mortgages residential remortgages buy to let debt consolidation first time buyers
TRANSCRIPT
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MORTGAGES• Residential• Remortgages• Buy To Let
• Debt Consolidation• First Time buyers
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PROTECTION• Life Insurance
• Income Replacement• Critical Illness Cover• Family Protection• Home Insurance
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EQUITY RELEASE
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Equity ReleaseWhat is it?
What is it used for?How does it work?
Customer protection
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Equity ReleaseWhat is it?
What is it used for?How does it work?
Customer protection
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Equity ReleaseWhat is it?
- allows older homeowners to release some of the money tied up in their
home
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Equity ReleaseWhat is it?
What is it used for?How does it work?
Customer protection
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Home Improvements Clearing DebtsHolidays /CruisesGifts to FamilyCar / CaravanIncome / SavingsMove House & ‘Trade Up’Long Term Care
= anything legal!
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Alternatives to Equity Release:Downsize?Spend savings?Apply for grants?Family help?State Benefits?Checked all pensions?Lodger?
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Equity ReleaseWhat is it?
What is it used for?How does it work?
Customer protection
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Two options:
• Lifetime Mortgage• Home Reversion Plan
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Lifetime Mortgage• A mortgage on the property• Applicants still owns their home• Interest charged, but not paid• The debt ‘rolls up’ with interest added• Interest rate is usually fixed throughout term
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Lifetime Mortgage• Can be a single lump sum, or income, or ad-
hoc withdrawals, or a combination• The amount available depends on age(s) and
house value• Can be portable if choose to move• Open ended – can run until the end of the
borrowers life (‘Lifetime Mortgage’)• Repayment is only required when the
borrower leaves the house
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Lifetime Mortgage
(The bad news)• Younger ages will not release much• There will be less of an inheritance to leave• The increasing debt could wipe out the
property value over a long term• Moving home can be difficult
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Lifetime Mortgage
(The bad news)• The debt can double every 10 years• Set up costs can be high – budget for £2000-
£2500
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Lifetime Mortgage
(The good news)• Guaranteed lifetime occupancy• No monthly payments are required• You retain full ownership of your home• The growing debt can be accurately forecast
with a fixed rate• There may be some equity left when you
leave the property or die
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Home Reversion Plan• Minimum age(s): 65• Part, or all, of the property is sold to a
Reversion Company• Applicant can live there, rent free, for life• When they leave, or die, house is sold and
Reversion Company keeps the proceeds• No debt, no mortgage
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Home Reversion Plan
(The bad news)• Ownership of sold part of the home is lost• No inheritance left unless just a part of the
property is sold• Typically only 45% - 60% of true value is paid• If applicants die quickly, can prove to be a
very costly scheme• Moving house can be tricky
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Home Reversion Plan(The bad news)
• Set up costs can be high – budget £2000 - £2500
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Home Reversion Plan
(The good news)• Certainty: no effect if house prices fall• Can guarantee to leave something for
beneficiaries on a part release• Can usually release more than a Lifetime
Mortgage for any given ages
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Equity ReleaseWhat is it?
What is it used for?How does it work?
Customer protection
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ProtectionSafe Home Income Plans – ‘SHIP’• No ‘negative equity’ guarantee• Use own Solicitor – SHIP certificate• Right of occupation for life• All terms must be ‘clear, fair and not
misleading’Financial Services Authority – FSA regulation• All advisers must hold equity release
professional qualification
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Summary
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Any Questions?
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