Retirement Advantage were previously referred to as Stonehaven Equity Release, and formed following a merger with MGM Assurance. They have built an enviable reputation based on producing equity release products that can be tailored to suit the needs of individual homeowners.
That same trend of innovation and customisation has been brought to Retirement Advantage’s new line of products, Second/Holiday Home Options. With this range of three products, homeowners are able to secure a lifetime mortgage with their second home.
Retirement Advantage’s Second Home Options allows the homeowner to choose whether they want to pay just the interest on their loan, pay off interest but on an ad-hoc voluntary payment basis, or just let the interest roll-up and compound for the lifetime of the loan.
For a property to be eligible for use with the 2nd Home Interest Only plan, it must meet the definition of a second home, as defined by Retirement Advantage. So, the home must be available for the sole occupancy of the homeowner and if it is let-out at all, it must not be for more than 4 weeks a time. The homeowner must also use the property for at least 4 weeks every year.
There can be no formal agreements on the home, including an Assured Shorthold Tenancy, and it cannot be listed anywhere publicly, including online or with an agency. The property must have a valuation between £70,000 and £6 million, though exceptions can be made on a case-by-case basis if the property is valued over £6 million.
The home must be located in Wales, England or Scotland. With each product in the Second Home line, the loan amounts available range from £10,000 to a maximum £750,000. Please contact the London Equity Release team on 0800 678 5159 if you require a personalised key facts illustration.
The homeowner must be between the ages of 55 and 90 in order to be eligible to take advantage of Second Home Interest Select Plan. If borrowing jointly, the youngest homeowner must be no more than 90 years old.
The structure of the early repayment charges for these products is one of its most attractive features and coincides with the charges applied with other Retirement Advantage Interest Only scheme. From the start of the loan to year through year 5, the early repayment charge is 5%. For years 6-8, it is 3% and for years 9 and over, there is no early repayment charge.
The Second Home Interest Select Lifetime Mortgage is one of the three products offered in this range. With the Interest Select product, homeowners are allowed to pay anywhere from 50% to 100% of the total interest on their loan each month. They can make payments for 5 years to the full lifetime of the loan. However, once the loan is completed, there cannot be any changes to the payment term or amount. Unlike traditional residential mortgages there are no affordability checks with this Interest Select Option. The loan-to-values for the Interest Select Option begin at 9% at age 55 and go up to a maximum of 34% for ages 80-90.
With the Interest Select, homeowners have a level of flexibility in making payments. However, if the homeowner decides to stop making payments, the payments cannot be restarted. If the homeowner does stop making payments before their payment term is completed, the loan will convert to a standard interest roll-up loan and the interest rate on the interest paying portion of the loan will increase by 0.2%.
Homeowners can miss up to a total of 4 payments at any time over the course of their loan without incurring any penalties. Those four payments are not consecutive so only a total of 3 can be missed over the entire period of the payment term. If the fourth payment is missed, the loan will convert to a traditional interest roll-up with the increase in interest rate. Making payments on the loan is simple, as homeowners will have the payment directly withdrawn from their bank account on the first working day of the month.
There is additional borrowing available with the Second Home Options Interest Only plan. Approval for this additional borrowing is contingent on the lending criteria imposed at the time of the application. The minimum amount allowed for additional borrowing is £4,000 and the maximum amount is the maximum available within their product range. Homeowners must stay within their original product LTV range and cannot switch products when borrowing additional funds.
The Interest Select product is the ideal option for those homeowners who are concerned with interest roll-up, and want the discipline of making regular contributions. With this Interest Only product, homeowners have some sense of control in setting their interest payments and payment term. All products in this range are unique as they allow homeowners to take advantage of a lifetime mortgage on a second home, something that is quite new to the equity release marketplace.
To obtain further information or to request a quotation on the Retirement Advantage 2nd Home Interest Only Retirement Mortgage, please contact the Retirement Mortgages team on 0800 678 5159 today.