Pros and Cons to Consider When You Compare Equity Release Deals

By Mark Gregory on June 29th, 2012


You probably already know that the equity release UK market is not as straight forward as other financial products. Indeed, this is one of the main reasons why many people may choose to steer clear from such plans in the first instance. However, if you are stopping yourself from getting online to compare equity release deals because you simply feel too intimidated by the whole concept, make sure you undertake a little research to ascertain if such a plan could be right for you. That vital research process will start right here as we discuss some of the pros and cons that are relevant to equity release plans.



The Pros of Equity Release

Obviously, the main pro is the very fact that a huge chunk of the equity that is tied up in your property can be released to you at a time that you would most appreciate it. This can be forwarded to you as either a one-off lump sum or it can be taken as an additional income over time, by way of instalments.



The equity release UK market has never been better regulated than it is today and this is primarily thanks to the organisation known as SHIP (Safe Home Income Plans). This regulatory organisation exists to ensure best practice within the industry, and if you compare equity release plans through a company that is affiliated with SHIP, this should give you some extra peace of mind.



There are even guarantees that can be taken out that will ensure that you do not end up paying more interest than the equity that will eventually be left in the property when you die or move into fulltime care; furthermore, there are even guarantees available that can ensure your loved ones are left a set amount of money: as agreed at the commencement of the plan. These options provide further peace of mind by way of the no negative equity guarantee and the inheritance protection feature of a lifetime mortgage.



Some equity release plans will even allow you to move house and this means that you do not have to be tied to your property for the rest of your life, just because you have secured a lifetime mortgage or home reversion plan against it. There are certain criteria that need to be satisfied for this, so be sure to check with the company you have the equity release product with first.



The Cons of Equity Release

The main con is the very fact that most people feel intimidated by the concept and privacy of equity release products. But to be fair, this is not really the fault of the industry itself; rather lack of knowledge amongst the general public. If you admit to knowing very little about equity release plans, the onus is upon you to find out more and compare equity release deals to ascertain if they are right for you.



Another con is that you will always have less to leave your loved ones when the equity release plan is paid back. However, it would be nice to think that most relatives nowadays are far more self-sufficient when it comes to relying on the inheritance of an estate. We no longer live in Victorian times when such a sum of money could mean the difference between life and death itself. Many people, if they genuinely care for the relative in question here, would much rather see them enjoy the autumn of their lives.



Equity release plans are such a long-term commitment; hence the correct term for these plans being named lifetime mortgage schemes. This is certainly true, but when a plan is drawn up correctly and in full agreement between the two parties involved, over a very short period of time, it is forgotten about very easily and you are left to live within your property as you would have been before such a plan was taken out. The only difference being that you will be tens of thousands of pounds plus richer.



So, hopefully this article has gone some way toward alleviating the anxiety that may be held with regard the equity release UK market. It is actually not as complicated as you may have first thought. Get online and compare equity release deals to find out if this is the type of financial assistance you have always been waiting for.


To find out which equity release lenders are offering the best interest rate, cashback or free valuations click here.

Alternative please call for advice on any of the details discussed above on 0800 678 5169 today.

Are You Looking for Equity Release Jobs? – Listed 28th June 2012

By Mark Gregory on June 28th, 2012

If you are an experienced equity release adviser, Compare Equity Release can point you in the direction of a market leading equity release firm looking to provide equity release jobs.

Having the benefit of lead generation for its advisers, they offer a generous package on a self employed basis.


Follow this link to read all about the new equity release jobs advert here:

Words of Caution When Dealing with an Equity Release Remortgage

By Mark Gregory on May 18th, 2012



In today’s world many people have built their inheritance by owning their main residence. However, this still doesn’t negate their requirements for more cash on a day to day basis for everyday expenses, home improvements or maybe a dream holiday!


Equity release is a way of freeing up some or all of the equity that has built up in this property that you have worked so hard for and made many sacrifices along the way.


Equity release schemes are a popular choice in today’s ‘want it now’ social environment and as such there are several options available on the market. For those who have an existing equity release plan, it is possible to shop around for a better alternative and take out an equity release remortgage.


Who would have thought all those years ago in the early days of equity release that one day you would be able to switch lenders! It was considered in those days a ‘one stop transaction’ which once undertaken was considered there’s no going back? Well how times change – along with interest rates, product flexibility & retiree’s attitude towards their retirement & how they view it.



Points to consider first

Many equity release schemes charge an early repayment penalty, also known as early exit fees. These charges are, in theory, supposed to protect the lender from losses incurred due to early repayment of the loan. Before you decide to go ahead with an equity release remortgage, it is important to find out whether your existing plan comes with an early repayment charge clause, and whether it is applicable to you. Different lifetime mortgage companies apply different formula for assessing how their penalty is applied. The following list confirms which companies follow each different type of equity release early repayment charge: –


  • GiltsAviva, Just Retirement, Partnership, more2life, Norwich Union
  • Fixed penaltiesLV=, New Life Mortgages, Godiva, Saffron Building Society, Northern Rock, Hodge
  • Bank of England base rate – Prudential
  • Swap RatesHodge Lifetime



Early repayment charges vary from lender to lender and scheme to scheme. Some lenders can charge as high as 25% of the total amount that is borrowed. If the penalty is too high, this can nullify any savings that will be made on an alternative scheme. Some lenders can have a lower rate such as 5% for the first five years and nothing thereafter. Some, especially newer equity release schemes, don’t have any early repayment penalties.



To have a realistic idea of what you will break even with the new scheme, it is necessary to consider the setting up costs as well. These usually include any application fees charged by the lender, solicitor fees, adviser fees and the valuation fee. Sometimes you can find lenders offering extra perks such as a £500 cash back, or free valuation. This can be an attractive proposition for those interested in an equity release remortgage with a newly proposed equity release lender.



How do I calculate the final equity release balance

If you need to apply for a straightforward ‘like for like’ remortgage, then it is necessary to apply for the exact amount that you will require and no less. To do this, it is important to get a redemption statement from the current lender. From this it is possible to find out your daily rate of interest and calculate exactly how much you will owe when the switchover goes through.



Normally it can take up to sixty days for an equity release remortgage to go through. Therefore, your equity release adviser will need to accommodate the extra 60 days worth of interest the existing lifetime mortgage provider will be charging during the time your new application will be being processed. Add this to the redemption statement, also the set up charges that will be levied & you have the amount that needs to be applied for on your new equity release application.


Note – if your original application was linked to government gilts then be aware that between date of receiving your redemption statement and completion the penalty could still change.


It is important that the whole procedure is managed by an equity release remortgage expert who has access to the correct information & a good solicitor. (preferably from ERSA – Equity Release Solicitors Alliance).



Compare Equity Release have a switch plans tool facility which enables you to compare whether it would be in your interests to remortgage your equity release plan. To establish how much money you could save over the term of your lifetime mortgage scheme click here.


If you have any questions over potentially remortgaging your equity release scheme call the Compare Equity Release team on 0800 678 5169

Equity Release Rates are Now More Competitive than Ever

By Mark Gregory on April 17th, 2012


Equity Release PercentageIt has taken some time for equity release interest rates to mirror the reduction in conventional mortgage interest rates offered by the banks & building societies. You may be forgiven thinking the two rates are directly related. They are not.


In fact the movement in the lifetime mortgage market is usually more down to the competitiveness of the providers; particularly AVIVA, Just Retirement & LV=.

The knock on effect of these reductions has been a surge of consumer interest in UK equity release schemes during 2012.



What Factors Affect Lifetime Mortgage Interest Rates?

The inspired competitiveness from the providers is a result in the fall of longer term interest rates on the open markets. Long term swap rates had reached a level where lifetime mortgage providers feel is justified in passing on these reductions. Lenders borrow their funds in different ways. Companies using government gilts as their early repayment charge as their calculator have also been able to pass on these rate savings.

With companies like Stonehaven using the 15 year FT-SE gilt index as their repayment penalty format, their latest tranche of borrowings are at an all time low of 2.82%. This could be great news for equity release applicants looking for possible early repayment with no penalties in the future.


The Financial Benefit to Homeowners

The idea that homeowners can free-up some equity by way of equity release lifetime mortgages is enticing. The surplus of cash can be used to pay off debts and loans, as well as be used to help the children. Many homeowners even choose to carry out home improvements including having the kitchen or hardwood floors they always wanted but could never afford. These lifestyle enhancements have created an increase in demand for equity release plans, in turn increasing the competitiveness of equity release interest rates.


What are the lowest equity release interest rates currently?

A lot of different firms are currently offering attractive equity release interest rates, but believe it or not they are harder to find than you would think. It is always best advice to speak to an independent equity release adviser. They know the market best. As they are whole of market advisers & can deal with all the lifetime mortgage schemes currently available, they will be able to source the best interest rates. If you’re serious about equity release plans, don’t tackle the job all by yourself, you could be missing out on a great opportunity.


AVIVA provide the lowest equity release interest at the end of the first quarter of 2012, with a market leading 5.92% on their drawdown lifetime mortgage. Couple this with AVIVA’s free valuation upto £1million and £500 cashback, it represents an excellent deal.


If you’re searching the Internet for the best equity release interest rates you should be aware of two facts. Equity plans can often involve more aspects than meets the eye. Failure to understand a specific part of the plan could mean the difference between actually locking into a good rate, or being deceived into believing you got the best deal.


The lowest interest rate isn’t always best advice for everyone. Dependent upon one’s needs will determine the type of scheme suitable. With an array of equity release plans available such as home reversion, drawdown equity release & enhanced lifetime mortgage’s the decision can be daunting. Hence, the reason most equity release providers will insist on you receiving independent financial advice before they will accept any application.


Secondly, any potential consumer should be aware that some rates are not offered publicly over the Internet. An expert equity release professional will be able to offer customised equity release interest rates depending on your specific situation. Brokers such as Compare Equity Release have access to special deals that most financial advisers would not be privy to.


Additionally, by going direct to certain providers such as AVIVA may not always be the best option. Having a direct sales force costs a great deal of expense. Company car, pension scheme, sickness benefits & a basic salary has all to be paid for by AVIVA. As none of these costs are incurred by them with independent equity release advisers means that these savings can be passed on in a lower interest rate & cashback deals.


However, certain specification such as home value, the type of equity release plan, and your age all factor into the possible interest rate a consumer is eventually offered. For this reason, we always recommend seeking the advice of a professional. Equity release plans are not as simple as they always appear on the surface. Before you sign away the children’s inheritance, you want to understand all the aspects of the relevant plan.


With that being said, many experts agree equity release interest rates are being offered at great rates. Many professionals on the subject are advising to take advantage of these competitive rates while they still exist. As with any equity release schemes, there are risks. It’s imperative, in your consultation that all of the possible risks are fully outlined to you & the alternatives considered.


If you are interested in freeing up some capital to use for whatever you like, take a closer look at equity release lifetime mortgages. The first step is conducting your own independent research on the Internet. The second is speaking with a certified professional. They are Compare Equity Release and looking forward to discussing & help you find the best equity release deal for you.

Compare Equity Release can be contacted on 0800 678 5169 or by completing their online enquiry form.


Different Lifetime Mortgage Options Available With Equity Release

By Mark Gregory on March 29th, 2012

Equity Release Book

Are you looking to secure your life post retirement? Do you want to lead a life free from tension and financial worries? If the answer is yes, opting for equity release schemes is the right decision.

As different people have different financial requirements, recent equity release schemes have been designed and developed to cater to your needs. These schemes include home reversion schemes and lifetime mortgages. Roll-up lifetime mortgages are preferred by many people these days.



Features of lifetime mortgages

Lifetime mortgages are especially for those homeowners who are entering retirement. With such a plan, retired homeowners can release equity from their property in the form of a secured loan. The repayment of a loan under this plan takes place after the homeowner has moved into long-term care or after the applicant has passed away.


After opting for a lifetime mortgage, homeowners can continue to live in their residence. This is also applicable when the equity release balance exceeds the value of the property.

The no negative equity guarantee also ensures that no debt over the property value passes to the beneficiary. Therefore, inheritants are given assurance that the no debt is incurred by them from the decision made by their parents.


As the release of equity is completely tax free, applicants can use the money for any purpose they want. Due to all these benefits, more and more retired homeowners opt for equity release to secure their future.

The Main Advantages of an Interest Only Lifetime Mortgage

By Mark Gregory on February 15th, 2012

Equity Release Planning

There are very few people who do not take out at least one loan within their lifetime. There are many people who are financially well-off and do not find the need to go for a loan, but it is not always easy to manage money.


The management of finances is an art which most people do not possess instinctively. Thus there are banks and other financial institutions that offer mortgage loans to people.



An interest-only mortgage loan has its own set of advantages and disadvantages. Let us now have a look at the advantages of opting for an interest only lifetime mortgage.

The main benefit of this type of agreement is that the payments you make are lower compared to usual loans & protects your inheritance unlike equity release schemes.
An interest-only mortgage is an effective way of trying to reduce the mortgage cost. The reason behind this is that with an interest-only mortgage, the initial payments do not go towards covering the principal amount.
The interest calculated for the term of the loan is first recovered in a series of fixed instalments, after which the payments made proceed towards covering the principal amount.


Once the interest is covered, the amount of the fixed instalments is increased and it is then used to cover the principal amount. This kind of arrangement works well for the people who can be sure of the fact that their income will increase in the future through promotions or any type of inheritance.


It is however essential that one reads the terms and conditions of the lifetime mortgage including the fine print very carefully before signing it and making a commitment.


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