Tag: Equity Release Schemes

The Benefits of Interest Only Lifetime Mortgage Calculators

For those considering equity release, you may have come across an interest only lifetime mortgage calculator. These are free online tools which offer to calculate the maximum lump sum you would be eligible for and what plans you would qualify for. Many people are reluctant to provide their personal information to these tools. However, there are a number of benefits associated with this readily available and easy to use tool.

The Benefits of an Interest Only Lifetime Mortgage Calculator:

• Quick qualification information: Equity release schemes such as lifetime mortgages have specific qualification criteria. This is slightly more complex than other forms of conventional financing. An interest only lifetime mortgage calculator can provide quick information about whether you meet the qualification criteria. This can save a great deal of time for those who would not yet qualify and allow them the opportunity to decide whether to postpone equity release or pursue other options. For example, many people are unaware that equity release lenders consider the age of the youngest applicant in joint applications. This would mean that a couple aged fifty eight and fifty four would be ineligible for equity release for at least another year.

• Highlights the implications of interest rates: An interest only lifetime mortgage calculator can be an excellent way to highlight the implications of different interest rates and specific plans. You will be able to see the long term costs involved in committing to a lifetime mortgage plan in order to make an informed choice about proceeding forward.

• Compare plans: Many of the more in-depth forms of calculator allow home owners to compare different plans and products. This can allow the home owner more control and information to make informed choices. By exploring the implications of different plans and products you can explore whether it would be more beneficial to opt for a plan offering a slightly amount of release or one which offers a more attractive interest rate. While many people are interested in obtaining the maximum amount of release possible, an interest rate of even one per cent lower can significantly reduce the overall long term cost, which may make it a more attractive deal.

How to Make the Best Use of an Interest Only Lifetime Mortgage Calculator

Interest only lifetime mortgage calculator tools provide an extremely useful research resource. However, there are a number of guidelines to make the best use of these free tools:

• Use more than one calculator: An interest only lifetime mortgage calculator is restricted to being linked to the specific product range of the company or broker. This may not represent the best possible deal for your circumstances. In order to obtain a better insight into the marketplace, it is best to use more than one calculator. Ideally, you should also incorporate using a general equity release calculator into your research to double check that a lifetime mortgage would be the best type of equity release for you.

• Double check your information: Calculator tools are purely mathematical. They have no capacity to check the validity of your information. Therefore, there is a responsibility for you to double check your information. You should spend a little time researching property valuations in your area to ensure that the figure you enter for your property value is as accurate as possible. Additionally, request an up to date balance from your current mortgage provider. Both these factors will affect the amount of equity in the property and inaccurate information will compromise the reliability of the results from the calculator.

• Plan out how much you actually need first: Many people begin their equity release research by looking for the amount of release sum which would be available to them. However, it can be a good idea to calculate how much you actually need before you begin. This will give you an indication of whether a particular scheme would be sufficient for your needs right away before wasting any more time researching. You may be pleasantly surprised by the amount of equity release available to you, which would give you more options on your flexibility which could provide a better deal.

If you are considering equity release, an interest only lifetime mortgage calculator can be a good starting point. However, it is important to realise that it should not replace professional advice. The calculator can provide the information you may need to make an informed choice about whether you would like to apply, but a professional adviser will be able to assist you in assessing the specific benefits and limitations of your chosen plan.

Are We Likely To Ever See Prudential Equity Release Plans Again?

In order to answer the question as to whether we will see Prudential equity release plans again we need to consider why equity release plans emerged in the first place and what they have to offer. Equity release allows you to raise funds from the value of your property. You and your spouse or partner retain the right to live at the property until you pass away or move out.

Essentially what you are doing is selling your home and then moving out later. For the retired over 55 individual or couple this can be a wonderful way to raise funds when they are needed. There are many reasons to choose equity release. The most obvious is that your retirement plan simply has not lasted as long as you thought or hoped it would. With the cost of living at an all-time high this is very common.

But, of course, you could just want to make your retirement a bit more relaxed. Or, perhaps you have always wanted to take an overseas trip and you have decided that this is the time.

Not all equity release schemes have been taken off of the market. In fact you have at least three companies that are major equity release providers. When you lose one provider there are often two more coming along the way or at least two more products to make it on the market. Whether Prudential equity release plans appear again or not, you are not being left out in the cold for your retirement needs. Instead, you have plenty of choices that have replaced the one product that is gone from the market right now. Let’s take a look at those options versus dwelling on the loss of one particular company’s product.

Lifetime Mortgages for Retirees

Under the name lifetime mortgages you have four products on the market right now. These are:
• Drawdown
• Roll-up
• Interest Only
• Enhanced

To start, rollup is the mainstream equity release. It is the one which all other lifetime mortgages are designed around. They are made for the person unable to make a monthly payment on the loan and who desires a large lump sum of cash to live out their retirement. You will see interest accrue onto the principle lump sum you took out. This lump sum and the interest are paid back once you die or decide to move out of the house the product is covering. Typically, payment is made with the sale of the home as most retirees do not have enough cash to cover the amount without a sale. You must be 55 years of age to take out one of these rollup products or any lifetime mortgage.

Drawdown is a definite change to rollup because you receive a smaller lump sum initially and then you take out money as you need it. Interest only adds up on the funds you have withdrawn from the account. This saves you money in the long run.

Enhanced is a version of the rollup scheme in every aspect, except it is a specialised mortgage to offer more money in a lump sum. You receive even more than the rollup plan or drawdown mortgage because your life expectancy is compromised. It might sound cold to say that illness in which death is quicker than most retirees is an advantage. However, in this case it is your ill health that can get you more funds because the loan is expected to be repaid quicker.

Interest only works like a rollup mortgage except you pay a monthly interest amount for as long as the loan is unpaid. Some products allow you to choose the amount of interest and make it a hybrid with a roll up in which any unpaid interest is rolled up into the lifetime mortgage. Most expect you to pay the full interest as it accrues each year.

If you do not appreciate these equity release plans in your situation, then consider a different choice in home reversion. This is an absolute sale of your house, but at least you get funds without a mortgage and interest accruing. For some this is a better option than having the burden of debt when they pass away.

Whatever scenario applies to you, you can see that the need for equity release plans is only going to increase. With this in mind it does seem likely that we will see equity release plans again in the form of Prudential equity release or at least from another company with products just as great.

The Versatility of Modern Day Equity Release Schemes

The process of releasing money or equity out of a primary residence without moving out is called ‘equity release’. Seniors who desire to free up money for different purposes choose this method as it allows them to have money in their pocket which they can use for different purposes. If you are living in the UK, you can arrange to get equity release as early as when you hit 55 years, but there are also limitations since you can only release so much at that age. Ideally, the older you are the greater the lump sum you get from equity release loans.

The main reason why people choose equity release loans is to raise money, which in turn will help improve their standard of living. The reasons could be for a multitude of different purposes, ranging from home improvements, helping the kids, holidays or even having an emergency fund in the bank.

In the past, people used to release equity to enhance their pension, go on holidays, and make their retirement years much more pleasurable. If you have a major project that requires cash in a lump sum, this will be a great idea; for instance, buying a second home in the UK or abroad, or to simply enhance your retirement package.

Other people take up equity release loans for real life situations that need accomplishing. For example, there are those who take up the lump sum to pay off a mortgage and consequently increase their monthly income, while a long waiting list for a hip replacement or other similar surgery may prompt one to take up equity release.

You might also choose to use the money to help family members buy their first home, do your own home improvements, or replace a family car. You can also choose to invest the money in property abroad which then allows you to travel away and have time with your children, especially if they are not living close to you. You might also consider buying a motor home and having fun travelling all over. The principle of equity release is to have money and spend it on what you want.

When people choose this option of raising funds, usually they do not have any other options left, or the other options are too expensive or inconvenient. In its infancy, people tended to use equity release for lifestyle reasons which effectively were optional and not a necessity. However, more and more seniors today are using the equity release facility to enhance their pension, or to fund their long-term care or help their children in financial crisis or for business purposes. These new era requirements have become more of a ‘need’ rather than a ‘want’ in the current economic climate.

Given this era of need you will definitely want to compare the different plans that exist. You may find that there is one solution that best fits your requirements. You may be older than 55 and wish to have more money released than a person would get at this age. Perhaps you have a health issue? If there is something attacking your longevity, there is a solution.

You can take out an enhanced lifetime mortgage. You receive a larger lump sum than you typically get. You also have the funds to make your life as comfortable as possible. If you are not taking out a loan to help pay for your expenses or help your children out, consider an interest only lifetime mortgage.

An interest only lifetime mortgage is designed to make taking out equity cost effective. You pay the interest that accrues each month on the loan. You do not pay the balance like any other option; however, you also do not add more to your principle balance. This keeps it at a reasonable level and an inheritance for your family.

Once you reach 65 you have an alternative to equity release loans in the form of home reversion. This option ensures you do not owe any more debt now that you are in retirement, but you do have cash to spend. You just have to sell your home, not always something most retirees are comfortable with, but still it is a choice.

Before one embarks on an equity release plan, it is important that they involve an independent financial adviser who can guide them on the best equity release method depending on their own unique circumstances. Generally, people aged above 55 and who own a property can use equity release loans, and the amount of money released will largely depend on their age and their health condition.