Many people don’t plan for the future and when it comes to their retirement. They subsequently find they are short of money to live life to the standard they have become accustomed to. An equity release from Halifax might be the answer to their problems. The aptly named Halifax Retirement Home Plan is becoming quite popular due to the following benefits it offers.
What you should know about the Halifax Retirement Home Plan
The Halifax Retirement Home Plan is simply an interest only mortgage lifetime mortgage for retired individuals. This is a great equity release plan for those people who have a lot of equity tied up in their property. The money received can then be used for a number of reasons, ranging from anything like paying off credit card debts to supporting a certain lifestyle or even financially gifting money to the children.
The minimum age required for an individual to opt for this Halifax equity release scheme is 65 years. There is however provisions that can let a person apply for this scheme, even if they are below 65 years of age. Retirement income must be in place, as evidence of such will be required as proof upon application.
Acceptable proofs of income and the amount that Halifax allocate would be: –
State pension – 100%
Company and private pensions – 100%
Pension credit – 100%
Rental income – 60%
Disability Living Allowance (DLA) – 60%
Industrial injuries – 100%
Attendance allowance – 60%
Investment income – 0%
These can always be at the discretion of the Halifax underwriter, however with guidance from the Halifax affordability calculator these are the assumptions usually made and form the basis of the maximum amount that can be borrowed.
Look Beyond One Product
The lifetime mortgage industry has more than just the Halifax Retirement Plan. There is an interest select plan that works in a similar manner as Halifax interest only lifetime mortgage. You also have products that are not interest only. While there are some obvious benefits to paying off the interest, such as leaving an inheritance behind, you also want to be careful you get a product that works best for you.
Roll-up or lump sum lifetime mortgage products allow you to take a lump sum like the interest only loan. The difference is the interest rolling up onto the capital sum you borrowed. You do not make a monthly payment. You get to spend tax free money as you need to and live a comfortable retirement; however, you have to be wary of the fixed interest. It can roll up to the value of your home. It could take the entire inheritance you intended on leaving too.
Drawdown lifetime mortgages are a little better than roll-up when it comes to inheritance talks. With this mortgage you take a smaller lump sum than the roll-up choice. You are then given a facility or equity account where you withdraw tax free cash as you need it. Depending on the amount of cash you actually use there could be inheritance left. This is because the roll-up of interest happens only on the money you use.
Time is going to be a factor. The longer you are alive the more funds you will need to use. Additionally, the longer your life the longer the lifetime mortgage is outstanding which means the more time the interest is accruing.
It is perhaps the reason many focus more on interest only plans like Halifax. With the interest only option you know there is never an increase to the capital sum, so there is always going to be inheritance. The downside is how long can you keep up monthly payments as you utilise tax free cash and pension accounts? Some find they have to rollover into a lump sum scheme to cover their interest only product.
• It is possible to rollover an interest only lifetime mortgage into a different lifetime mortgage as a means of stopping the monthly payments. It might be a choice you have to make later on as money tightens. Make certain you speak with an adviser regarding your rollover options as you search for products.
Seeking Proper Experts
Thus, it is always better to choose a financial advisor who can give you all the details about this scheme. Being appropriately licensed in the field of lifetime mortgages, they can income assess your potential application and advise on what can be borrowed quite accurately; but as always this figure is subject to the individuals credit record.