Monthly Archives: August 2010

Here at Retirement Solutions we are constantly trying to help those approaching retirement or already retired to understand the various financial products that could help them have a more comfortable retirement. One of the more complicated financial products is equity release. To help our readers understand if they qualify for equity release we have built a new equity release calculator.

The new version does require you to enter some basic details about yourself, your property and any outstanding mortgages you may have. Outstanding mortgages does not include personal loans but if you have a secured loan on the property as many retirees do, then this should be added to any mortgage.

Whilst the calculator results will tell you the amount of lump sum you can have after deducting any mortgage first if you are looking for a regular income then this could be accommodated. If you qualify then we recommend that you seek independent financial advice before proceeding.

Equity Release Advice

There is two types of equity release advice out in the the market place

1. Independent Financial Advice which covers the whole of the market and includes every provider that has an equity release product.

or

2. Tied or Multi-Tied advice which only covers a single provider or a panel of providers

If you are considering equity release then once you confirm you qualify using our equity release calculator make sure you take independent advice.

Rodney Cook, CEO Just Retirement, said;
“The business has secured sales of over £1 billion for the first time in its history. It has maintained or enhanced its market leading positions within the markets for its two products. During the year, Just Retirement was acquired for £228m by Avalon Acquisitions Limited (“Avalon”), a company backed by funds advised by Permira Advisers LLP. Avalon subsequently injected a further £25m of capital into the business. The business won Financial Adviser 5 Star Awards for both annuities and equity release mortgages for the fifth and second time respectively and, in so doing, was accorded the accolade of “Company of the Year”. Also, Just Retirement was ranked within The Sunday Times “100 best companies to work for” on its first entry to the survey. By any measure, this has been a year of considerable accomplishment.

Kevin Stelfox, Sales Director at Retirement Solutions commented: “This is excellent news for Just Retirement and I am delighted for them. As far as I am concerned our business uses them for both annuities and equity release products, we have always found them to be extremely efficient and have always voted for them in the adviser awards. In particular I am glad that equity release is picking up as this market has struggled for a couple of years now”

Retirement Solutions are independent financial advisers and give independent advice on annuities and equity release products.

House equity release is where you use the equity in your property to provide a lump sum and/or regular income. All house equity release schemes work on the same principle: they lend you a part of your home’s value in return for a share of the proceeds when you die.

House Equity release plans – are also called lifetime mortgages, home reversion or home income plans – they allow you to release cash to spend as you wish, whether to buy that new car, to pay for a holiday or home improvements, or simply to make daily life more comfortable.

How do house equity release schemes work

These schemes essentially allow you to borrow money against the value of your home, with the debt being repaid from the sale proceeds after your death. Many retirees only have a small pension and virtually no savings but live in properties which in most cases have no or very small mortgages on them.

The average house price in England and Wales is now standing at £164,455 (February 2010, see www.landreg.gov.uk/houseprices/).

House Equity Release Step by step guide

• Age Concern and the Financial Services Authority, the UK’s chief financial watchdog, both recommend getting independent financial advice before proceeding with house equity release.
• An Independent Financial Adviser (IFA) will look at your overall finances to see if equity release is really the best option for you, help find the right type of scheme – bearing in mind that in some cases you could risk losing state benefits and may have to pay extra tax.

If you are considering house equity release then you can download this free step by step guide from the Consumer Financial Education Body.

If you have recently retired and finding it a struggle to cope with day to day living on your current income then you could consider an equity release loan as a way to increase your retirement income. Pensioners often find after a few years into retirement that managing day to day income is a struggle.

Equity release is not just about raising a tax free cash lump sum it can also be used to generate a regular income which could help you manage day to living expenses. You can normally release as little as £50 per month from an equity release plan and have it paid into your bank account each month.

How do I release income from my property?

First of all lets remind you of the criteria for an equity release loan. You need to own your own property (value at least £70,000) and the youngest person if there is more than one needs to be at least age 55 years old. Also, any outstanding mortgage on the property will need to be cleared on completion of the equity release loan.

You can of course approach all the equity release loan companies direct, but generally you will get the best equity release loan by using an independent equity release loan broker. They will search the entire market on your behalf and find you the best income generating equity release loan.

We are seeing many more varied ways in which the elderly use the capital in their Properties to enhance not only their own lives but also those of people nearest to them. We are seeing more and more elderly people using Equity Release Schemes to provide a route out of financial troubles that they find themselves in.

There is a also a growing contingent who are using these schemes to release money to help children who have got themselves into financial difficulties and have no means of getting out of it due to the financial crisis which has effected so many. It may seem strange to find retired homeowners assisting middle aged children, however the thinking seems to be that they would prefer to help the children while they are still alive and it becomes a living will. There are obviously implications regarding these gifts which must be discussed at the time the release is taken, this again reinforces the need for specialist advice in the Equity Release arena.

Another way in which these plans are utilised is to help a further generation down. Grandparents are helping Grandchildren. This is becoming especially prevalent in the area of assisted house purchase. One of the major effects of the global banking crisis has been the restriction of mortgage funding, especially to the FTB market. Tightening of ltv’s and stricter lending criteria mean that it is more difficult to get your foot on the first rung of the property ladder than any time in recent history. One way out of this is to receive some or all of the increased deposit required from a Grandparent. Some of these Grandparents are again using Equity Release schemes to release Capital from their own homes. Again it is essential to those effecting these schemes to seek professional expert advice.

An alternative to conventional roll up equity release plans is the Halifax Retirement Home Plan Mortgage which is actually an interest only mortgage. The Halifax Retirement Home Plan is only available through selected intermediaries and can save you thousands of pounds in rolled up interest.

The plan is classified as a lifetime mortgage and can be used for unlocking the equity in your property as tax free cash or enable you to purchase another property. The product is available from age 60 and has three interest rate deals, a fixed rate interest plan, a tracker interest rate plan and a discounted interest rate option.

Halifax would not expect the loan to be repaid either until the eventual death of the homeowner(s) or if you chose to sell the property or repay the loan earlier.

It is certainly worth considering the Halifax Retirement Home Plan mortgage if you are looking to release equity from your home and could afford to make monthly repayments.

Halifax Equity Release

The Halifax Equity Release plan or as it is known the Halifax Home Retirement Mortgage is available for those over age 60. You can use the proceeds to spend as you wish and you can even use it to purchase a new property. With the Halifax equity release plan you can choose from a choice of interest rate options.

You need to consult with an authorised equity release intermediary and get advice.

Your home may be repossessed if they do not keep up repayments on their loan. Whilst a fixed rate mortgage can give your client certainty around monthly payments, the Bank of England base rate may go down as well as up. The value of your home may alter with market conditions so that the amount of the loan may exceed the value of the home.

In simple terms an annuity calculator will give you an indication of how much income your pension will produce. It is only indicative and a quick guide of annuity rates from the annuity calculator.

There are many annuity calculators on the web and all do the calculations slightly different. Some use xml feeds direct from the annuity providers, others have tables programmed into them and when you enter your details it reads from the table and displays the results to you. The best annuities calculators are those with xml feeds straight from the providers and insurance companies as these are usually exact rates in real time.

Annuities Calculator – Where do you find one?

The world wide web is full of these annuities calculators, here are two of my favourite places that you can find out information about annuity calculators. The first is annuity calculator and the second is the FSA annuity tables website. You can find the FSA website by doing a search in one of the search engines.

Equity Release Calculator and Purchased Life Annuity

Many retirees find that their income from the pension pot is too low for them in retirement and need a source of additional income. Equity release is a product available for over 55 year olds and can be used to provide an income from the product direct or via a purchased life annuity. A purchase life annuity has certain tax advantages over a pension annuity. The equity release calculator can show you how much your property can yeild.

Get Quotes and Advice on LV= Equity Release Lifetime Mortgages from an Independent Financial Adviser and equity release specialist. We can give you advice and quotes over the telephone or face to face in your home.

LV= Equity Release Criteria

If you are a homeowner over 55, LV= equity release could help you to unlock some of the value in your home.

LV Lifetime Mortgages Criteria

With LV= Equity Release Lifetime Mortgages plans start at age 60 & this product offers a one off lump-sum to spend on whatever you wish & the interest rate is fixed for life. Plans start at age 60 & there is a minimum property value of £70,000 with a £15,000 minimum initial withdrawal limit.

Use our equity release calculator to see how much you could borrow from a lifetime mortgage (the calculator is not specific to LV=).

Get Quotes and Advice on Aviva Equity Release Lifetime Mortgages from an Independent Financial Adviser and equity release specialist. We can give you advice and quotes over the telephone or face to face in your home.

Aviva formerly Norwich Union

Norwich Union changed its name to Aviva

Aviva Equity Release Criteria

If you are a homeowner over 55, Aviva equity release could help you to unlock some of the value in your home.

Aviva Lifetime Mortgages Criteria

With Aviva Lifetime Mortgages plans start at age 55 & this product offers a one off lump-sum to spend on whatever you wish & the interest rate is fixed for life. Plans start at age 55 & there is a minimum property value of £75,000 with a £15,000 minimum withdrawal limit.

Use our equity release calculator to see how much you could borrow from a lifetime mortgage (the calculator is not specific to Aviva).

Get Quotes and Advice on Just Retirement Equity Release Lifetime Mortgages from an Independent Financial Adviser and equity release specialist. We can give you advice and quotes over the telephone or face to face in your home.

Just Retirement Equity Release Criteria

If you are a homeowner over 60, Just Retirement equity release could help you to unlock some of the value in your home.

Just Retirement Lifetime Mortgages Criteria

With Just Retirement Lifetime Mortgages plans start at age 60 & there is a minimum property value of £70,000 with a £10,000 minimum initial withdrawal limit. You can borrow from the reserve facility at any time without further approval & subject to a minimum of £2,000. In exceptional circumstances, the drawdown facility could be withdrawn. Just Retirement Life

Use our equity release calculator to see how much you could borrow from a lifetime mortgage (the calculator is not specific to Just Retirement).