All posts tagged Long Term Care Facility

Searching for an equity release calculator for the under 55s is unfortunately not going to produce the results you hope for. Yet, many people do conduct a search online for this tool, which is one reason many websites and articles use the keyword to get your attention. There are some important facts you need to understand about equity release for retirees. The first is that equity release (ER) is for individuals over 55. Since it is a minimum age, there is not going to be a calculator that provides a calculation for an individual who is younger than this. One of the reasons the phrase is still used and targeted is because of planning.

People who want to plan for their retirement can find the calculator useful as they plan for their retirement day. The calculator can certainly provide some details that will help with the planning.

What ER Calculators Provide
As an equity release calculator for the under 55s does not exist, you will need to use a standard equity release mortgage calculator. It can still provide you with helpful information. You can also look for such options as the impaired equity release calculator that provides results for potential ill health issues. Impaired health allows you to gain a larger lump sum of tax-free cash than a healthier retiree. Of course, if you do not need a bigger sum of cash, it is best to stick with the standard ER. You also have calculators specifically for interest only lifetime mortgage products and home reversion.

An interest only lifetime mortgage provides you with a capital lump sum where you pay interest off each month to keep that sum the same throughout the life of the loan. Every lifetime mortgage will have interest and the entire amount is due at death or a move to a long term care facility. Basically, when you move from your home you need to pay it back. With interest only it is more affordable and leaves an inheritance behind if you pay off the interest, versus a loan that accrues until death, leaving a large sum to be repaid.

With appreciation and depreciation a home value can change and wipe out any inheritance if you have interest adding to the loan too.

Home reversion is different because it is a sale of all or part of your home. With the sale you still live rent free under a lifetime tenancy agreement, you can stay until death or until you decide to move to long term care, and only at the end is the rest of the house sold to the buyer. Any home left to sell is converted to cash for your beneficiaries. Buyers are investing in the appreciation of the home as a way to make their money.

ER calculators will be able to provide you with a potential maximum amount you can be lent, along with figures for what you may owe in the end. This gives you an idea of whether the option is affordable for you or not.

Possible Products
The market is flooded with products as more people begin to retire. Also changes to the regulations of these loans have meant a change in availability of certain products. The calculator uses the age of the person, plus the home value, to determine the maximum amount allowable. A loan to value percentage is the maximum amount for a specific age a person can obtain.

For example, Aviva is offering a product to 55 year olds where you receive 20.5% of your home value in an ER loan. Stonehaven’s Interest Select Max (interest only loan) provides 19% of the home value.

The older you are the higher your loan to value ratio will be on the assumption the loan will not be outstanding for as long. Thus, someone 65 years of age from Aviva can receive 30% of the home value in an ER. The Stonehaven ISM plan offers 29%. If you go with Aviva and are 65 years of age with a home value of £100K you would receive £30,000 in a maximum amount.

You should be aware that not all providers offer 55 year olds ERs. For example Just Retirement, LV=, New Life, and Pure Retirement require you to be 60 years old at least. This will change the calculations you receive from the ER calculator. As no equity release calculator for under 55s exists, just make certain you use an independent calculator that can provide accurate results for your situation.

With the people around the world still feeling the impact of the global crisis in the financial industry, many are trying to establish a financial solution to their current recession problems. These problems are not limited to the working age population as many older people have seen the real world value of their pension compromised by quantitative easing and inflation. Even those who have made adequate pension provisions may find that their pension falls short of meeting their needs. This is the main reason why equity release schemes have experienced a resurgence in popularity over the last few years.

What are Equity Release Schemes?

Equity release schemes are specially designed financial products for the over fifty-fives age group. They allow home owners aged between fifty-five and ninety-five to release the equity tied up in their home without the inconvenience and upset of moving home. The funds released are provided tax free and can be used for any purpose. Many people use equity release to supplement their pension income, make large purchases such as a holiday home or assist their children or grandchildren financially.

The global recession has made it very difficult for younger people to take their first steps on the property ladder, but with equity release, older relatives can leverage the equity in their home to finance a deposit for a first time buyer without placing their home at risk. This can be done because equity release schemes are intended as a lifetime mortgage or loan. The amount borrowed does not require monthly repayments as the interest is accrued and then compounded on the balance each year. The total loan balance is only due to be repaid when the home owner passes away or moves into a long term care facility. At this stage the property is sold, the balance of the loan settled and any remaining money from the sale is distributed to the beneficiaries of the estate.

How Much Can be Borrowed with Equity Release Schemes?

The amount of money which can be borrowed with equity release schemes depends on a number of factors. These include the age and gender of the applicant, the value of the property and the balance of any outstanding finance secured on the home. In some cases the health of the applicant is also considered. This is to assess how much equity is available in the home and if it meets the loan to value ratio specified by the lender. Additionally, the personal information is used to estimate the approximate lifespan of the applicant which would determine the duration of the loan.

Generally, applicants who are older will be able to release a greater percentage of equity compared to someone younger. However, women have a statistical likelihood of living longer than men, so their gender can affect the amount which can be borrowed. Additionally, some providers offer impaired life equity release schemes which consider those with an impaired life expectancy, for example someone with a terminal condition or long term illness. These cases will generally be offered a greater percentage of equity release based on the estimation that the lifetime mortgage will run for a shorter period of time.

The general rule of thumb for an equity release scheme is that you should be able to release thirty to fifty per cent of the value of your home. However, this is dependent on your circumstances and the type of property. There are a number of equity release calculators which are readily available online. These offer free and confidential examples of the amount of release which would be available in your specific circumstances. Many of these calculators will even allow you to compare the details of specific equity release schemes to determine which represents the best possible deal for your requirements and circumstances.

In order to obtain a full view of the equity release schemes which would be applicable for your circumstances, it is recommended that you utilise a number of different equity release calculators. This will provide a wider range of products to be assessed to increase your chances of finding the best possible deal. This will enable you to assess the maximum amount of release possible, compare interest rates and examine the financial implications of choosing a specific product.

If you are interested in exploring equity release schemes and are unsure if they would meet your requirements, an equity release calculator can provide a great starting point. However, before making any final decisions about the feasibility of specific equity release schemes, you should consult professional specialist advice. This will ensure that you are confident in your decision and assured of the best possible deal.