MORTGAGES Residential Remortgages Buy To Let Debt Consolidation First Time buyers

MORTGAGES• Residential• Remortgages• Buy To Let

• Debt Consolidation• First Time buyers

PROTECTION• Life Insurance

• Income Replacement• Critical Illness Cover• Family Protection• Home Insurance

EQUITY RELEASE

Equity ReleaseWhat is it?

What is it used for?How does it work?

Customer protection

Equity ReleaseWhat is it?

What is it used for?How does it work?

Customer protection

Equity ReleaseWhat is it?

- allows older homeowners to release some of the money tied up in their

home

Equity ReleaseWhat is it?

What is it used for?How does it work?

Customer protection

Home Improvements Clearing DebtsHolidays /CruisesGifts to FamilyCar / CaravanIncome / SavingsMove House & ‘Trade Up’Long Term Care

= anything legal!

Alternatives to Equity Release:Downsize?Spend savings?Apply for grants?Family help?State Benefits?Checked all pensions?Lodger?

Equity ReleaseWhat is it?

What is it used for?How does it work?

Customer protection

Two options:

• Lifetime Mortgage• Home Reversion Plan

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

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

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

Lifetime Mortgage

(The bad news)• The debt can double every 10 years• Set up costs can be high – budget for £2000-

£2500

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

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

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

Home Reversion Plan(The bad news)

• Set up costs can be high – budget £2000 - £2500

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

Equity ReleaseWhat is it?

What is it used for?How does it work?

Customer protection

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

Summary

Any Questions?