Tag: Home Reversion

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.

The Importance of an Equity Release Property Valuation

A Stonehaven equity release plan is a great way for people to obtain an additional source of capital in retirement. If you are considering applying for a Stonehaven Equity Release plan, one of the most important factors that will decide how much money you are eligible for is the property valuation. Property valuations are a standard part of the equity release application process. An estate agent can be of great assistance during the property valuation process.

Seek Independent Advice
It is also recommended to seek the advice of a qualified equity release adviser before the property valuation process. An equity release adviser will help you to obtain a good idea of the value of your property prior to application so that you have a good idea whether the amount you require is practical.

Property Valuation Options

• The internet is also a good resource to find realistic ideas of the current value of properties especially of properties that are similar to yours.
• Another good idea to consider during the property valuation process is to request a market appraisal from your local estate agent. These can usually be obtained free of charge.

Location Matters to Equity Release Lenders
Apart from the valuation figure, Stonehaven will also be interested in the location of the property. If your property is located on a large council estate, you might have some difficulties obtaining a Stonehaven equity release plan since Stonehaven do not like properties to be located on a large council estate. You might also experience difficulties if your property is located on areas that are designated as flood risk areas. Stonehaven does not accept properties that are located on flood risk areas either. Check the environment agency website for more details on flood areas.

Factoring Valuation at the End
Property valuation is not only important during the equity release application process but it is also important when the property is being sold. Normally, the property is sold at the end of the equity release plan which normally occurs when the borrower dies or has moved into a long term care home. The property is normally sold to repay Stonehaven Equity Release.

In most cases, the property would hopefully have increased in value. A final property valuation needs to be conducted to obtain the current value of the property for which it can be sold. This would be at the end of the equity release mortgage term, once death or long term care has been attained. Once the property is sold, Stonehaven is repaid and the remaining amount goes to the beneficiaries. In most cases, the beneficiaries would be the children or grandchildren of the borrower.

Focusing on Financial Product Benefits
For the most part the focus has been on valuations and what will happen if you decide equity release is right for you. There are other things you should consider before you hire a company to do an evaluation of your home particularly if you will need to pay fees for this valuation.

There are benefits to equity release:

• Tax free cash
• Having money during retirement to live on
• Going on holiday
• Helping out your kids
• No monthly payments necessary

You can use the money in any way you want which is great. It means you can have those holidays you always wanted. You can also enjoy a little improvement to your home. For many improving their home is the purpose of such a loan so they can increase the value of it for their children.

Disadvantages to be Wary Of
Depending on the amount of loan you take out you might threaten the inheritance left behind for your family. This is why adding to the value of your home is a good idea if you can afford it with the loan. If not there are ways to ensure you protect your children’s inheritance such as an inheritance clause in the agreement. It is always a good idea to get advice about the potential clauses that will reduce the negative effects of an equity release.

You also do not want to use this method if you truly want to leave the home in your family. If the home does not matter, you might also want to consider home reversion. Home reversion sells the home while you are still living in it. You retain a portion of the home and a lifetime tenancy agreement. In exchange you have funds to live on, but you do not have a mortgage payment you have to worry about in the end. This is another way to guarantee a money inheritance is left for your family members.

To receive an estimate of property value contact our team today on 0800 678 5159 and make certain to mention Stonehaven equity release is a product you are looking at so they know which company to send the estimate to.

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.