Guide to the Cost of Care Home Fees in the UK

There has been a fairly steady rise in the number of care facilities that span across the UK. This is due in large part for the need to rise up and meet the increasing demand for adult social care and long term care needs. Today, thousands of elderly people across the UK reside in residential care homes. The biggest component of long term care costs is usually the care home fees. For those who find out that they need long term care or that their loved one needs care, there can be a number of questions that need answering. For example, who pays the care home fees and who is entitled to funding from the state?

The fees associated with residing in a care home really depend on a number of factors – including the location of the care facility and the type of care that is offered at the facility. The range in cost can be quite wide and care home fees could range anywhere from £300 a week to £700 per week for residential care homes. For nursing care home homes, the cost per week can range anywhere from £500 to £1100. These costs usually include rent, caregiver’s fees, and food. Any additional personal expenses are not included. Also, special care requirements will generally increase the cost of care. So, if there is anything unique or individualized that is needed by the patient, the cost will rise accordingly.

The state provides funding for adult social care but in order to qualify, a means test must be performed first. That means test assesses your income and capital and works out whether or not you are entitled to receive financial help. This assessment also decides if you will be required to contribute to the overall costs and if so, at what amount.

Currently the higher threshold for the means test is £23,250. Individuals with a combined income and capital above this limit are not entitled to any financial assistance with their costs. You can find more details about what the means test does and does not consider in its assessment from the social services department. You can also find detailed online resources about the means test and how assets are considered – particularly from charities such as Age UK. However, if you are found to have available capital and income that exceed this amount, you can expect that you will be forced to self-fund your care.

Next, the NHS provides a continuing healthcare service that is based on a needs test. The comprehensive needs test assesses whether an individual’s needs are primarily related to their health. If you are eligible to receive it, continuing healthcare covers costs of care irrespective of your financial situation. It is also possible to receive a combination care package wherein different agencies work together to meet the costs of treating your needs. Depending on how much you are eligible to receive, you contribute in full or part towards your care. If the council or the NHS is paying the fees for your care home, and you choose to live in a care facility that costs more than the amount you are allocated, you are expected to ‘top up’ the difference in costs. That means that you are required to bridge the gap between the financial assistance you receive and the actual cost of your care.

Long term care costs are potentially indefinite – and this means that those self-funding their care could end up losing their entire life savings to pay for long term care. There are payment solutions such as care plans and care annuities designed to pay for long term care. Care plans can be a good way to protect your savings from running dry by insuring for future cost of care by investing a lump sum. It is imperative to learn every option available to you long before you ever need long term care. Being proactive is perhaps the best plan for making sure that you are able to protect your assets and life savings. Once you know that you need care, it may be too long to put the best action plan in place. That is why it is so important to learn about all of the assistance that may be available to you and then to plan accordingly. The cost of long term care, and the cost of care homes, will most likely do nothing but increase. Speaking with a financial adviser and ensuring that you are prepared for any costs that might come your way is the best way to plan for the costs you can incur should you need long term care.

Using Home Equity Release as a Means of Steady Income

There are several different strategies to perform a home equity release, all of which allow a borrower to make their home work for them. By using an equity release, homeowners are able to provide a steady stream of income for themselves by making use of the money already invested in their home.

A home equity release is very similar to a reverse mortgage except that the cost of an equity release tends to be much cheaper. During an equity release, the borrower is not required to repay any portion of their loan each month.

There are several different equity release schemes, but there are three that tend to be used most prevalently. These are Lifetime Mortgages, Shared Appreciation Arrangements, and Home Reversion Plans. Under each of these schemes the homeowner is allowed to stay in the property until it is sold. The fact that the borrower does not have to move or relocate is often a significant benefit for those individuals who want to try a home equity release scheme.

Lifetime Mortgages
This is a product that allows you to retain ownership of your home. You take out a specific amount of equity with the intention of paying it off later upon your death or removal to a home care facility. The payment method can be through the sale of the house. Under lifetime mortgages you have three options: roll-up, drawdown, enhanced, or interest-only. Each has a special caveat that makes it different from the norm. For example an enhanced scheme is attained when your life expectancy is significantly shortened, allowing more equity release. Drawdown sets up a payment instalment where you take out only what you need. Interest-only means you pay interest on the loan prior to repayment leaving only the principle balance. The roll-up scheme is the standard lifetime mortgage.

Home Reversion
Reversion is a partial sale of your home. You can also sell the entire home. You do not owe money to the provider because it is not an actual loan. You have sold the home, but with an addendum stating you have the right to reside in the house until death or removal to a care facility. This type of home equity release requires a lifetime tenancy agreement.

Shared Appreciation Mortgages
Shared appreciation mortgages or SAM plans use a lender that agrees to accept a partial or full payment based on the increase of value in the home. This is a shared arrangement in which you may leave behind an inheritance based on the share you retain after payment is made to the lender from the increased value in your home. The idea is that the property is going to increase in value so much that it will cover the loan during your lifetime, any interest accrued, and leave a share for your beneficiaries.

Benefits of Equity Release

There are several other advantages to using equity release.

• The most relevant of these is that it provides for a steady source of income for the borrower. They are allowed to extract the equity from their home, thereby giving themselves income each month.
• The second benefit is that the owner is allowed to live on the premises, even though the ownership of the property is possibly shared between the borrower and the lender.
• The upfront costs are also usually lower than many other alternative mortgage schemes.
• Lastly, there is no repayment of the loan back to the lender or creditor depending on the home equity release. The money owed on the loan is only repaid to the lender once the home has been sold.

Disadvantages of Equity Release Schemes

There are also a few disadvantages to using a home release scheme, which are shared below. They are general disadvantages and may not apply to all schemes available to you.

• Firstly, the home is almost always sold once the borrower has passed away. This eliminates the possibility for the house to be passed down to another generation or family member.
• Secondly, the ownership of the home is shared with the lender under a home equity release. Therefore, if the home appreciates, the lender reaps the benefit of the increased appraisal amount.

Several individuals have found a home equity release scheme to work very well for them as they are able to produce a steady stream of income for themselves simply by using the equity already invested in their home. It is imperative to compare and shop around for the best fit in release plans.

Different Ways to Release Cash on the Property for People Over the Age of 55

A person who is over the age of 55 can receive money from their home to spend any way that he or she wants. The basis of this transaction is called an equity release mortgage. There are two main equity release plans, which are home reversion and lifetime mortgages. How to release equity from your home is naturally the next question you have with regards to these two options.
Before choosing an equity release plan, always consult with an independent equity release adviser, so that he or she can help you pick the right plan.

An equity release adviser will tell you how to release equity from your home in the cheapest, most flexible way possible to suit your own personal requirements. The older that you wait to release equity, the more money you can release. The rationale behind this is that the shorter your life expectancy has remaining, the less time it has for the interest to accrue over your lifetime. Once the financial adviser chooses the best equity release plan, you can find the company over the Internet and apply. If you choose a financial adviser with an equity release company you can apply through them; however, it is always a good idea to compare companies and plans for the most affordable option.

The equity release adviser will initially conduct a fact find in order to gather all information regarding your current situation. They need to ensure that all bases are covered & any advice offered does not have an adverse impact on any other areas of financial planning such as means tested benefits.

Once this has been undertaken the equity release adviser will discuss the different plans available. One equity release plan the financial adviser will tell you about is a home reversion. With a home reversion, you will have the option to leave an inheritance for a family member. In order to leave an inheritance, you can only sell a percentage of the property. The piece of property that the family member has may increase in value over the years, which may allow the person to get a good amount of money, if the person decides to sell it in the future or leave that part to their children.

With a lifetime mortgage plan, you will receive a cash lump sum also. There are more than two types of lifetime mortgages; however, popular options are interest-only and roll-up interest. With an interest only lifetime mortgage, you will have to repay the interest back monthly while living in the home. By paying off the interest you are protecting the property, as the balance will remain constantly the same so that more can be inherited by your heirs.

The amount that can be taken on a roll-up equity release plan is based on the value of your home & the age of the youngest borrower. The lender provides a cash lump sum or monthly income to the borrower.

As you ask how to release equity also consider drawdown lifetime mortgages in which you take out only the money you need. You can always go back for more if it is necessary as long as you have not reached your limit. Once the limit is reached you can reassess the mortgage to see if there is more value you can extend your limit with. You only pay interest on the amount you have taken, which can ensure more funds left for your beneficiaries.

With all equity release loans, you can remain in the home rent free, except as discussed earlier with an interest only lifetime mortgage, until you pass away or go into a long term care. The homeowner always has the option to sell their home. When this happens, it is a good idea to include the interest that has accumulated from receiving a loan. Any money that is left over will be given to you or your heirs (in the case of death).

A retired person should not have to struggle to meet their needs after a long working life. If they have a home & struggle making ends meet they should consider borrowing some money from their home, but only after consultation with their equity release adviser & the children upon whom it will affect the most in the long term. Make certain you understand all aspects of how to release equity as this will help you feel more secure about entering into one of the main options available to you.

Learn How to Boost Your Retirement Income

Planning long term financial security is essential to make sure that you are not dependent after retirement. There are many products available to help you not only secure your finances but also boost your retirement income. With a little planning, you will be able to live a financially free life even after you have retired.

There are specific financial tools and products that are meant to boost income post retirement. One popular choice among pension seekers is annuities. An Annuity is an insurance plan that provides a lifelong guaranteed income against an invested amount. With annuities, the investment amount, the length of the payment period and the interval between payments determine the size of your income. In addition to boosting your retirement income, annuities also offer large tax benefits as you can make an investment that provides guaranteed returns. You must be careful when you invest in annuities to make sure that there is value for your investment.

If you have made an investment in a property, you can even generate revenue from it through an equity release to boost retirement income. This financial product allows you to stay in your home while you are able to get a lump sum amount or a fixed monthly income against the value of your house. The income provider will be repaid after an agreed period, usually after the home owner’s death. This type of investment is ideal for those who do not have heirs to their property or have multiple properties that can be used as definite income providers.

Equity release schemes have gained in popularity over the last ten years as a solution to retirement income issues. When state pensions or private pensions are not enough, you can use your property to give you an added amount each month. How you use that money is based on your needs. For some it is a matter of gaining a little income each month to enjoy a holiday, go to a movie, or have some fun as retirement is meant to be.

There are two equity release plans that are most common and within these two there are subsets: lifetime mortgages and home reversions. Home reversions use property you own in full to sell it. You can sell the entire house or just a portion of it. The amount of property you sell is considered as part of the entire home valuation then calculated to determine the appropriate amount of funds to be given to you. Often you get lower than the actual house value, since the provider is going to sell the property upon your death or move to a care facility. You get to live in this home rent free under a lifetime tenancy agreement. Anyone who is a part of the contract also gets to stay in the house before it can be sold. This type of equity release ensures there is no payment to be made after your death.

Lifetime mortgages are different since it is a true loan. You retain the full ownership of your property. The only different from a regular mortgage and lifetime loan is the repayment option. You do not make payments on lifetime mortgages. Instead, when you move out or expire your house is sold to pay off the equity release mortgage. This option gives you retirement income without the headache of making payments on a mortgage.

There are four main choices in lifetime mortgages each based on your life expectancy, house value, and age. You only need to be 55 to obtain a lifetime mortgage, whereas home reversion requires you to be 65. If you have health issues you may get an enhanced payment. If you want you can also use an interest only lifetime mortgage leaving only the principle balance of the equity release upon your death. For some this is a more comfortable option.

You can also take a few precautions before retirement for long term financial security. You can make investments in assets whose value is time based. These investments include shares and real estate that will help you deal with market issues like inflation. However, there are risks involved which can be compensated by diversifying income instead of focused investment. Such investments can also boost your retirement income by providing additional financial sources.

Making a good financial plan to boost your retirement income will ensure that you can enjoy your time after retirement. This is your chance to live a carefree life. Don’t let mere financial issues hold you back.

Poor Health Can Actually Be a Benefit with Enhanced Equity Release Schemes

Poor health has always been known to be a cause of worry, but at least in case of opting for an equity release from your property, you can be happy that you stand a chance of deriving some extra benefits because of your bad health. These are the special cases and are commonly known as an enhanced lifetime mortgage scheme to the UK market. This benefit comes your way because of a simple reason that poor health has an effect on potentially reducing your overall life expectancy.

Equity release is a type of mortgage that you take that is secured on your property, but without a need to vacate it or even to sell it as long as you are alive. These are the special terms applied when releasing the equity accumulated in your property without selling it off. It offers a viable solution to all those who need money and live the life as they want without selling their house. You retain the ownership of your house as long as you are alive and are assured that your beneficiaries will never end up owing more than its value.

These equity release schemes are nothing but a refined and sophisticated form of mortgage arrangement for elderly people. Your house could only be sold in case of your death or if you move permanently into a long term care home. If the equity release is made in the name of joint applicants, then the house could be sold only in case of death of the surviving partner.

After the death of the person, the property is sold and the loan is repaid back to the equity release company. It uses the accumulated cash value of a house and lets the owner enjoy the release of the cash in spending it in a way that he/she wants. The lender takes into account the life expectancy of a person while deciding the initial loan-to-value, as well as an enhanced amount that could be released in your case.

There are several health conditions that entitle you to get the benefit of enhanced equity release. Some of these health conditions include long term smoking, diabetes, abnormal weight, heart diseases, cancer, Parkinson’s and many more. It is a long list and you can ask the provider about an inclusion of any particular disease. However, in order to qualify a health and lifestyle questionnaire will need to be completed in order for the enhanced equity release company to establish the severity & ultimately the size of the initial amount they will release.

An enhanced lifetime mortgage scheme is set up for the best possible solution for you. There are generalities with regards to the advantages and disadvantages you might find with such a mortgage option. It is best to look at them in a list to fully understand what could happen once you release a little equity from your home.

•    With a lifetime mortgage plan a home is sold only if there is no way to pay off the mortgage. Usually a retiree has no other financial benefit left to pay the mortgage at time of death or removal to a care facility. A beneficiary can supply the cash to pay off the loan and keep the house, if that is their desire. Note also that life insurance plans a homeowner might have could cover a mortgage and funeral, whereby the funds are used to keep the home rather than go to the beneficiary.

•    Home reversion which is different from enhanced lifetime mortgage scheme is where a house is sold absolutely upon death or care facility living of the homeowners. It is because part of the house has already been sold to the provider. Lifetime mortgages keep the ownership with the person taking out equity.

•    Payment of interest and the principle balance of the equity loan is only due when the person moves out or dies. In the event the agreement was signed by a couple, then the repayment is due when the other person in the house moves out or dies.

An enhanced lifetime mortgage scheme is just one option open to you. You have plenty of choices and one might fit your lifestyle and expectancy a little better. Speak with an adviser or agent to find out more about the different schemes available to ensure that an enhanced option is really the way you should go. Also talk with family so they understand what you wish to do for a more enjoyable retirement.

Releasing Equity Can be the Pinnacle of Your Future

In a world where most of the employed people find it difficult to make both ends meet, the problems for people who retire or are forced to leave their jobs because age catches up with them are paramount. When regular monthly income dries up and only the savings remain, the idea that the entire upcoming life would be easily spent becomes a dream. In such cases, releasing equity is probably the only option to save you from financial bankruptcy.

It is important to understand that there are two problems faced by the people who near retirement or near the age when they can’t work anymore. Firstly, people get accustomed to a comfortable and lavish lifestyle during the time when they enjoy great jobs. Your job might end but the spending to maintain the lifestyle won’t. Secondly, the debt repayment schedule accepted while taking into account the monthly salary would also need to be adhered to even if the monthly salary isn’t coming into the bank account any more.

Considering these serious financial problems, life can become extremely difficult unless you look towards the option of releasing equity. Equity release schemes simply help you in releasing the equity on your home as a loan. Financial institutions offer you a loan in the form of a large lump sum or in the form of monthly instalments over the equity of your house.

This option of equity release is known as lifetime mortgage. Under this option you have several choices:

•    Interest only
•    Drawdown
•    Enhanced
•    Roll-up

Roll-up is often a standard for lifetime mortgages, although it too has a little difference from the mainstream product. A roll-up provides you with a lump sum and then monthly instalments. Interest only is fairly simple to define since it means you make a monthly interest payment thereby leaving only the principle balance of the loan when you move out or expire. Drawdown sets up an account with a limit in which you draw on the account when you need income. You only pay interest on what you have actually used from the release of equity rather than an entire lump sum.

Enhanced is a specialised lifetime mortgage for those with a detrimental illness. It allows you to take more money out initially on the premise your life expectancy is shorter than most retirees.

The lump sum amount or the monthly instalments can be used to repay debts and continue with a comfortable lifestyle till the time that you die or are taken into long-term care. In simple words, by releasing equity, you can sign up for a comfortable life till your life ends.

There is another option you can use for releasing equity in your home. It is called home reversion and it is not a loan. This option is actually a sale of all or part of your home. You retain ownership of the portion you have not sold and this gives you the lifetime tenancy agreement rent free. In this instance you often find the sale of the house is absolutely necessary in order to satisfy the deal with the home reversion provider.

The home reversion provider has set up the equity release on the premise of making money through the increased value of your home. It is why they are willing to give a little tax free money to you for the sale of part of your home and let you live there rent free. This option is not ideal for many since it means selling your home. You also need to be at least 65 to start this equity release. With a lifetime mortgage plan you can be 55.

The only problem with this idea is that the loan amount would get repaid by the sale of the house in most cases. However, the house would never get sold while the owners live in it and thus the sale would only happen once you have left this world. If these benefits sound like something you could definitely use then releasing equity might be the best way to make your remaining years comfortable. Before signing any paperwork it is usually a good idea to speak with your beneficiaries. Your family will be responsible for satisfying your accounts. They may feel it is possible to save the home from sale as well as helping you out with some of their income. All in all, the release schemes bode well for people who want to live a great life even after retirement without any financial restraints.

Ways to Release Equity from Property

There comes a time when eventually you will need to use some of the equity that has built up in your home to help with some of your living expenses. But, how to release equity is a question most asked. Most equity release schemes are geared towards the elderly since they have more equity that has built up over the years. An elderly couple can obtain cash from their home in the form of an equity release plan.

An elderly couple can find out how to release equity from their property by contacting an independent equity release adviser. The independent equity release adviser will discuss with the elderly couple their options. Two of the options that the independent equity release adviser will tell the couple about are lifetime mortgage and home reversion plans.

With a lifetime mortgage plan, the elderly couple can receive a tax-free cash lump sum and still remain in their home. The couple will not have to make any monthly payments on the loan while they are living in it. The interest that has accumulated while you are living in the home will be paid in full once you pass away or move into long term care.

Lifetime mortgage plans offer more than just the standard roll-up plan outlined above. You also have drawdown, enhanced, and interest only plans to choose from.

Drawdown is an equity release mortgage where you have a limit on the account based on age, health, and equity value in your home. You elect how much you take out in a payment amount each time. You are only charged interest for the amount you remove from the account and not the entire limit set.
Interest only lifetime mortgage is the only equity release plan that requires a monthly payment. You pay interest on the account until you die or move out. It leaves the principle of the initial loan left to pay off at time of death or move to care facility. It does require you to have disposable income to cover the payment amount.
Enhanced lifetime mortgage is for those in a poor health situation. Typically there are two doctors in agreement about the life expectancy of someone’s health in that they have only a specific amount of time left before home care will no longer be appropriate. In this situation the monetary allotment is often larger to ensure the person has a comfortable life in their own home for as long as possible.

With a home reversion, the elderly couple can sell all or half of their property. By selling just half of it, it allows the couple to gift the other half to their beneficiaries when they pass away. Just like a lifetime mortgage, the couple will not have to make any monthly payments and can remain in the home until they pass away or go into a nursing care facility.

• Home reversion offers a lifetime tenancy agreement to the elderly couple remaining in the house. It states the couple named in the home reversion plan is able to stay in the house for their lifetime or until they decide to move out.
• At time of moving out the house will be sold. The home reversion provider gains their investment and any leftover income from the sale is given to beneficiaries.
• Home reversion has become popular again for the reason that an inheritance is guaranteed with the sale of the home.

With both plans, it allows the elderly couple a capital sum or to have a steady flow of income for the rest of their lives. With a home reversion, you can usually obtain a greater lump sum than you would receive if you were getting a lifetime mortgage.

An elderly couple who are over 55 are eligible to qualify for a lifetime mortgage. However, for a home reversion you need to be 65 & own your main residence with no or little mortgage.

How to release equity is simple once you understand equity release schemes like home reversion and lifetime mortgages. The questions now are what is the application process and how long will it take to release the equity? The application process requires you to give personal information and housing information to a provider so they can determine if you qualify for the mortgage or home reversion.

The process takes 6-8 weeks for lifetime mortgages and up to 12 weeks for home reversion. At each stage of equity release it is a good idea to have your adviser on hand.

Recognising the True Quality of Equity Release Advice at the Annual Industry Equity Release Awards

Today, equity release has become very popular and those who do not have sufficient income are making the most of it. Looking at the popularity of the Equity Release and to appreciate the efforts of the companies and advisers, the equity release awards are held every year in November at the Merchant Taylors’ Hall, Threadneedle Street in London. These awards are sponsored by the Equity Release Council so that companies and advisers can continue working with the same dedication and effort. Well, these awards create a spirit of dedication among the companies and they do their best in order to offer the best services throughout the year.

This year once again these awards are going to be held to appreciate the efforts of the people involved in equity release. The voting for this year has now been closed. The last date to vote was 19th October. These awards include various categories which include Best Equity Release Providers, Equity Release Advisers and other relevant equity release categories.

Equity Release Supermarket has previously been voted as best company in the market and has been successfully nominated every year keeping in view the great services offered by them. This company was able to take away the most prestigious award in the year 2008. This shows how sincere and recognised they are with their work.

The Equity Release Council has very strict criteria for voting and one must abide by the rules and regulations while casting the vote for a certain category. Every category has its own criteria therefore it is recommended that you should go through the criteria in order to cast your vote successfully.

For this year’s awards, the council has announced the whole plan and you can go through the venue details on the official website of Equity Release Awards. Apart from this, you can even view the award winners from the previous years. Their website has various other promotions which will definitely help you in knowing about these awards in detail. This will help you to make a better choice when it comes to choosing which equity release company or adviser you should work with.

Awards are given out for great service in nearly every market and industry. It is not surprising that each year certain companies in the equity release market gain recognition. It is because they strive to be the best and most supportive for retirees like you. While voting is closed this does not mean the equity release awards are not important.

You will want to follow along as the winners are announced for 2013, especially if you have yet to make a choice regarding home equity release schemes and potential providers. Awards are the best way for you to ascertain which companies are worthy of your business. Simply by looking at those companies that received awards you can tell they are a part of the recognised community.

There are two programmes that certify equity release providers. They offer companies membership, so that you can recognise them during your search for equity release plans. First, the Safe Home Income Plan or SHIP is a symbol you should recognise as a retiree. Any company operating under the SHIP code is law abiding ensuring you have a proper equity release plan.

The second name to look for is Equity Release Solicitors Alliance. ERSA is an organisation that requires solicitors to be members if they want to practise in the equity release market. A solicitor is required to act on your behalf during the equity release plan and it cannot be the same person working for the provider.

When you combine the equity release awards with ERSA and SHIP members, you know you have a company worth working for. Even though you may not use the same solicitor as the provider of your loan, it is still important to ensure they are a member of ERSA.

Each year the equity release awards are given out. Each year companies might receive different awards or the same award. There have been years in which a company has retained its award standing. This is a sign of excellence you do not want to overlook. Next year after you go through your equity release plan you may want to vote for your company to help secure a potential award for them. This will let others know in coming years that it is a company with standards and one they might wish to use too.

Obtaining a Fixed Source of Income in your Retirement

Being able to provide a financially stable future is one of the major concerns of retirees. Based on the fact that they are no longer a part of the work force, obtaining a fixed source of income can be quite difficult. Some retirees who engaged in active retirement planning during their working years may have saved just enough to meet their daily expenses, but what about leisure activities? Emergencies and other situations can arise affecting the amount of income one has in a month. Plenty of retirement options exist from state pensions to interest only lifetime mortgage plans.

Retired folks are entitled to leisure activities and to be quite frank, they have sufficient time to do so; however, many of them are not able to engage in leisure activities due to the fact that they do not have sufficient income. Today, there is a solution for some retirees. Those who own a property can obtain an additional source of income during their retirement period through equity release. Equity release allows retirees to release equity from their property.

An increasingly popular form of equity release plan is the interest only lifetime mortgage which has bred familiarity amongst retirees by the recently withdrawn Halifax retirement Home Plan. However, recently withdrawn it has left a void in the interest only lifetime mortgage market, the reason being that conventional mortgage lenders have withdrawn or made it extremely difficult for retirees to get a mortgage.

However, this is now becoming a niche retirement area and there are a few specialists left that can still provide advice and get access into the market. Companies such as Stonehaven equity release buck this trend in offering an interest only lifetime mortgage.

Most equity release plans consist of two amounts that need to be repaid – the initial loan amount and the accumulated interest. This is however not the case with the interest only mortgage. This type of plan does not allow interest to accumulate by giving retirees the opportunity to repay the interest amount on a monthly basis for the rest of their lives. Once they die and the mortgage needs to be repaid, only the initial loan sum amount will have to be repaid since the interest amounts have already been repaid.

Based on the above mentioned fact, the interest only lifetime mortgage is highly preferred by retirees who want to be able to leave an inheritance for their children. When their property is sold, the part of the sales proceeds that will be left after the equity release provider has received his payment can be left behind as an inheritance.

If the home is the inheritance a retiree wants to leave behind, this mortgage option is still viable. Selling the home is not an absolute must. What it will come down to is whether you have savings or a life insurance policy that will pay out enough benefits to cover your mortgage.

By obtaining a life insurance policy to cover a mortgage and funeral expenses, you ensure your children can keep their childhood home. It also means the lifetime mortgage can be paid upon your death as the contract stipulates. For some this is an extremely important factor in deciding what type of equity release to apply for.

The fact that you pay interest on the mortgage during your lifetime also reduces the amount needed at the end. It can make a combination of life products like insurance and a lifetime mortgage more appealing than alternatives.

There are definitely alternatives to interest only lifetime mortgage plans. A drawdown option in which you take only the amount of money you need is one. With a drawdown scheme you pay interest only on the money you take out of the account. The disadvantage is for early payoff. With an early payoff there can be fees associated with it. You also end up paying interest at the time of payoff rather than before. It is just one option you have should the interest only option not fit your current situation.

Home equity release is not for everyone. The disadvantages can be too much for some or the uncomfortable situation of home reversion in which part of a home is sold can be too much. If you feel interest only lifetime mortgage is right for you speak with an adviser, agent or broker who offers these plans. They can further explain the details of each type and the best advantages of interest only options, ensuring you get the right product.

Finding the Best Equity Release Advice

If you are considering equity release, it is important for you to understand that you are making a serious financial decision that should be handled with the care and attention such a large decision deserves. You need to approach it in the right way if you want it to be rewarding and beneficial. So before applying for any equity release scheme, it is of utter importance that you seek equity release advice in the first instance.

The fact is that there are many equity release providers who want to have your business, so you want to make sure that you have sufficient information to make the right choice. Equity release is something that you will have to live with for the rest of your life so you need to understand the effects of this lifelong commitment.

You need to be able to look at your personal needs and circumstances and choose the provider whose equity release schemes best fit your needs and circumstances. This is not just at the present time but you need to consider your future situation also. For instance: are you likely to move and downsize, what is your health situation and are you expecting any potential windfall in the future?

When choosing an equity release adviser, it is important that you choose someone who is completely independent and is qualified and experienced in the field of equity release. They should hold the minimum equity release qualifications in order to be able to offer equity release advice.

You need someone who knows every corner of the equity release market and who can provide impartial advice. Most independent equity release advisers offer a free initial consultation. The reason for this is that they want to determine whether or not equity release is really for you. They will only proceed and start billing for other consultations if they have determined that equity release is the right option for you after the initial consultation. Interactive maps can help you to find a local adviser that will be willing to provide a FREE initial consultation and can be found online at companies such as www.equityreleasesupermarket.co.uk.

Each equity release provider has different lending requirements and it is only after discussing your situation & seeing your property type that your adviser can provide their expert opinion. Obtaining advice can make you aware of this and help you to avoid this by making sure that you meet all of the requirements to qualify for the equity release scheme.

One way an adviser might look at your situation is to have you fill out an application. They will at least ask some pertinent details about your life and home. You do not have to fill out the application or allow a credit report to be run initially. You can simply ask them to consider your situation and provide an answer of what product they feel would best fit you. It is one way to choose between the various providers available to you.

There are also tools online that you can use like equity release calculators, which take the same information and show you scenarios based on what you feel would be the best products. It is not 100% accurate to use the calculator since providers have different percentage rates and calculations; however, it would give you a basic idea of which scheme seems more plausible.

Equity release schemes are varied in form from selling a part of your home to retaining ownership, but gaining extra cash. It is up to you to get the information on all the products from your adviser and consider each of the options through merits and disadvantages that they have.

Home reversion might sit better with you even though you sell a bit of your home, than taking out a new mortgage due upon your death with compounding interest. This is why advisers can be of help. You also want to speak with your children once you have explored your various options. Your children have a right to know what choices you have made that could limit their inheritance, cause debt issues, or simply impact their memories of their childhood home.

These are all the right reasons why you need to make sure that you find an adviser who is qualified, experienced and knows the equity release market inside out. Remember this is not only a decision that will affect you, but also your children & children’s children, so gaining equity release advice you trust is paramount.