Understanding Some Important Facts about Halifax Equity Release

After retirement, there are many adjustments individuals need to make to their lifestyle. Even though you may get a pension, the amount may not be sufficient enough to meet your monthly expenses. As the bills increase however, the money you have seems to decrease. This is especially true given in May 2011 the level of inflation is running higher than average pay rises.

Overcoming Retirement Challenges
To overcome financial problems in your golden years, opting for roll-up equity release schemes or interest only lifetime mortgages such as the Halifax equity release scheme could be a wise decision. This particular equity release scheme offers a number of benefits to retired individuals. The size of the benefits can be assessed by use of an interest only mortgage calculator.

Halifax Equity Details
The Halifax equity release scheme is basically an interest-only lifetime loan. Your property is the guaranteed asset to the equity release loan provider. This will need to be assessed prior to completion. The condition and property type are an important factor.

With this scheme, you only need to pay the monthly interest. This is paid by direct debit on a date of your choice from your selected bank account. Once the property is eventually sold there is no need to make any further payments as the proceeds are primarily used to pay off the pensioner mortgage with the balance passing to the beneficiaries of choice.

Checking Eligibility of Interest Only
Before you opt for an interest only mortgage, there are some eligibility criteria you need to fulfil. You should be above 65, however discretion is provided to people over 55 as long as they are fully retired and have a retirement income to support the proposed mortgage. Therefore, it is a pre requisite that both parties must be retired and must own their main residence.

With a Halifax lifetime mortgage scheme you can increase your income after retirement. As the money released from this plan is not taxable, you can spend it any way you want. This way, you can have peace of mind and enjoy your retirement without any financial worry. Always be aware though the potential effect any cash released could have on any means tested benefits.

Other Companies and their Products
Stonehaven, Aviva, and plenty of other UK based lifetime mortgage companies are there for you to choose from. Stonehaven is one other company offering an interest only mortgage, where you must be at least 55 to take out this product. In fact some lifetime mortgages begin at the age of 55, while others may require a higher age for the qualification.

Other differences in qualifications include the income approval. As long as you are not taking out an interest only product that requires repayment it is possible for you to secure a lifetime equity release without proving any income. This is because the capital sum and interest of the equity release is paid back at death or move to a care facility. You do not make monthly payments, so having income is not a prerequisite.

Types of Equity Release
Besides interest-only lifetime mortgages you have rollup, drawdown, and enhanced equity release plan to choose from. All of these mortgages are going to have roll-up interest rates meaning it compounds onto the capital sum for repayment at the end. The differences are found in the structures of the equity releases.

Rollup is a lump sum payment. Drawdown requires a small lump sum at the beginning and then you have an account you can with draw from as you need to. Enhanced or illness lifetime mortgage is an impaired life mortgage. It means as a retiree you have an illness that is affecting your longevity such as cancer, diabetes, obesity, or other health related disorders. If your longevity is shorter there is a potential to release a larger lump sum than the standard lifetime mortgage.

This last option allows you to live in comfort during your remaining years by taking as much as you need or at least is possible given your age and life expectancy. It is the one loan that illness makes it easier to get. It does not work for everyone just as Halifax interest only plans work for a select type of mortgage borrower. At least you have options for your retirement and can rest easier knowing there are funds available to you.

Experts Help you Learn More
Seek the advice of a qualified equity release adviser who can ensure you receive best advice and have the knowledge to make sure no existing means tested benefits would be affected.

What You Should Know About Home Reversion Plans

A home reversion plan is a type of release scheme whereby a home owner can sell a certain percentage of their home in exchange for a tax free lump sum or income or both. This scheme, just like many other retirement schemes, is available to people who are 65 years and above. There is a second type of equity release called the lifetime mortgage. It is best to understand both equity release schemes in order to see the advantages and disadvantages clearly.

The main feature of home reversion plan is that you can sell the entire house yet continue to stay in the house for the rest of your life without paying rent, and carry on your daily duties as usual. If you so choose, you can get a regular income on top. However, just like all equity release schemes there is a catch. You get to sell the house at a price lower than the current market value, since the equity lender has to wait for a while to actually exercise ownership rights. Additionally, you lose on any price increase since you do not actually own the house.

Many have compared this equity release scheme with the lifetime mortgage scheme. The difference is that in this scheme you actually sell your house and get the money, which will be lower than the current property value. The rest of the details are similar; for example, the amount you stand to gain from the scheme is heavily dependent on the applicant’s gender and age.

Lifetime mortgages require you to take out a loan on your home, which means you either pay interest during your lifetime or leave a mortgage to be paid upon your death or removal to a long term care facility.

The good thing about home reversion plans is that you can get a regular income or capital lump sum with no requirement to make any monthly payments. This leaves you with more income, thereby enabling you to achieve your retirement goals. Additionally, should you choose to have the payment made in lump sum, you get it tax free. You are also allowed to move out of the house whether you have taken a full or partial plan.

Once you move out of the home, it will be sold under the home reversion scheme unless there is a remaining member of the plan. For example, a married couple may not need an assisted living facility at the same time. Someone with an illness might be in nursing care, long term care, or hospice, but the remaining family member can be in the house. Under this type of the equity release schemes the tenancy will cover all those named in the agreement.

The fact that you can take a partial home reversion plan makes it possible for a home owner to raise money when needed, while retaining a percentage that can be passed down for inheritance. Additionally, one stands to benefit from market price rises. If you take a partial home reversion plan, you are allowed to buy back the part you sold. Though you, or your children, will pay a lot more than the part sold, it can be bought back. You can consider a home reversion plan as one of your retirement income options.

The home reversion provider is in the business to make money, eventually, off of the home. While it is a disadvantage to buy-back the home for more than you pulled out in equity, you at least have this option. There are any number of ways you or your surviving family might be able to afford to buy back the house later.

The key to this type of equity release is gaining money you can use in the now. Economies change, which can mean in a few years you are able to buy back the home or you no longer need to pull out money from the remaining equity. By starting off with a partial amount of property sold and using a monthly instalment scheme you can better position yourself to use just the funds required to make it through a tough time.

This article highlights the many facets of equity release schemes in the quest to aid retirees to a comfortable and prosperous golden age. It is important to find out more details about equity release schemes through a SHIP agent. Laws change for what is appropriate regarding these schemes. Additionally, as the market consumer changes, these schemes can change to become more or less beneficial to you in your older years.

What Is An Interest Only Mortgage?

With the recent furore from the FCA (Financial Conduct Authority) regarding the sale and uptake of interest only mortgages, we take a look at how these controversial interest-only mortgages work.

The Basics of Interest Only
Interest only mortgages operate by requiring a monthly payment to be made to the mortgage lender. This payment made pays off the interest that the lender is charging on a monthly basis.

This differs from a conventional repayment mortgage which pays off both capital and interest, which results in the mortgage balance reducing over the term. Therefore, this capital and repayment mortgage will guarantee the eventual repayment of the mortgage at a pre-determined date in the future.

An interest only mortgage has no capital repayment element and as such the balance on the mortgage will remain the same for the duration of the term. Therefore, to ensure eventual repayment a separate savings plan can be set up which with regular payments and investment growth. This provides a mortgage which establishes a long term repayment strategy. If choosing a conventional interest only mortgage.

The normal investment plans that are required to pay off an interest only mortgage are usually one of three vehicles. This could be equity ISA (Individual Savings Plan), less commonly a pension plan or a low cost endowment. These products are taken out separately and are the responsibility of the mortgagor to ensure they are on track to pay off the capital amount at the end of the day. This is where the problems have arisen over the years, particularly with endowment policies that have failed to meet expectations.

So is the risk worth it?
Judging by the majority of plans now maturing and people scrambling for alternative means of making up shortfalls, the answer is probably no.

Endowment policy holders with the fortune of hindsight may have already changed to a repayment mortgage upon receipt of the endowment projections with the red warnings. At least time was on their side and action can then be taken to address any potential shortfall.

But this wasn’t the only reason the FCA has clamped down on interest only mortgages. These mortgages were becoming increasingly popular with first time buyers who were struggling initially to afford the monthly mortgage payments. The danger of this being the temptation for first time buyers to either not set up a repayment vehicle or never switching over to a repayment basis when finances ease.

Pros and Cons of Interest only mortgages

Advantages
• Greater control over the savings element and how it is invested and managed
• Option of which investment vehicle can be used and the ability to maximise tax free growth

Managed correctly the investment growth rate could exceed expectations and therefore you may be able to pay off the mortgage earlier. Alternatively, on maturity if the policy has over performed then the lump sum paid out at the end of the repayment period could be greater than the mortgage balance. This savings excess then can be put to further use which can normally assist their retirement plans.

Disadvantages
• There is no guarantee that there will be sufficient funds on maturity to pay off the interest only mortgage balance at the end of the repayment period. This could be due to under performance or insufficient payments being made during the investment period.
• The mortgage debt remains constant during the term
• Some investments such as endowments cannot be stopped and restarted and others may incur a penalty or fee if premiums cease.

Alternatives for Retirees
The above is a discussion of conventional interest only mortgages. There is another type of interest only mortgage under the lifetime equity release scheme. The lifetime mortgage is for retirees. As a retiree it is possible to take out money and repay it in the distant future. For instance, if you need money, but you are retired you have pensions and retirement savings. You usually do not have income. The principle balance remains unpaid until your death or move to a new place. You still pay interest each month based on an APR.

• The benefit is you have more money to spend during retirement, while you maintain minimal payments.
• You also leave an inheritance behind because you pay off the interest leaving some equity in the home that is gained at the future sale to repay the interest.
• A downside is that not all retires can afford to repay interest throughout their retirement.

Certainly interest-only mortgages for retired and non retired individuals take consideration of all information, but at least there are products to help you.

The Financial Conduct Authority’s (FCA) Mortgage Crackdown On Interest Only

Interest only mortgages have been in the spotlight with the UK property market for quite some time. This escalation in best interest only mortgages is particularly concerning as it commenced when people were borrowing increasingly excessive amounts. At the same time low cost endowments which were the traditional investment product sold as the repayment vehicle for an interest only mortgage were dying out. The timing could not have been worse.

Essentially, this resulted in many new borrowers drafting their main plan for mortgage repayment by relying on house prices to keep rising.

This is where the FCA intervened
Their mortgage market review and subsequent proposal forced lenders to have a much tougher stance on UK interest only. Lenders would now have to provide evidence on how they assess affordability. Borrowers would have access to this calculation by using interest only calculators. It would compare the cost of a repayment mortgage and then stress test the mortgage borrowers to ensure they could maintain the monthly payments.

This could additionally be checked to see if affordability was an issue once they then revert to a standard variable rate and the mortgage interest rate increase was 2%.

This toughened approach has resulted in most mainstream mortgage lenders ceasing to offer an interest only mortgage unless a savings vehicle such as an ISA is established and evidence of monthly premiums paid. Lenders have also removed the ability of the mortgagor using the sale of property as the repayment vehicle or even an inheritance on mainstream interest only mortgages.

Interest-Only Options for Retirees
While some products have disappeared from the market or become harder to obtain, retirees still have some interest only lifetime mortgages to take advantage of. The FCA also delved into issues with these products, but found as long as the house could be used for resale at the death of the homeowner and with certain SHIP Code of Conduct clauses the products were reasonable.

The Code of Conduct Rules clearly state no property can have a negative equity effect in which the sale of the home would not cover the loan. In other words, borrowers can only borrow up to a certain amount of the home value to avoid 100% equity usage. It protects against depreciation of the house should it occur. It also means the beneficiaries would not be responsible for paying the debt.

With the caveat of selling the home to repay the debt for retiree mortgages an ISA or other investment vehicle is unneeded. Providers of these mortgages also do not require proof of disposable income, although some still might.

The repayment of the balance is at the end of life; however, the interest payment is still required each month as a means of keeping the capital sum the same.

Other Options for Homeowners in Retirement
Lifetime mortgages are not conventional mortgages, so they are not held to the same standards as the FCA has for traditional loans. By standards, it is meant that income is not a factor. There are definitely rules to follow for these products. The lender has to offer a sum below 100% equity usage and based on the life expectancy of the borrower. If the borrower is closer to 55 than 80, then less is borrowed to account for accrual of interest rates.

Also companies are able to wait for full repayment and interest payment till the end of the homeowner’s life. The difference is interest is not paid in these other forms of lifetime mortgages. It accrues increasing the sum due at the end, which can remove any potential inheritance available.

FCA worried about inheritance issues asked for a potential choice by homeowners. Lenders are supposed to provide a choice called an inheritance guarantee in which the owner can save out a portion of their home from the equity mortgage that is solely for the beneficiary. Homeowners can request this clause be in the agreement before signing. For homeowners that have no beneficiaries the clause is less important.

Beneficial Changes Brings Security
With changes to the market both in mainstream and retirement mortgages, homeowners can feel more protected. They also have solutions to their financial needs and potential extensions for their retirement income. There is more security in the current market. The FCA and Equity Release Council are there to ensure homeowners have safe options and choices. When necessary there are financial advisers working at independent firms who can also help.

Always make certain you have thought about your financial decision, thoroughly researched, and are making the best decision for your situation and later requirements.

What Do Mortgage Lenders Mean By Interest Only?

Taking an interest only mortgage out may offer a cheaper way to purchase a property or even a remortgage of your current abode than with the conventional capital and repayment mortgage. The reason being is that borrowers are only paying off the interest charged and not the capital.

Calculating Interest Only
An example of interest only mortgage calculations would be as follows – someone borrowing £150,000 at 5% interest rate over 25 years would cost them £624pm on an interest only basis, and £878pm on a capital and repayment mortgage. The difference in monthly payments is plain to see. But you don’t get something for nothing and this is what some interest only mortgage holders have found to their cost.

However, come the eventual repayment of the mortgage at the end of the term then the interest only loan will have only paid off the interest charged which would still leave the original £150,000 outstanding. Additionally, this debt will still need to be repaid; hence a means of savings should have commenced many years ago to counter this. In comparison to this, as long as payments have been met then a repayment mortgage would have guaranteed to clear the debt.

Slight History Analysis
Interest only mortgages have been around many years and have been very common in the heyday of low cost endowment policies predominantly during the 1980’s which were sold as repayment vehicles alongside them.

So, what’s the problem with interest only mortgage deals?

Some time ago the regulators removed the requirements stipulating that if borrowers took out interest only mortgages, then the lender would have to ensure a suitable repayment vehicle was taken at inception and that monthly premiums were maintained.

The lenders even took the bold steps of taking possession of the endowment policies and keeping them in safe custody with storage facilities provided. Additionally, the mortgagee would put a charge on the endowment policy itself so that encashment could not take place without the knowledge of the lender.

However, as poor performance of these endowment became evident from 2000 onwards the sale of these life assurance policies declined.

People then began gambling on future house price rises with the hope of this being a repayment possibility over increasingly longer terms. People with interest only mortgage deals and with no repayment of capital can have the major risk in time of falling property prices. This will result in their debt being greater than the value of their home. This can be dangerous.

Retirement Options through More Details In
Interest only loans did not come under the FCA eye just as conventional loans. There are also lifetime mortgages that offer interest only options, which have caught the FCA eye and have been changed to account for the SHIP Code of Conduct. Lifetime mortgages are a product for retirees. They are designed to give a retired person more funds to live on when their pensions start to dry up. It is this type of product that can be taken out by retirees where conventional loans and interest only mortgages cannot.

Like mainstream loans, lifetime mortgages in the interest only category had a few issues. Many misunderstood the loan they were obtaining and the repayment options, actually with all lifetime mortgages and home reversion products. Home reversion is another retiree option in which a home is sold in full or partial amounts.

With the confusion in the market about these products the FCA started to regulate the industry. Many interest only and home reversion products had to leave the market due to the new regulations.

It has given way to more products for retirees though. Now you have four types of plans that are designed to help you gain tax free cash to live an easier retirement. It was necessary after the losses in retirement investments occurred due to the uncertain market.

4 Types of Lifetime Help
Drawdown is a facility based option in which you have a sum of equity released into an account. You can then use the money when needed keeping the interest from compounding until you actually need the account. It is like having an income that you can withdraw when you want. It has a limit based on housing value.

Lump sum is a rollup lifetime mortgage with the interest compounding onto the capital loan amount. You gain a larger sum of money all at once through this option.

Interest only as discussed for mainstream loans is much the same. You have to pay an interest payment during the month, but you pay the capital at the end of your life rather than in 10 years.

Enhanced options offer the largest lump sum on the premise that your illness is going to kerb your longevity.

The Benefits Of Having a Mortgage In Retirement

Paying off your mortgage before retirement may not always be the best idea.

People strive throughout their working lives in order to attain their main financial goal – to have their mortgage repaid before they reach retirement age.

Studies on Mortgages
During one’s life, a mortgage will be the greatest financial outgoing each month and consequently is seen as a millstone around one’s neck. Hence, this is the reason to strive and eliminate this debt as soon as possible; the usual goal preferably before retirement.

According to the statistics, there are still approximately 12% of people carrying their interest only mortgage into retirement with a substantial average balance of almost £60,000!

The mentality of the older generations that debt is bad has dwindled and people can now see how an interest only mortgage into retirement can actually assist their pensioner lifestyles. Particularly still in 2013 with the Bank of England base rate at an unprecedented run at the lowest interest rate in history at 0.5%. Yes, retirement savers are suffering as a consequence, but the retirement borrowers are benefitting.

Retirement Mortgage versus Paid in Full
Therefore, having a retirement mortgage may not be so bad. Many people may have selection this option, rather than feel short of cash. Rather than a large mortgage, by keeping some semblance of borrowings into retirement, property owners can also use this mortgage to assist with estate planning and thus enabling mitigation of any potential inheritance tax (IHT) paid by their beneficiaries after they die.

This would involve totalling the assets; which would include the property and its contents, any savings/investments and then deducting the liabilities such as loans, credits cards and bills. If the mortgage is substantial, this will significantly impact on the net value of the estate and reduce any potential inheritance tax that may be due.

Another popular reason for carrying on with a mortgage into retirement could be that the home owner could use the additional capital to increase monthly income and pay for lifestyle improvements. Considering the alternatives and living your longest holiday in constant financial plight, this makes a sensible option. Particularly the case as the beneficiaries may only need to sell the property anyway to pay the potential inheritance bill after you die.

Top Reasons for Taking out Loans
Popular reasons for raising extra funds can be improvements to the home, buying a car, caravan or holiday home to retire and relax with. In today’s environment of first time buyer’s difficulty in obtaining mortgages, then how useful could it be to gift money to children, even grandchildren now and enable them to get on the first rung of the housing ladder.

The usual warnings come with this. Any gifts made from one’s estate when over the inheritance tax threshold should be considered carefully. The seven year rule exists in that you need to survive this period after the date of the gift; otherwise it can still be included as part of the overall value of the estate.

Interest Only or Rollup
There are decisions to be made when looking towards financial products in retirement. The interest only lifetime mortgage definitely offers a good way to save some inheritance. It can also be more comfortable since payments are made and the capital loan amount never changes.

Yet, there are choices like the rollup lifetime mortgage which can be taken in three different ways. A rollup mortgage implies the interest is rolled into the capital sum. It compounds onto the back of the loan, so the capital and interest have to be paid at the end of the mortgage term, which for retirees is the end of your life.

With standard rollup mortgages you take out a lump sum based on the value of your property and your age. A drawdown lifetime mortgage works by giving you an equity account to withdraw from as you please. The more you withdraw the less equity is left in your property. As you withdraw from the account interest is compounded on to the loaned amount. Any funds remaining in the account are not a part of the interest roll up because they are technically not being used.

Lastly if you have ill health then the life impaired or enhanced lifetime mortgage can be used to gain the largest lump sum a company will offer retirees. The premise is that you pay it back a lot earlier than these other mortgages due to your health issues. It is like a roll up mortgage in all other respects.

Therefore, taking an interest only mortgage into retirement has its advantages and disadvantages, however if one has the resources to fund the repayments, then they aren’t such a bad concept after all.

The Differences Between The Halifax Retirement Home Plan and Roll Up Equity Release Schemes

Come retirement age, many pensioners soon hit upon the realisation that cash is required more than ever. Being the longest holiday of one’s life and having more leisure time than ever, money can soon become in short supply. So what are the alternatives?

Other than the non-financial options such as downsizing, using one’s savings or investments, claiming any means tested benefits due, asking relatives for financial assistance, there are still two further means by which people can remain in their current home.

Equity Release Mortgages
These options are either equity release schemes or interest only mortgages in retirement. An equity release scheme works by releasing a tax free lump sum from the property, dependent upon the age of the youngest property owner and the value of the property. The interest charged by the equity release providers is added to the balance of the original amount borrowed. Therefore the balance grows over time, almost doubling every 10-11 years.

In contrast an interest only lifetime mortgage plan, such as the Halifax Retirement Home Plan will also achieve the aim of releasing tax free cash from the property. However, these schemes require there to be some form of regular repayment. This is usually the interest only element. As a consequence of the interest being repaid, the balance will always remain the same. When it is a retirement mortgage it is still an equity release scheme. There are interest only mortgages that are not lifetime, which are part of the traditional mortgage packages. Here the discussion is all about retirement.

Let’s have a look in greater detail at more of the differences: -

Interest Only Lifetime Mortgage

• Usually commence at age 65
• Interest only repayments required
• Balance remains the same throughout
• Amount borrowed dependent upon income
• No drawdown facility available
• Less stringent property requirements
• Not SHIP authorised

Equity Release Schemes

• Minimum age is 55
• NO monthly repayments required
• Balance increases with annual addition of interest
• Cash sum release based on age and property value
• Flexible drawdown schemes available
• Can have rigorous property requirements
• Schemes meet SHIP requirements

Therefore, much consideration should be given as to which scheme is taken out and done so for the right reasons.

Usability of the Funds
Something that has yet to be fully discussed is the benefits of lifetime mortgages in terms of how you can use them. For instance, you are able to use your lifetime mortgage funds for that grand holiday. Perhaps you always wanted to take a cruise around the world or one of the major cruise ships that offer the epitome of luxury. You can do this with your retirement mortgage.

Funds can be used to improve the condition of your home; therefore, increasing the value your home has. You can make changes that help adjust your home to your later life needs such as a walkway instead of stairs, elevator for the inside stairs and other modifications.

Funds can be given to your children for their first home, education needs, or to help out with the grand children. Since the money is tax free and it is for retirement you are able to use it in a way mainstream loans do not offer.

Being Wise with Funds
Just because you can use your lifetime mortgage funds as you wish does not mean there are only advantages. The more money you remove from your equity and accrue in interest, the less money remaining for inheritance. It can also mean your home will need to be sold to pay it back. If you would rather enjoy your life after working extremely hard there is no issue with that.

Be cautious only in that you could end up make things slightly difficult for your children or beneficiaries. Also keep in mind that the funds are currently tax free cash when you take them out in the loan and as long as you stay under Inheritance Tax sums and gift tax sums you can give your children an inheritance now, perhaps even when it will benefit them the most as opposed to years done the road then they are in a steadier income bracket on their own.

Experts in Financial Realms Available
Always seek the advice of an independent financial advisor who not only can offer advice on equity release, but also mortgages. Obtaining advice from such an impartial specialist mortgage broker and not from a company portraying themselves as just a specialist equity release broker, could pay dividends in the long run.

What Is, And Where Can I Find an Interest Only Lifetime Mortgage?

The misconceptions that all lifetime mortgages will have a detrimental effect on the heirs to the estate are misguided. Due to adverse publicity sections of society have been inappropriately been led to believe that lifetime mortgage schemes are bad news. Given the right situation & scenario, the best lifetime mortgage plans can offer an olive branch that may change how retirement life can be enjoyed. Less financial pressure & the ability to chase dreams of their golden years are one of many justifiable reasons for the most common question ‘can I have a mortgage in retirement?’

As a general rule of thumb, mortgages are normally offered to applicants based on affordability calculations through their earned income. Consequently, the concept of mortgages has traditionally been for those individuals that are young enough to be in employment & expected to be so for the whole mortgage term. For example, a lender would expect someone taking out a 25 year mortgage to be under the age of 40 years, thus having the mortgage repaid by they have retired.

This does of course, makes perfect sense. However, consumers should now start taking note of the fact that interest only lifetime mortgage plans offer a case for retirement mortgages to become a potentially more viable option. Why should someone over the age of 65 not be able to take out a mortgage and have the ability to repay only interest & maintain a level balance thereafter?

Given the fact that retirement income is guaranteed; unlike any employed or self-employed individual, then why are they excluded from the many high street lenders? State pensions will always be paid along with any annuity purchased or company pension scheme in payment. Additionally, these are more than likely to be index linked each year, thus making affordability an increasingly viable strategy.

As a result of these factors, lenders are becoming more flexible in their approach to retirees mortgage needs & thus more prepared to offer mainstream mortgages to people over the age of 60. Currently, these lenders will only go upto age 70 & some to age 75. Nevertheless, this still doesn’t provide the financial solution to pensioners due to the FCA’s implementation of the mortgage market review (MMR). This has resulted in lenders on being only able to provide capital & repayment mortgages, rather than an interest only mortgage unless a suitable savings plan had already been set up to run alongside prior to even starting the mortgage.

The problem with this scenario is the how long the term of the plan can be. Given the fact that some existing retirement mortgages are being applied for at retirement & need to be repaid by the oldest persons 75th birthday, the term can be quite short. Repaying a capital & repayment mortgage over a short term of 10-15 years can prove very expensive & unaffordable for many.

However, shop around & research specialist mortgage brokers who deal in this area could uncover a couple of gems that will lend to age 85, & one in particular the Hodge Retirement Mortgage plan can even run for the rest of their lifetime.

How Common is an Over 60s Mortgage?
Due to the ever increasing cost of living & inflation currently has resulted in the inability of borrowers to save up regularly & pay off their debts. This has also been fuelled with the past rise in property prices that has taken place since the 1980’s.

We’ve all heard the adage ‘asset rich & cash poor’. Never has this been so true. The older generations in particular are living in properties that they could have purchased for what now seems a meagre £2,000 in the 1960’s, but now have extremely valuable assets. Regardless of this, they still cannot necessarily afford a comfortable lifestyle. This issue has become particularly noticeable given that the pension crisis has become even more widespread.

Given these economic facts, the interest only lifetime mortgage for the over 60s is actually more common than one would think. With the advent of schemes such as the Hodge Retirement Mortgage Plan, more2life’s interest choice plan & Stonehaven’s interest select equity release scheme, help is certainly now at hand.

Halifax Retirement Home Plan an Equity Release Scheme To Safeguard Your Future

Do not be intimidated or confused by the name ‘Halifax Retirement Home Plan’. This is just an interest only equity release lifetime mortgage scheme that lets people make use of the equity that is tied up in their home. Halifax equity release is great for people who do wish to release tax free cash from their home and have good disposable income to cover the monthly payments.

The retirement home plan maybe a better option for the kid’s as well as the plan is a good alternative to the conventional roll-up equity release schemes. If inheritance is an issue and concern for the beneficiaries, with the stability of the Halifax mortgage balance over the life of the loan it will provide inheritance protection guarantee for them. For some of the older generation, whose attitude to risk is extremely low and averse to borrowing in the traditional sense, and then the Halifax Retirement Home Plan has proved to be an excellent measure.

Stability in Income for Retirees
Pensioner mortgages require a stable source of income from retirees in the later years of their life. The one advantage pensioners have in the realms of affordability is stability of income. Additionally more often than not is the amount of equity residing in their properties. Given the majority of elderly people have lived in their properties for many years; they would have paid what is in today’s terms a meagre value for their main residence.

From paying £2,000 for a bungalow in the North West in the mid 1960′s, experience has shown that this can now have escalated in value to over £200,000. Assuming any mortgage has now been paid off prior to retirement; it clearly illustrates the amounts equity that has built up within those four walls. So after all the hard times and seeing the children successfully move on, now is the time to reap those deserved hard earned benefits. This is where the Halifax Home Plan enters the fray and helps pensioners release this built up equity in the home.

People can use the proceeds of the Halifax interest only lifetime mortgage on anything they want; be it home improvements, paying off debts or generally to support a lifestyle after retirement.

How much equity release is possible?
The Halifax Home Plan offers a minimum equity release of £15,000. If you are not really sure about the amount you can get, you can use an affordability calculator. These lifetime mortgage calculators will assess the exact amount that can be borrowed by collating information such as income, number of applicants, credit status and outstanding credit commitments.

A person can also take professional help from expert financial advisors who will be able to guide them through the whole process. The maximum equity release cannot however exceed more than seventy-five percent of the total value of the property. This is subject to income criteria and can only be based upon retirement income and additional state benefits that may be in payment.

More Conventional Lifetime Mortgages
You have an option of going with a more conventional lifetime mortgage in terms of rollup schemes. Halifax Home Plans work for a select clientele who have income to repay the loan and wish to keep the capital sum the same. If you find you have limitations with this you can consider taking a lump sum payment where the interest rolls up into the loan. All interest and lump sum is due at the end of your life or when you change to a new main residence.

When you opt for this type of product the qualifications can change. For example you do not have to be 65, but 55 for some of the products on the market. You can also take out more in a lump sum with an enhanced lifetime mortgage if there is an illness concern. You would not have the same option with an interest only mortgage. You have a specific limit based on home value and percentage of time you have left based on age.

If inheritance is still an issue and you know the lump sum amounts will not work, you have drawdown lifetime equity release. This type of plan does not require you to take a huge lump sum, but rather smaller payments as you need them. Interest rolls up only on the used portion of money. For some this is a lot easier than coming up with an interest payment each month. Compared products to find what suits your needs and lifestyle.

It is always advisable to seek the guidance of an independent financial advisor if you have any doubts about equity release schemes like the Halifax Retirement Home Plan.