Archive for May, 2009
Equity Release could be the answer to pensioner debt
New research from Key Retirement Solutions (KRS) reports that the UKs pensioners have a collective debt of £183 billion. For many, equity release could be the answer to their mounting debts and a path to a more comfortable retirement.
Taking out a lifetime mortgage can help the elderly pay off their debts, in fact the money can be used for anything they want – there are no restrictions – whether it is to fund residential care, a holiday, or to even renovate their home. The money would be theirs to do as they wish.
How do I know if I qualify for Equity Release?
If you are a homeowner and are aged 55 or over you could qualify for equity release, and you could benefit from releasing a tax-free lump sum or an additional regular income from your home.
Your final eligibility will depend whether your home meets the general property requirements needed for your chosen equity release product.
New Equity Release Toolkit for Financial Advisers
LV= have announced a series of road shows specifically designed to better inform financial advisers on equity release. The road shows mark the launch of a new marketing toolkit for financial advisers which will help them advise and explain to their clients more clearly the benefits of equity release, and the process of releasing equity from their property.
The toolkit is being rolled out in a range of road show events across England in May and June.
Releasing Equity From Your Home
There has never been a better time to consider equity release. The market is more competitive than ever before and as a result interest rates on equity release schemes are at an all time low. The right equity release specialist should be able to search the whole market to find the most suitable equity release plan for you.
What is a Home Reversion Plan?
Unlike a lifetime mortgage and drawdown lifetime mortgage where you remain the homeowner while you live there, with a home reversion plan you actually sell part or all of your property in return for an income or lump sum of tax-free cash whilst still retaining the right to live in it rent free for the rest of your life without having to make any repayments.
With a home reversion plan you don’t necessarily have to sell off all of your property, you may decide to release equity on only a fraction of your home, thus guaranteeing an inheritance to your beneficiaries. Typically home reversion plans aren’t as popular as lifetime mortgages for the reason that many people prefer to retain full ownership of their home.
Norwich Union Life Equity Release Sales Increase by 89%
Norwich Union Life has recently announced that equity release sales have increased by 89% to £83m in Q1 2009, compared to Q1 2008.
Q1’s high volumes have been driven by the significant pipeline of business (£75m) coming out of 2008 says Norwich Union.
Group manager for Norwich Union equity release Dominic Fraser-Smith said Norwich Union regained the number one position in the overall market at the end of 2008 thanks in the main to achieving a 27% market share in the IFA channel in Q4.
‘We have been prudently managing our risk in the turbulent property market, reducing our LTV scale twice since November 2008 and limiting the percentage of property value we will offer for higher risk properties.’
What is a Lifetime Mortgage?
A lifetime mortgage is one of the most popular forms of equity release because it allows you to free up part of the value of your home without risk to losing it. You retain full ownership, the equity you release is tax-free and can be taken in a lump sum. Consequently, a lifetime mortgage would be particularly beneficial if you’re looking to raise a large amount of cash without having to worry about regular repayments for the rest of your life.
Interest is added to the lifetime mortgage over your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually repaid when your home is sold. This can be when you move into long-term care, or when you and your partner die. In the UK, you can usually release up to 50% of the value of your home with a lifetime mortgage but that will vary depending on the value of your home and your age. An independent equity release specialist will be able to advise you more.
Equity Release industry believes UK government should do more
A recent poll found that 81% of equity release stakeholders believe the UK government should offer more support to the industry in future.
During the equity release debate held by Eversheds and SHIP on 28th April 2008 service providers, intermediaries, consumer groups and charities were asked about the future direction of the industry. Results show that the industry feels the government has a greater role to play in raising awareness of equity release as a means of financing retirement and 87% believed advisers have an increased role to play in highlighting customer benefits.
What is Equity Release?
Equity Release is a term given to schemes that enable homeowners to free up a chunk of the capital tied up in their home without having to make regular monthly repayments. In light of the recent economic downturn a growing number of elderly homeowners are turning to equity release to make their retirement more comfortable, and to open up exciting new possibilities in later life.
An equity release plan allows you to raise money from your home as either a lump sum or regular income, or both – and at the same time you and your partner can continue living there until you both die or move out.
Is an Equity Release Loan Right For You?
As equity release loans become more widely available to homeowners aged 55+ in the UK you could be in two minds about whether to pursue a loan further – on the one hand, you’ve worked all your life to pay off your home and a loan would put you back to square one. But on the other hand, your property is your biggest asset so why not use it as part of your retirement plan and enjoy it like any other savings. Deciding whether an equity release loan is for you firstly depends on how you feel about this.
