News Has Is That Home Reversion Plans Are History

Home reversion has seen a steady decline in popularity over the past 5 years despite the lifetime lease option. A home reversion plan is a form of equity release scheme whereby one exchanges part of their property for a lump sum of money or income. Comparing most of the features of this plan with features of other plans, this has proven a less attractive plan and most people will avoid it and instead go for the more flexible options which are the lifetime mortgage range of schemes.

With a home reversion plan, one becomes a co-owner of their property with the person they sell it to and therefore have limited enjoyment of the appreciation of the price of this property. In fact, one can never count on any profit in the escalation of property value on the portion they do not own anymore. This limited co-ownership is a major turn off for most potential equity release applicants as sharing the ownership of a home they own does not sit comfortably with most.

However, home reversion plans do have some advantages over their lifetime mortgage counterparts. One of these is the introduction of a lifetime lease which the home reversion provider will offer the applicant. This gives the right for the home reversion applicant to remain living in the property, no matter what, for the rest of their life.

Anyone named in the lifetime lease is able to remain in the property, as long as they are also named in the home reversion plan. It includes anyone who is 65 years or older living in the home, if named. The concept allows a married couple to stay in their home until the last surviving person has to move out or dies.

The older the person is the more amount of money that can be released. For example, a male person aged 70 years with a property value of £200,000 can receive up to £83,000 but in return must surrender up to 100% of the property. Younger people, who happen to be most of the ones seeking such plans for home loan repayment, get far much less than what the elderly get. This thereby facilitates the drop in popularity of this plan.

The most important benefit of the home reversion plan can be the fact that ownership of the property not surrendered can be hereditary. This means that if one dies, his heirs can take up ownership under the same guidelines and specifications agreed upon by the deceased and the company offering the plan. However, with any surrendered part, if sold at a much higher price, one is not entitled to getting any share of the profit. In fact, in the long run, one gets much less the amount he could have received under other plans.

Another option that does not use lifetime lease options is lifetime mortgage schemes. These schemes are a mortgage often referred to as a reverse mortgage because repayment is not owed until the person dies or they decide to sell the home and move to a full time care location. The mortgage provides equity to the homeowner, so that they can live on the money.

The only option under lifetime mortgage schemes that require a monthly payment is the interest-only lifetime loan. You pay interest for the amount borrowed. At time of death or when the owner decides to sell the home, the principle loan amount is due.

There are definite advantages to keeping ownership of one’s house. It can be passed on to family members, without the need to sell or care what the loan company might need to do with it to get their money back. This type of scheme means the loan provider is happy as long as payment on the loan is made. The principle cannot change unless more money is withdrawn in equity. When the price increases, the home can be sold for that higher price ensuring an inheritance. Of course, the home price might devalue which could mean no inheritance.

Under most circumstances, the home reversion plan can work out far more expensive than a lifetime mortgage. The main difference is there is no worry about losing one’s right to stay in their home because of the lifetime lease. In this plan, if the interest rates were to go up, or house prices to considerably depreciate over the long term, the comparison then would be closer. Home reversion however still remains a less attractive plan, thus its significant drop in its market share.

Switch Deals Now Whilst Halcyon Times Exist For Equity Release Mortgages

Typically, older equity release mortgages can leave you steeped in high interest charges that are simply eroding the family’s estate. While some people will continue stressing with their month to month equity release charges, others will opt to make a change in their lives for the better by considering remortgaging their equity release scheme. To swap equity release schemes can ensure a better deal for many older equity release clients.

Understanding Your Choices
If you find that you are wasting money and time, or someone you know is wasting their time with an old equity release mortgage plan, you may want to advise them to look to swapping equity release schemes for their own good. Performing the switch to a new lifetime mortgage plan can be easy and quick, but will also relieve plenty of stress that you are now in a better position to save the equity in your property . And the time for switching to a new equity release scheme has never been better with interest rates being lower than they have ever been. Therefore, it is the perfect time to make the equity release switch.

You may be wondering how exactly one can switch from their old plan to a new equity release scheme. The process is incredibly simple and should not take too much of your time. Have you never owned a mortgage? Did you never remortgage and transfer your debt to a new lender. Well that is exactly what switching equity release schemes is all about. Call it an equity release remortgage.

All that is required of the individual is to get in contact with an independent equity release consultant. They will review your information; take down your existing plan details in order to complete a switch plan analysis. This will give you a definite decision as to whether or not you should swap equity release schemes by comparing your old, to new plan. Ensuring that all set up costs are accounted for and any early repayment charges included within the calculation, the adviser can then roll out the news.

What benefits can come by switching equity release schemes?
One of the major benefits of switching lifetime mortgage plans is down to interest rates. Rates during the latter end of 2013 were the lowest that homeowners have seen in years; these incredibly lower rates you could save £1000′s over the long term. Another benefit of choosing this type of plan is the greater flexibility now available whereby you have the option of applying for drawdown equity release schemes with absolutely no problem. The last benefit is that the startup fees for modern day equity release plans are much lower due to the inclusion of special offers such as cash backs and free valuations.

Now, a year later interest rates are starting to edge back up slightly, but this does not take away from the benefit of swapping out your current equity release. Instead, now is still the time to ensure that you are able to change your mortgage for the better. Remember, these equity release interest rates are fixed for life, so if there is a chance, grab yourself one of the best equity release deals around which could very well be the Aviva Flexible Lifetime Mortgage Plan with rates currently as low as 5.68%. (5.88% representative APR).

There are some disadvantages to the situation too, which you need to be aware of.

Cons of Swapping your Equity Release Scheme
Like swapping any mortgage, you will have certain fees associated with the switch. You definitely need to speak with a representative of an equity release company to determine if switching to a lower interest rate is going to save you a great deal based on the fees. The good news is in most instances you will be able to save a great deal; however, not everyone is alike especially given the length of time you might have carried your equity release plan.

• Check with a lifetime mortgage adviser, who should be qualified & experienced in such matters of switching plans & possible even worked for these legacy companies.
• Overview your current case and the amount of interest that you have earned so far in the build-up of your compounding interest. A redemption statement would evidence this data
• Check to see what types of interest rates are currently on offer –usually equity release comparison websites can provide these rates & details for you
• Decide if your home value has increased or decreased. You can usually gauge valuation from websites such as Zoopla where recent sales may have been listed.

Along with interest rates becoming lower there are many areas in the United Kingdom that have suffered housing devaluation. You may currently sit in a negative equity situation, which could hinder your ability to swap mortgages. If you are lucky and your home has increased in value dropping the interest rate is a perfect opportunity to ensure inheritance for your family.

Always remember to speak with your family and consider your options. With interest-only lifetime mortgages on the market, you could swap out of your older plan and start paying a little interest to help save your family’s inheritance. Assess your situation and what saving your family home means to you before you begin to renegotiate on any mortgage plan. Also find out if you have a great deal versus newer deals, as there are cases that do.

Looking to swap equity release schemes should be undertaken on a regular review basis, particularly for some of the older equity release plans from yesteryear. There are many legacy plans from companies who have now withdrawn from the equity release marketplace. Providers that were once very popular such as Northern Rock (now Papilio Equity Release), In Retirement Services (Sold their mortgage book to Newcastle Building Society & Just Retirement, Aviva with their Index-Linked Equity Release Plan or the Norwich Union Capital Access Plan should all be reviewed. Also, not forgetting Mortgage Express who had a maximum release lifetime mortgage along with the Portman, Saffron and Godiva (Coventry Building Society).

There are so many legacy equity release plans out there, and too many to list completely, but they are all still contactable to ascertain the latest redemption statements for your adviser following the completion of a Letter of Authority.. So to enjoy lower startup costs, fixed interest rates and the availability of drawdown plans, now is the time to decide on whether to swap equity release schemes and reap the benefits!