Mortgages For Old Timers

Mortgages For Old Timers
With the​ whole pension fiasco many people are struggling when in​ their golden years .​
Releasing the​ equity from your home can be a​ good way to​ supplement your income in​ retirement .​
Make sure you​ use these ten points to​ avoid the​ pitfalls.
#1 Make Sure That Equity Release is​ Right For You
If you​ are coming near to​ retirement or​ are retired and you​ are a​ homeowner you​ could be eligible for a​ cash lump sum in​ the​ form of​ an​ equity release plan .​
The amount you​ eligible for will depend on​ your age,​ property and the​ type of​ scheme.
Regardless of​ the​ equity release plan you​ choose,​ it​ will still affect the​ amount you​ are able to​ leave as​ inheritance .​
So you​ should make sure that you​ talk things through carefully with your family first.
#2 Get Financial Advice
It is​ always a​ good idea to​ talk to​ an​ independent financial advisor who will be able to​ access your current situation and what you​ want to​ achieve and find the​ most suitable solution.
Make sure you​ ask your financial advisor about the​ different equity release options available,​ the​ associated costs and whether any repayment charges are payable if​ you​ decide to​ end your plan early.
#3 Make Sure Your Provider is​ a​ Member Of SHIP
Safe Home Income Plans (SHIP) is​ the​ organisation dedicated to​ the​ protection of​ equity release plan holders and the​ promotion of​ safe home income and equity release plans .​
All participating companies have pledged to​ observe the​ SHIP code of​ practice,​ which guarantees the​ safety of​ all their plans.
#4 Check Out a​ Lifetime Mortgage
Lifetime mortgages used to​ be called cash release plans or​ roll up mortgages .​
The amount you​ borrow is​ secured as​ a​ mortgage against your home and you​ do not have to​ pay anything back until you​ die,​ need to​ go into care or​ the​ loan is​ repaid from the​ sale of​ your home.
Interest builds up from the​ start of​ the​ loan until it​ is​ repaid .​
a​ no negative equity guarantee ensures the​ lender will always accept the​ value of​ your home as​ full repayment for the​ loan and your estate will not have anything to​ pay on​ top .​
This is​ something to​ talk to​ your financial advisor about.
#5 Consider a​ Home Income Scheme
A home income scheme is​ another type of​ product where the​ money from a​ lifetime mortgage is​ used to​ buy an​ insurance policy that provides a​ guaranteed income for the​ rest of​ your life.
#6 Look At a​ Reversion Scheme
This is​ where you​ sell all or​ part of​ the​ value of​ your home to​ a​ reversion company in​ return for either a​ cash lump sum or​ an​ income .​
The amount you​ receive will be less than the​ value of​ the​ proportion you​ have sold .​
You can live in​ your home for the​ rrest of​ your life,​ but you​ will not be the​ sole owner and in​ some cases may have to​ pay rent .​
When you​ die the​ property is​ sold and reversion company keeps its share of​ proceeds.
#7 Check Whether the​ Product you​ Have Chosen is​ Regulated
The Financial Services Authority (FSA) currently regulate lifetime mortgages .​
If you​ see a​ product advertised as​ a​ lifetime mortgage,​ find out exactly what type of​ product it​ is​ .​
Regulation means advisors and lenders have to​ adhere to​ the​ FSAs strict code of​ conduct or​ face heavy penalties.
#8 Think About How House Prices Will Affect You
All SHIP members have a​ no negative equity guarantee on​ their lifetime mortgages .​
This means that if​ the​ price of​ your house falls you,​ or​ your estate,​ will not have to​ pay any extra to​ compensate.
With a​ lifetime mortgage,​ an​ increase in​ the​ value of​ your house can help to​ offset the​ interest on​ your loan .​
With a​ reversion scheme the​ company will take the​ agreed share of​ your property regardless of​ what happens to​ property prices.
#9 Check you​ Entitlement to​ Welfare Benefits
A large cash sum could affect your entitlement to​ state benefits .​
This will depend entirely upon your financial circumstances and it​ is​ an​ issue you​ should bring up with your financial advisor.
#10 Check How a​ Plan Will Affect Your Tax Liability
A large lump sum might also affect both your current and future tax situation,​ but not necessarily for the​ worse .​
If your children are looking at​ a​ large potential tax bill then releasing some equity in​ the​ house now might elevate this .​
But it​ is​ important that you​ speak to​ a​ specialist tax advisor about your personal circumstances.

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