Top 5 Mortgages for PensionersSeptember 25th, 2013
The rising demand for flexible and innovative financial solutions during retirement has spurred on many new and positive changes in this sector. For one, a number of more flexible equity release mortgages are now available for pensioners to choose from. Different products have different unique features that make them suitable for a range of clients. Let’s take a look at five of the most popular lifetime mortgages for older homeowners.
1. Stonehaven currently offers a flexible interest only lifetime mortgage called Stonehaven Interest Select. The plan is available in three tiers – Interest Select Max, Interest Select Plus and Interest Select Lite. The three variations have different interest rates and are designed for different levels of release.
This plan is one of the interest only lifetime mortgages currently available on the market. The plan is currently available to clients over 55 years, on properties in England, Wales and mainland Scotland on property valuations above £70,000, and with a minimum release of £10,000. Clients have the choice of making full monthly interest repayments, and the minimum amount of £25 per month must be repaid. The money can be released with Stonehaven as a tax free lump sum, or in monthly instalments.
The interest rate can remain constant for the entire term. Clients also have the option of switching the mortgage to a roll up type plan with no extra charges. Missing more than three consecutive interest payments will mean that the mortgage is automatically switched to a roll up mortgage.
2. More2Life’s Interest Choice Plan is also an interest only lifetime mortgage, and available to applicants over 60 yrs on properties in England, Wales and mainland Scotland of current valuation from £70,000 to £1 million. The Interest Choice Plan is a flexible drawdown mortgage and money can be released either as a single lump sum or in additional future instalments.
The minimum required monthly payment is £25 and the maximum is the full interest amount. Clients can choose to stop making monthly payments at any time with no ERCs. The mortgage will then be converted into a roll up plan, whereby interest is added to the principle amount and compounded.
3. Hodge Lifetime’s Flexible Mortgage Plan does not fall into the category of Interest Only Lifetime Mortgages as such because it is not an interest only mortgage. It is a lifetime mortgage with flexible options for withdrawal, repayment and downsizing protection.
Money can be withdrawn in a single lump sum payment, or if the maximum amount is not exhausted then in additional drawdown payments. After one year of taking out the loan clients can start repaying upto 10% of the original loan amount plus 10% of any additional amount borrowed without any early repayment penalties. The plan also offers an additional downsizing protection – if the loan is repaid on account of downsizing after 5 or more years, no early repayment penalties will apply. The mortgage is currently available in England, Wales and Scotland to applicants over 60 years.
4. Leeds Building Society offers a retirement mortgage for applicants up to the maximum age of 70. There is an interest only lending option for properties with a minimum valuation of over £150,000. This is not a lifetime mortgage, and the maximum term of the loan is 25 years, with the maximum applicant age at the end of the term being 80 years. The maximum loan to value ratio for the interest only mortgage option is 50% of the valuation of the property.
5. NewLife 65+ Mortgage is a retirement mortgage designed for the over 65’s. This is not one of the lifetime mortgages and the maximum term is 25 years, with possible extension. Repayment options can be interest only or capital and interest. This mortgage is currently available in England and Wales on properties where a minimum equity of £150,000 is left after completion of the mortgage. There is an ERC of 3% of the loan amount for repayment within a year and none thereafter. There is an additional ‘Sealing Fee’ of £100, for early repayment at any time.
These are some of the most flexible and popular lifetime and retirement mortgages currently available on the market.