Home Reversion Plan | Equity Release UK

Do Home Reversion Calculators Still Exist?

Posted by Stephen Hall + on August 14, 2014

The equity release market has changed considerably since the beginning of the industry. Products have come and gone. For example, the Hodge Share Growth Option, a home reversion plan, is no longer available. Hodge Lifetime was a forerunner for all equity release schemes. The market is left with few companies offering the product. They include Bridgewater, Crown and New Life. Since home reversion payouts are dropping in these last few years; there has been a drop in tools available to consumers like you including home reversion calculators.

Impossible to Find – NO!
It is definitely harder to find home reversion calculators; however, it is not impossible. You just need to know where you can search for the tools to make certain you are on the proper website and not led astray. Doing a Google search will show you results of supposed websites providing these HR calculators; however, the actuality is they offer a lifetime mortgage calculator. These two types of calculators are very different in the results they offer, thus the need to find a true tool.

Instead of getting frustrated by the misleading results, you can visit Crown or www.homereversion.org. Crown Equity Release has an association with HomeReversion.org ensuring you find a proper calculator for your home reversion needs. By using this product on the aforementioned website, you can determine whether it is possible to gain enough tax free cash to help during your retirement.

Exploring the Differences in Products
Lifetime mortgages are loans available to retirees aged 55 or older. There are four types of lifetime mortgages, which are not currently relevant to the discussion. With a lifetime mortgage, you will need to pay the principle tax free sum plus any interest that has accrued at the end of the loan. The end of the loan is defined as your death or a move to a long term care facility. Lifetime mortgages can be transferred to new properties with some companies, not all but some, thus the definition of payment.

Home reversion is not a loan at all. There is no interest that applies to the concept. Instead, you allow partial control of your home to go to the buyer. You will sell your home, in full or part, in return for cash. It is tax free cash, to be used as you wish. The buyer signs a lifetime tenancy agreement with you allowing you to remain in the home until death or again until you wish to move. At the time you move or expire, your home is sold to the buyer in full. Any value or equity left in the home is given to your beneficiary or you.

The buyer then has full ownership of the home, which they can then sell to a new buyer. The new buyer will pay full value for the property, whereas you received only partial value based on the percentage you sold originally and at the end. An appreciation of your home allows for a higher percentage awarded to you.

Calculating Based on Value and Age
As you can guess, home value is going to apply to the amount of money you can obtain with home reversion. The more value a home has initially, the more you can get in a percentage. It is best to have an accurate value or as near an approximation as possible. Zoopla can help or Nationwide (if you have an old appraisal).

You must be 65 to take on home reversion. The older you are the more money you can receive. The premise is all about life expectancy for the company buying your home. They assume the older you are the quicker you will die. It sounds cold and it really is. They are in for the investment and potential money they can make, thus the less time you are in the home, the better, especially as the market improves. The more a home appreciates the more they can make on the resale.

Lifetime Mortgage Calculator
Results from a lifetime mortgage calculator are based on your age, home value, and the fact that there is an interest rate. You receive a specific percentage of the home sale just like home reversion, but you cannot determine what that percentage is.

With home reversion you can tell the home reversion calculators what percentage you want to sell of your home to see if it is going to result in enough cash to live during your retirement comfortably. An advantage is that you can always sell more of your home to gain more funds and still live in it.

Which providers offer Enhanced Lifetime Mortgages?

Posted by Stephen Hall + on January 15, 2014

Equity release mortgages are varying as people’s needs are different. Usually you would just visit the normal equity release schemes which would either be a type of lifetime mortgage or a home reversion scheme. However, there is a fresher type of equity release called the enhanced lifetime mortgage. This lifetime mortgage can provide an even greater maximum lump sum that doesn’t require you losing ownership of your home like in a home reversion plan.

You generally consider an enhanced lifetime loan if you are in poor health or such that is deemed to be eligible due to smoking or excessively drinking. New applicants to this lifetime mortgage find it appealing due to their poor health. This is because lenders believe that you will die sooner than people applying for a normal equity release so they can recoup their money sooner. Therefore, you would receive a higher lump sum with this scheme, meaning that you can enjoy life without any monetary restrictions.

To apply for an enhanced lifetime mortgage you need to be at least 55. There is an application to fill out that asks specific questions about your health and lifestyle. This application looks at lifestyle choices such as smoking and drinking that can be dangers to your health. The application also asks your weight to see if there are obesity or heart concerns. The provider will take into consideration if the applicant has a severe health issue like cancer or other life threatening diseases. This is due to the fact that with a decreased life expectancy of people with illnesses, the provider will release more equity.

There are three main providers of an enhanced equity release scheme: Aviva, More2life and Partnership. You should look at approaching these companies if you are looking to borrow and you suffer from minor or severe health impairments. Alternatively, you should speak to a financial advisor to see if you are eligible for an enhanced equity release scheme.

The enhanced equity release scheme is often overlooked by applicants, because they are not as promoted as normal lifetime mortgages but companies like Aviva or More2Life are becoming more popular with this product. Also, applicants fear that because of their health that they would have the opposite effect in the amount of cash they will receive for their equity.

Enhanced schemes are not for everyone. As stated, there needs to be a significant health risk to your life expectancy for you to qualify. If you speak with one of the providers available to you and feel this scheme is not for you, do not give up. There is monetary help out there for you. You may want to speak with a financial advisor to see what other plans you might be eligible for.

Highlights of Enhanced Lifetime Mortgages:
1)      You do not sell your home to obtain cash.
2)     The cash you receive in a lump sum payment can be used as you wish.
3)     You will not have to pay any monthly payments or interest with this mortgage option.
4)      It is for individuals who have severe health issues or potentially reduce life expectancy.
5)      There is a potential for leaving an inheritance.

Concerns:
1) Your family will need to pay the mortgage back. This may be through the sale of your home. If there is a sale needed your family may still get an inheritance based on the housing value increase of your home. The sale price minus the outstanding loan balance with interest may equal extra funds.
2) If you have a companion, partner, or are married you may be leaving your partner without extra funds for their retirement by taking out equity when you are at an earlier age.

Enhanced equity release schemes allow you to take money out when you are 55, but there can still be quite a few years left for your spouse or even you should medical changes occur. One major benefit of the enhanced plan is having the funds to cover extra medical expenses that may not be a part of NHS, such as cancer treatments that are not covered under your UK government programme.

Applicants also have a tendency to keep health problems secret, which is understandable. In the case of enhanced lifetime mortgage the sicker you actually are the more you can receive for your equity. Companies should be making potential customers more aware that this option is actually available to them and applicants should not shy away from disclosing any health issues.

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Posted in: Enhanced Lifetime Mortgage, Equity Release