R.J.
Nash
Consultancy Ltd
Independent Financial Solutions
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Now you can really make the most of your retirement with either a lump sum or monthly income to spend as you wish. A lifetime mortgage offers you the chance to unlock the money tied up in your home. With a lifetime mortgage there are no monthly repayments and you will continue to own and live in your home for as long as you wish. How a lifetime mortgage works: If you (and your partner) are aged 55 or over, and you own your own home you could be eligible for an lifetime mortgage and benefit from a cash lump sum or monthly income Put simply, you release some of the equity locked in your home by taking out a loan secured on it. There are no monthly repayments to make and interest is paid when the plan ends, which is normally when you die or need long term care. You retain full ownership of your home and carry on living in it for the rest of your life. You can even move if you want to, most plans are flexible enough to move with you. If you move to a smaller property you may have to make a part repayment. You may even be able to take out a further loan subject to lending criteria at the time, although the availability of further loans is not guaranteed. If you move or change ownership of your home, you may have to repay some or all of the total loan including interest. A lifetime mortgage offered from a Safe Home Income Plans (SHIP) member offer a 'no negative equity guarantee', provided at no additional cost, which ensures that the provider will never ask you or your estate to repay more than the value of your property. This means that no matter what happens to property prices, your family or estate will never be left with a debt that cannot be repaid by the sale of your property, providing peace of mind for you and your family. How will you spend your loan? There are many ways of using the monthly income/lump sum released from your home to make your retirement more comfortable, and you can use the money you receive for any purpose. Many people use the monies to buy a new car, make home improvements or even a family holiday. It is not just home improvements which the monies can be used for. Many people use the funds as part of general financial planning. This can include: Paying for health treatment or long term care Funding school or university fees for younger children or grandchildren Helping out older children or grandchildren with their first house purchase Funding early retirement Providing funding to boost income shortfall Why a lifetime mortgage can be a good retirement solution: Retirement should be a time that we look forward to. Todays older generation is generally fitter, more active and wants to make use of their new freedom. In fact, some people spend longer in retirement than they did in work. They have no shortage of ideas about what they'd like to do, often the only thing holding them back is money. Whilst lifetime mortgage isn't the only way to access the money tied up in your property, it is an option which enables you to stay in the home you've lived in for years and no doubt grown to love. House prices: Thanks to rising house prices in recent years, most older householders now find their homes are worth far more than they paid for them. Once the mortgage is paid off, the amount of equity available could be substantial. Look for the sign SHIP Key providers of equity release plans are members of Safe Home Income Plans (SHIP). SHIP is a voluntary body set up in 1991 to promote safe equity release plans and to provide valuable protection for consumers. SHIP has established a code of conduct and a system of self regulation for all member companies. The code sets out that:
All cash release plans
must have a 'no negative equity' guarantee, which ensures youll never have to
pay back more than your home
Customers own solicitors
oversee the transaction. A SHIP equity release plan cannot be set up until the
solicitor has signed a SHIP member companies must provide fair, easy to understand information about their plans
Customers are told in
detail, what costs are involved, are advised that the plan may affect their tax
position and entitlement to Finally, SHIP also make provisions for handling customer complaints in the event that they are not covered by other regulatory bodies For more information visit the SHIP website www.ship-ltd.org Role of independent financial adviser: We recognise that taking out an lifetime mortgage is a big decision, that impacts both you and your family. It is not a decision that should be taken lightly. This is why we recommend that all customers undergo a full financial review from us, we will then pass the review to Sesame Solutions, as we only act as introducers for this product. This ensures that the right solution is found for you and will assess the impact of lifetime mortgage on your estate and state benefits. Sesame Solutions will be able to answer all of your questions and make sure that you understand how the plan works in detail. This review is there for your protection. It can be done in the comfort of your own home and importantly it is available without obligation. Why involve the family? We strongly recommend you take time to discuss your ideas for your home with your family. We recognise that there will be some questions that your children or close family may ask. These are the questions most frequently asked by the families of those considering a lifetime mortgage: Q. Are there any monthly repayments? A. No, there are absolutely no repayments to make until the home is sold which is normally on death or the need to go into long term care. Q. What if one of the borrowers need care? A. You can be assured that the provider of the equity release will never ask a plan holder to leave their home; they may wish to arrange care at home and the provider will never force them to leave. If one partner does go into long term care, the other partner can continue to live in the house for as long as they wish. Q. When are the loan and interest repaid? A. Interest is compounded annually on the anniversary of the plan. The loan and interest are repaid upon the death of the second borrower or once the home has been vacated because of long term care needs. Q. How are the loan and interest repaid? A. The loan and plus compounded interest is usually repaid through the sale of the property. Q. What if house prices fall between now and when the loan is repaid? A. The 'no negative equity' guarantee ensures that the provider will never ask you to repay more than the open market value of the property. Q. When is the loan repaid? A. If you move or change ownership of your home, you may have to repay some or all of the total loan including interest. Whos eligible? You need to be aged 55 or over, for joint applications, you should both be over this age. You must generally borrow at least £15,000 and the property must generally be worth at least £50,000, based upon an independent valuation carried out by a surveyor on behalf of the provider of the plan. Most types of residential property located in England, Scotland and Wales are acceptable. If your property is leasehold, the unexpired term of the lease generally will need to be 145 years minus the age of the borrower. If there is any outstanding mortgage you must repay it at, or before, the time of completion. What happens if your house value changes? An increase in the value of your house can help to offset the interest on your loan. A decrease in the value of the property results in the 'no negative equity' guarantee which protects you if the value of your property falls. Is my tax position or entitlement to state benefits affected? Taxation: A cash windfall could affect your tax position. State Benefits: A cash windfall could affect your entitlement to state benefits; this will depend entirely upon your financial circumstances. Taxation legislation may change in the future. What are the early repayment charges if I want to repay the loan early? Remember it is not normally expected or recommended for any reason other than death or the need for long term care, because you may incur a substantial early repayment charge. In addition an administration fee may be payable. Next Steps: Step 1: Gather Information: There are a number of equity release plans on the market, so for your protection consider using a SHIP registered provider. Gather as much information from Sesame Solutions as possible and take time to review it carefully. Ask yourself the following questions:
Do
I want to remain in my own home? Step 2: Talk to Sesame Solutions:
It's always best to talk
things over with a qualified independent financial adviser, who will look at
your whole financial situation and Questions youll want to ask Sesame Solutions include:
What are the equity release options and costs?
Should you decide to repay
your plan for any reason other than death or long-term care needs, you may have
to pay an early Step 3: Talk it through with your family:
Using the equity in your home affects the amount you will be able to leave your
family as inheritance. It's best to
make sure that
What is ea lifetime mortgage? Step 4: Applying for your plan: When you apply you will need to provide the following: Birth and marriage certificates Evidence of who you are, together with your name and address Details of savings and investments, as well as any state benefits you receive Details of your home building insurance A cheque for the valuation fee
An application fee will
generally be deducted from the loan advance so you do not need to pay this up
front. The fee varies between
Valuation fee is payable
for an independent assessment of the value of your property. The fee will be
paid to the surveyor on your Legal fees are paid by yourself to cover your own and those of the providers legal fees which are generally fixed. Step 5: Your home is valued: Usually, your lender arranges for an independent valuer to assess what your home is worth.
If you take out a plan
with a provider a valuation fee is payable *. A sliding scale charge will
apply, depending on the value of your The valuation figure will not necessarily correspond with an estate agents estimate, which may be higher. Once your home is valued, your lender can establish the maximum loan available to you. * The valuation fee is non-refundable. Step 6: The legal process:
As with any mortgage
application, solicitors are there to protect the interests of the borrower and
the lender. All SHIP members Borrowers are responsible for their own and the providers legal fees.
If you do not already have
a solicitor in mind, The National Solicitor's Network can help you find one.
They ensure that each firm Fixed fees, which are explained prior to work being carried out. A local, quality-vetted solicit or. A solicitor who understands providers of lifetime mortgage plans, and can explain them to you in plain English. Any solicitors who are members of The National Solicitor's network are independent of any provider of lifetime mortgages.
Step 7: Offer and
completion:
The only responsibilities
you then have, are to maintain your home buildings insurance, keep your house in
good order and let the
The provider will keep you
fully informed about your loan. Each year they will write to you, providing
details of your total loan Disadvantages Equity release schemes may work out more expensive in the long term than downsizing to a smaller property. Releasing equity from your home may affect your entitlement to state benefits and grants.
One type of Equity Release is
a lifetime mortgage, where every year interest is added to the amount you owe.
This will reduce the remaining equity in your home. If you live a long
time or house prices fall, there may Important Notes
The Equity
Release/Lifetime Mortgage should be seen as a lifetime commitment. Substantial
early repayment charges may be An Equity Release/Lifetime Mortgage is a lifetime loan secured on your home.
Check that this mortgage
will meet your needs if you want to move or sell your home or you want your
family to inherit it. If you are If you are entitled to State/Tax benefits these may be affected. Age limits and minimum property values apply. What you or your estate get back depends on the value of your property when it is sold. Do not forget that inflation will reduce what could be bought in the future. Future property values may fall as well as rise. The availability of further loans is not guaranteed from the provider. Further loans are subject to lending criteria at the time. Full terms and conditions and/or a written quotation are available on request from the provider of the equity release plan. R.J. Nash Consultancy act as introducers only to Sesame Solutions for Lifetime Mortgages. We usually charge a fee for this introduction of £500 and then share 50% of the commission/fee with Sesame Solutions. Sesame Solutions typically charge a fee of £450 on application. They can then accept commission from the provider or alternatively they can be paid a further fee of £1000 and any commission will be rebated back to you. This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. There are alternatives to a Lifetime mortgage and you may wish to consider unsecured loans, family loan, utilisation of existing investments, restructuring of finances and/or debts or downsizing. |
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