Equity Release mortgage solutions from Shire Direct

Equity Release Mortgages - table of contents:

Life begins at 60!

Most of us have a vision of how we would like our retirement years to be. For some it's retirement into the countryside and to learn to paint, or make pottery, just to do things we never had the time for in our busy working lives. For others it may be to travel, and backpack around the world - after all youth is wasted on the young!

But do you have the funds to grasp this new lease of life - the chance to follow your dreams?

Thankfully there are solutions available in order to unlock some of the capital tied up in your home to help fund your golden years and allow you to be able to do those things you always planned to do when you retired. This is known as Equity Release. However, there are issues that must be considered before deciding whether equity release is the best solution for you, and they include:

Inheritance provisions for children and family
State scheme benefits
Your income and capital needs both now, and into the future.

Equity release can help to provide all this, and any of the following most popular uses:

Increasing Income and/or Capital
Improving your lifestyle, e.g. holidays, visiting relatives overseas
Home Improvements, such as a new conservatory, central heating, or for repairs etc.
Lifetime Gifts to your family
School or University fees for your grandchildren
Property purchase - including a holiday home
To pay for private medical care or to increase mobility e.g. stair-lift etc.
Paying for care
To clear debts and reduce outgoings
To help children / grandchildren onto the property ladder
Inheritance Tax Planning

What does Equity Release mean?

Well, firstly it's probably a good idea have a look at what "equity" is, and how it's calculated. "Equity" is the difference between the value of your property and any outstanding debt you may have, such as a mortgage or other loan secured on your property. Equity Release then is simply the process that allows you to release your equity without having to sell your property.

Equity Release is becoming more and more prevalent these days, due largely to the fact that:

Property prices, and therefore equity, have increased dramatically in recent years
Retired people now want to maintain a good standard of living
Because people are living longer, and because of poor investment returns, retirement annuities have not produced as much as was initially predicted or hoped for.
Attitudes to inheritance are changing; nowadays it seems that most children positively encourage their parents to use their assets in retirement, in order to improve their lifestyle, rather than going short purely to keep the inheritance intact.
More and more people want to enjoy a full and happy retirement, and therefore equity release plans have become a very significant market.

Types of Equity Release mortgage product

As we have seen, Equity Release is the act of using your home to raise cash. There are two main types of Equity Release schemes available in today's market place:

The Lifetime Mortgage, and
The Home Reversion scheme

The Lifetime Home Equity Release Mortgage (HERM):
Lifetime Mortgages or HERM's are mortgage products that have been designed for retired borrowers to release some of the equity in their property. The main advantage with these schemes is that the borrowers never have to make any monthly mortgage repayments; the interest charges being "rolled-up".

Generally, the minimum age requirement of the youngest borrower is 55. The older the borrowers, the greater the percentage that can be released. This tends to be in the region of 15% of the property value at age 55, rising to a maximum of 55% at age 85.

If you are thinking of arranging a Lifetime Mortgage (or Home Equity Release Mortgage - HERM) you are able to receive your equity release in a variety of ways, including as a:
- Lump Sum
- Lump Sum with a draw-down facility to take additional amounts as and when required
- Monthly drawdown in order to supplement their pension income, or
- Combination of both if you require an additional regular income as well as a cash lump sum
With the Lifetime Mortgage, you will always retain ownership of your property.
Home Reversion Plans:
Home Reversion schemes operate quite differently to the Lifetime mortgage. Here you actually sell your home at a substantial discount of its value, in return for a cash lump sum, and the right to reside in your property on a lifetime tenancy. Although you give up ownership, you may still retain an interest in a portion of the property, for example 50%, and you can use this 50% interest in the property to drawdown additional funds at some future time, or use it for inheritance purposes. Generally most providers of Home Reversionary plans require the borrowers to be at least 70.

What are the downsides to Equity Release?

Utilising equity release schemes must be very carefully considered, and they are not always the perfect solution!

You must consider that if you are currently in receipt of state benefits, these could well be affected by an increase in your disposable income and/or cash reserves.
As you are releasing money from your home, the amount you will be able to leave your family is going to be reduced.
The interest applied can grow quickly as it is compounded
If you repay the lifetime mortgage early, an early repayment charge may become payable

Qualified Equity Release mortgage advice, solutions and help from Shire Direct!

It's also worthy of note that the Financial Services Authority (FSA) regulations require advice in the provision of all Equity Release products should be undertaken only by suitably qualified Advisors.

We're delighted to let you know that Shire Direct has a specialist team of professionally qualified Advisors in Equity Release products, and who hold the Institute of Financial Services' (IFS):

Certificate in Lifetime (CeLTM)
Certificate in Regulated Equity Release (CeRER)
Certificate in Mortgage Advice and Practice (CeMAP)
Advanced Certificate in Mortgage Advice and Practice (Adv. CeMAP)

Carefully weigh-up the alternatives:

If you are considering an Equity Release plan, you should also consider the alternatives including raising cash by trading down to a smaller property, or having the family help you with your finances in return for an eventual stake in the property.

Also speak with one of our professionally qualified Equity Release Mortgage Advisors, who will carefully assess your needs and requirements, and will suggest that, if you have not already done so, you should talk over the matter with your family. You must also consider that if you are currently in receipt of state benefits, these could well be affected by an increase in your disposable income and/or cash reserves.

Naturally our aim is to provide all our customers with a first-class mortgage service. You'll find us to be friendly yet professional, and able to discuss, explain and provide the most appropriate product, commensurate with your aspirations, needs and circumstances.

All the equity release products we arrange are backed by SHIP (Safe Home Income Plans) the equity release trading standards body. Naturally all SHIP approved mortgages must comply with the SHIP rules. This means that a solicitor must provide a certificate confirming that implications of the scheme have been fully explained and understood, and in turn, this ensures independent legal advice forms part of the process.

Please don't hesitate to contact us if you think this facility would help you. Our professionally qualified mortgage advisors are available up until 10.00pm everyday, and we'll be delighted to provide you with an in-principle decision.

Is 65 the new 50...?!

As we all look forward to a potentially longer lifespan, you may be one of the rebellious pensioners who refuse to grow old gracefully! And so if you're interested in learning how Equity Release schemes could improve your lifestyle in retirement, you may find the following pages to be of interest:

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

This Equity Release product may involve a Lifetime Mortgage or Home Reversion Plan. To understand the features and risks, ask for a personalised illustration.

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Equity Release mortgage solutions from Shire Direct...