. Schemes are available to homeowners between 55 - 95, Clients can typically release 11-55% of the value of their home, depending on age, health and lifestyle.

Drawdown plans — A drawdown lifetime mortgage has the same advantages and disadvantages as a regular lifetime mortgage. The main difference with a drawdown plan is that the full sum of money available to the client is not released immediately. Instead, they can decide on a maximum amount of equity they want to release and ‘drawdown’ the remaining cash in stages, as and when they want to.

Releasing equity from your home is a lifetime commitment, with the loan only expected to be repaid when the home is sold, usually when you pass away or move into long term care. If you do decide to pay the loan back early, early repayment charges may apply.

Professional Mortgage Services does not advise on lifetime mortgages and  equity release for the over 55's but has partnership arrangements with specialist equity release brokers and if you require further assistance will be happy to introduce you to our equity release associates.

Want to know more? please fill in the form here and we'll be in touch.