Archive for August, 2013

Compare Equity Release & Access Lower Interest Rates than Aviva Direct

Sunday, August 18th, 2013

Aviva Equity ReleaseGoing direct to Aviva for your equity release scheme, rather than shopping around through an independent website such as CompareEquityRelease.com, will actually cost you more in the long run through the interest rate you receive.

 

By looking around at what an independent equity release websites such as CompareEquityRelease.com can offer, you are to get a better deal than you can when dealing with Aviva Direct.

 

Opening up the market

As the equity release market has grown and developed, independent brokers have ensured that competition is keeping the cost to customers down. Whereas if you only speak to the lender themselves they will give you a list of just their own deals, they know if you go through an independent they will show you all the offers on the market. This means that they have the incentive to offer better rates which comparison sites such as CompareEquityRelease.com have identified to encourage more business.

 

The cost of interest rates

Interest rates always look so small when they are just a number. The difference of a couple of decimal points seems insignificant, but over time that tiny increase can cost you thousands.

 

When applying for one of Aviva’s market leading equity release schemes, sometimes the difference between the deal you would get buying directly from Aviva and the deal you can get through CompareEquityRelease.com can be as much as 0.25%. Now that doesn’t seem like that much when you look at it, but that small difference could end up costing you, the customer, £1000’s over the years of your deal. With the amount of cash you can release from your property, 0.25% builds to a significant amount.

 

Flexible Pricing

The best equity release sites, such as CompareEquityRelease.com, have the ability to give you a far more flexible approach to getting you the best deal from Aviva. When Aviva’s direct sales team were encouraged to sell you standard deals that help them cover their own costs, an independent equity release company can access the Aviva Flexible Pricing Tool to make sure that you are always provided with the best deal for you.

 

Everybody has a different situation. Factors such as your age, health, size and condition of your property and the amount you want to release are all part of the overall picture. And you are an individual. Take a look at the house next door. Is it the same as yours? It might have been on the day they were built, but now that house is more than that. It’s your home. You’ve spent years making it what it is. Your property is as much a part of you as your neighbour’s is a part of them.

 

Independent equity release sites such as CompareEquityRelease.com recognise that, and know that the best deals can only be achieved by taking this into account. Looking at your personal criteria and using Aviva’s Flex Pricing Tool they can ensure that you always get the best deal for what you need. They can inform you which company offers the lowest deal, highest lump sum, biggest drawdown facility or even offer the most flexible plan in terms of lifetime mortgage early repayment charges.

 

Getting the rate that suits you

Even though you might want the great deals offered through Aviva, sometimes there are different rates available for different people. CompareEquityRelease.com can make sure that you find the one that best suits you. In order to cover the costs of maintaining their own direct advisory and sales team, Aviva will were forced to offer you higher rates than you could get through an independent advisor. This is why that from 1st July 2013 Aviva are closing down their direct equity release service. It just isn’t cost effective any longer.

 

They will now panel out any enquiries made to the Aviva head office if one requires equity release advice. Unfortunately, the deal offered thereafter won’t be as competitive rate as that offered through independent firms such as Compare Equity Release. You will pay a premium.

 

So if you want to take advantage of the best deals from Aviva, such as the Aviva Flexible Lifetime Mortgage Plan or Aviva Lump Sum Max then visit the CompareEquityRelease.com website and find out how much you can save and how to then proceed with your money saving application.

 

To obtain a competitive Aviva equity release quote call the team on 0800 678 5169 or contact us here.

New Era for Retirement Mortgages As Hodge Lifetime Enter the Fray

Friday, August 2nd, 2013

Hodge Lifetime Retirement Mortgage PlanHodge Lifetime today launched another pioneering retirement product aimed at capturing the needs of interest only mortgage holders who have NO repayment strategy in place.

 

The Hodge Lifetime Retirement Mortgage Plan is aimed at people between ages 55-70 who wish to borrow upto 50% of their property value. The money can be used for any purpose, however Hodge have designed the product with a rescue package in mind.

 

The Hodge Rationale

The Hodge Lifetime Retirement Mortgage Plan has been designed with the former Halifax Retirement Home Plan in mind, which was withdrawn late in 2011. With similar features & basis for lending, the new Hodge Plan is the first product since the Halifax Lifetime Mortgage that will offer an interest only lifetime mortgage based on income criteria.

 

For those with only a limited time to repayment off their interest only mortgage, the Financial Conduct Authority (FCA) state there are 2.6 million interest only mortgages maturing before 2030. Of these, 10% have no repayment strategy in place & with the average mortgage balance being over £50,000, the extent of the problem cannot be underestimated.

 

At the point of demand for repayment of their mortgage, people currently have limited options other than downsizing or remortgaging onto another mortgage. The first option may suit some, but not all. The second has proven difficult, as lenders have reigned in their retirement mortgage book after guidelines laid down by the FCA.

 

How Hodge Can Assist

A retirement mortgage is a loan secured on your main residence which runs throughout retirement. Hodge’s new Retirement Mortgage will remove all the concern over the eventual repayment of the mortgage, as it only requires repayment upon death or long term care.

 

Therefore, for someone leading upto retirement with a pressing need for repayment, could seek independent mortgage advice and see whether it would be best advice to remortgage onto the new Hodge Plan. This would effectively remove the short term mortgage need & switch over to a lifetime mortgage providing a lifelong secured loan on their home.

 

Scheme Criteria

Hodge use pension income as the basis for the borrowing calculation. With a cautious approach in light of the Mortgage Market Review (MMR) in April 2014, Hodge will only accept the following forms of income towards the affordability calculation: –

 

  – Basic State Pension

  – Defined benefit pension scheme

  – Defined contribution pension scheme

  – Annuity in payment

  – Income drawdown arrangement

  – SERPS or S2P

 

Stability of income is key to Hodge lifetime, with the necessity of the income being paid on a level, or preferably an escalating annual basis. Hodge underwriters will assess applications on a case by case basis, subject to income & a good credit history. Combining both factors will determine the size of the release.

 

 

The Plan In Practice

Once the loan size has been determined, payments of monthly interest will then be made to Hodge which covers the interest charged. This has the effect of maintaining a level mortgage balance & will continue until age 80.

 

The initial interest rate offered is a 5 year fixed rate of 4.75% (5.1% APR).

 

Therefore, as an example borrowing £50,000 on the Hodge Retirement Plan would initially cost £197.92pm. Once the 5 year fixed rate has expired, the standard variable rate would commence, however there would be the option of taking another fixed rate at that time.

 

On reaching age 80, a decision will be need to be made as to whether monthly payments will continue, or they wish to be stopped. Ceasing payments will result in the plan reverting to a traditional roll-up equity release scheme, where the balance will increase annually.

 

The plan eventually ceases either on early repayment or after the last surviving planholder has died or moved into care. The property will then need to be sold in order to repay the mortgage debt, with any surplus funds passing to the beneficiaries.

 

Additional Features

 – Early repayment charges – are fixed over a 5 year period. They start at 5% in the first year reducing yearly down to 1% in year 5. There are NO penalties applicable after the 5th year.

Flexible Repayments – Hodge will allow 10% extra capital repayments over the initial 5 year period with NO penalty.

Loan Size – minimum £20,000, maximum £500,000

Property – must be in England, Wales & Scotland & have a minimum valuation of £100,000

No Negative Equity Guarantee – included at no extra cost & ensures the loan can never be more than the property value

 

Summary

The Hodge Lifetime Mortgage plan opens the door for those who have sufficient disposable income in retirement to comfortably maintain payments on their mortgage. It will particularly benefit those between the younger ages of the product criteria. Where usual interest only mortgage schemes from Stonehaven & more2life will only lend based on age.

 

The limits are invariably low on these two types of interest only lifetime mortgage schemes.

 

For example, the current maximum loan-to-value at age 55 with Stonehaven is just 19%. Compare this to the new Hodge Plan whereby if sufficient income is proven, then upto 50% of the property value can be released. On a £300,000 property the difference could be upto £93,000.

 

 

To discuss eligibility for the Hodge Retirement plan or request a mortgage quote please call the team on freephone 0800 678 5169 or click here for further information.

 

This is a Lifetime Mortgage.  To understand the features & risks, please ask for a personalised illustration.  Your home maybe repossessed if you do not keep up repayments on a mortgage.

 

 

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