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.