Tag Archives: Lifetime Mortgage Plans

Equity Release

Does the Saga Equity Release Calculator Show Impartiality?

Plenty of websites offer calculators, information, and other tools to help consumers seeking equity release products. Yet, these websites work in different ways. For example Saga does not provide equity release schemes. They utilise Just Retirement for equity release products. Saga has built their business on offering annuity products Just Retirement actually creates. To understand the impartiality of the Saga equity release calculator you first have to understand more about the company.

Saga and Just Retirement Partnership
The Financial Service Authority (FSA) recently became the Financial Conduct Authority (FCA) and with this a new overhaul of annuities has occurred. Saga has a strong business partnership with Just Retirement on the basis of helping the company sell their annuity based equity release schemes to retirees 55 years or older. Saga may have to re-evaluate their partnership due to government changes or wait to see if Just Retirement will make changes to remain in the equity release industry.

Saga is going to be directly affected if sales of annuity based products begin to fall, after all they are selling these products as an intermediary between consumers and Just Retirement. Saga, for their ability to generate business on their site and help Just Retirement is paid fees. These fees are paid by Just Retirement, so the relationship is not truly an independent one, but more of a symbiotic relationship.

Saga also has information regarding interest rates as they apply to more than Just Retirement products. For example the Aviva Flexible Lifetime Mortgage plan is examined by Saga. The plan Saga offers is not considered as competitive as Aviva interest rates, which are found on sites like Equity Release Supermarket and other top equity release intermediaries. Basically Aviva information might be on Saga’s site, but just as a comparison.

Other Details to Know about the Situation
Saga’s partnership with Just Retirement Solutions operates within a tied panel basis. It is independent as other brokers. There is even the option of going off panel when necessary; however, this is not always offered right away. In fact consumers have to understand how the company works before they can request independent information.

How it Ties in
With the Saga equity release calculator values are going to assess Just Retirement plans. The information on the site is going to be about the annuity plans Just Retirement has. Yet, when you consider the differences of another company and what the Aviva equity release calculator may show, you will see different results. Aviva currently offers an APR as low as 5.63%, while Saga equity release schemes are over 6%.

One of the things Saga does to get your interest is to lower costs initially such as the upfront fees to obtain the loan. Remember you are obtaining a lifetime mortgage with an annuity from Just Retirement. There is a potential to save £500 in upfront costs, but this big savings is not always going to translate throughout the rest of the lifetime mortgage.

APR is an interest rate that will add up over the years. It compounds onto the loan and principle balance. Even if you have an annuity that is working to save up money for the eventual repayment is the higher interest rate on the product itself really going to help you save enough?

The answer is not always. Going with a big savings in the beginning or having an annuity structure is not always better than the low interest rate particularly if the rate is fixed at the lower rate.

Using Tools to Discern the Truth
You should not ignore the information you can find with both the Aviva and Saga calculators. Instead, use both tools to get results. By examining the different companies and their products it is possible to make a sound decision. Of course, you want to have more information than just the calculator to base your decision on. The calculator has to be used as an estimator of potentials. It is a guide that provides you information about specific products or if you find an impartial one, a calculator that provides information on several types of equity release.

Due diligence and speaking with an independent broker with no ties to any company is going to help you find the one product that is best suited for you. As you consider using the Saga equity release calculator keep in mind the above information, gain your calculations to use as a guide, and remember to speak with an expert then make a decision.

Equity Release

The Most Popular Lifetime Mortgage Scheme

Features of lifetime mortgages have evolved over the recent past and a lot of changes have taken place. Equity release schemes provide a number of benefits that enable you to take advantage of your home value. An example is the ability to repay the mortgage without fear of penalty payments. Another is the option of saving a portion of your home without selling it or using the equity in it to provide an inheritance. Other schemes like the drawdown lifetime mortgage offer you away to take out only the money you need and the ability to take more later should your needs increase.

The drawdown lifetime mortgage is the most popular type of equity release scheme in 2012. This is due to the flexibility of the schemes as funds can be taken on a drip basis from an overall reserve facility. What normally happens is that interest is calculated on the basis of the initial amount borrowed and it compounds as time goes by. Therefore, if a huge lump sum is taken from the beginning, interest charges will be high and will remain on the upward scale.

The drawdown plan has a host of benefits in lifetime mortgage but the most significant one is that they provide a pre-contract agreement whereby a limit is put on charges according to the value of your property. In most equity release plans the lender comes up with the amount to be deducted from the start, and normally it is somewhere around £10,000 and £25,000. The drawdown balance is available for the duration of the term, but terms are subject to change if the market changes.

Today there are so many lenders in different forms who have come up with customised terms in order to lure clients. The borrower of the mortgage must be clear with the terms beforehand because if there is one tricky field in financing, it has to be mortgage and loans. People often get themselves in situations they can barely get out of, which can give you a lot of headaches.

When you have a lot of information it can be best to look at a list of advantages and disadvantages. You also have to realise that drawdown lifetime mortgage plans can vary from provider to provider thus this generalised information can improve upon speaking with an agent or turn you off the idea altogether. It depends on who you speak with and how many agents you speak with. Always get three opinions when it comes to your financial planning regarding your retirement and lifetime mortgages.

Advantages of Drawdown Mortgages
1. You can be 55 and apply for this mortgage.
2. You can decide how much you withdraw on a monthly, quarterly, or annual basis. Typically the provider will require an initial lump sum at a certain amount, then you can take as much or as little as you want from the account. Obviously you cannot take more than the account has available.
3. Every 3 to 5 years you may need to reassess your drawdown mortgage to see if you should increase the amount of equity you use. This is an option with most providers.
4. The cash you receive is tax free.
5. You can use the cash as you wish for expenses, house repairs, emergencies, holidays or other special things you wish in your retirement.
6. You do not pay interest or any principle balance until the end of your life or you move to a care facility.
7. You only pay interest on the amount of money you withdrew from the account, not the funds available to you in the account.

Disadvantages of Drawdown
1. Drawdown lifetime mortgage is a mortgage.
2. You will owe money at the end of the mortgage including any interest that has accrued.
3. Most providers require the house to be sold within 12 months for their repayment or immediate repayment if your beneficiaries do not wish to sell the home.
4. It can be difficult to leave an inheritance behind if the housing value drops into negative equity.
One important clause to write in your contract is a negative equity clause. The clause should state you or your beneficiaries are not liable if your home is in negative equity at the time of your death or removal to a care facility.

To be safe with your lifetime mortgage plan, shop around for the most suitable choice. You can gather information from the internet or try to seek professional advice from a mortgage expert. This will save you a lot of headaches after your retirement.