Following on from the last article entitled - 'Will Equity Release Providers Accept Repayments of Interest and/or Capital?' we now look at the three companies concerned & their equity release plans in greater detail by covering the features these schemes have brought to the marketplace.
Hodge Lifetime returned to the equity release market in 2012 with a truly innovative lifetime mortgage product which has since been improved again to include a new drawdown facility.
This lump sum lifetime mortgage is unique in that it includes a 10% flexible repayment option with absolutely no early repayment charges under certain circumstances upon downsizing.
Hodge Lifetime Allow 10% Overpayments
The Hodge Lifetime Lump Sum Lifetime Mortgage is basically a traditional roll-up lifetime mortgage scheme in that it allows you to borrow a lump sum with a fixed interest rate for life. The flexible repayment option allows you to make a repayment of up to 10% of the original amount borrowed, without incurring any penalties or charges. Since there are no monthly commitments, repayment is flexible and you are free to pay as and when you choose, once the first 12 months has elapsed.
These payments are permitted on an irregular basis with a maximum of two repayments per annum. This would ideally suit people who want to control the balance of the plan in the future and in particular want to keep a level balance, or even repay some of the capital by taking advantage of the maximum 10% overpayment rule.
The effect of making these 10% overpayments
The Hodge Lifetime Flexible Repayment Option Calculator (accessible via their website) shows the effect making the maximum 10%pa repayments has on borrowing £20,000 at their current rate of 5.83% monthly (6.2% APR).
Over a 10 year period, by repaying £2,000pa back to Hodge Lifetime (10% of capital amount borrowed), it would reduce the balance by almost half to £11,340. Compare this to if NO repayments were made at all and the balance would have risen to £35,778; a significant difference of £24,438!
Hodge also have NO early repayment charges...
A second feature that is proving extremely popular with Equity Release Supermarket customers is the favourable early repayment charges that Hodge Lifetime offer.
The plan is geared towards those clients who maybe considering downsizing in the future. Again this has always been a stumbling block for many who see equity release schemes as a solution, however have been put off by the potential size of some of the lenders early repayment charges if repaid early. With some lenders such as Aviva, these penalties can be upto a maximum of 25% of the amount borrowed.
Hodge Lifetime make downsizing a more attainable option by applying a sliding scale of early repayment charges (ERC’s) over the first 5 years. These ERCs descend from 5, 4, 3, 2, 1 over the first five years of downsizing. There are no early repayment charges if you downsize after 5 years.
The starting age for the Flexible Repayment Lump Sum Lifetime Mortgage is 60, and the minimum property value is £100,000 with a minimum initial borrowing of £20,000. Hodge Lifetime is a member of the Equity Release Council and all their plans follow SHIP Guidelines. Click here to request a Hodge Lifetime quote.
Stonehaven launched their Interest Select Plans over 7 years ago and were the first of the current crop of equity release companies to offer an interest only lifetime mortgage option.
Stonehaven have been important addition to the equity release range of companies as they created the original concept of this type of interest only lifetime product, which now is starting to make in-roads into the over 55’s mortgage market. With features unseen before in this sector of the equity release market, Stonehaven's Interest Select range of products have been launched with the changing needs of the customer in mind.
Stonehaven help protect your inheritance
Like the other two flexible repayment plans, this plan is designed to suit those who wish to have more control over repayment and to protect their inheritance.
The Stonehaven Interest Select plans include the Interest Select Lite, Interest Select Plus, Interest Select and the Interest Select Max. Each plan has its own lending limits, or loan-to-value. The greater the borrowings, the higher the interest rate becomes.
You can select your monthly payment
All these plans offer a disciplined monthly repayment plan that maintains a level balance throughout the term of the contract. The minimum amount that needs to be repaid monthly is only £25. The client can actually elect how much of the total interest charged they wish to repay. It can be anywhere between the total amount of interest charged each month, down to this £25pm level. The interest rate charged depends on which interest select option you choose.
If only partial repayment is made then the Interest Select loans have two parts – the interest payment part, and the interest roll up part. The part of the loan on which you make interest repayments is the interest payment part. If you are not paying all of the interest, then the roll up part is included and this element will accrue over time depending on how much of the total payment is being made.
Stonehaven give you the option from the outset to choose how long you wish to make these monthly payments for. Most people will select over their lifetime. However, if there is to be a significant event arising in the future, then you can elect to fix a term for the payments. The interest rate is fixed for the term you will be making interest payments, but cannot extend it later.
Protection against repossession
Stonehaven also include a protection feature that is unique to the equity release market. In the future, should you ever fall upon difficult times, then the monthly payments can always be stopped and the plan is automatically converted into a roll-up lifetime mortgage. No further repayments are then requested. There are no actual penalties for this, however if this has been done without prior notification then Stonehaven will increase the future interest rate by just 0.2%.
What are the Stonehaven Interest Rates?
The monthly rates of interest for the Lite, Select, Plus and Max options vary, and are currently as follows –
Interest Select Lite – 5.99%
Interest Select – 6.08%
Interest Select Plus – 6.17%
Interest Select Max – 6.81%
The selection of each product is determined by the loan-to-value of the application. The lower the loan-to-value the better the interest rate offered by Stonehaven is.
An example of borrowing £20,000 on their interest select lite plan would result in monthly payments of £103.08 (6.4% APR).
Stonehaven are also a member of the Equity Release Council and all their plans follow SHIP Guidelines. Their plans start at a lower age of 55 with a minimum property valuation of £70,000 and a minimum initial release of just £10,000. Click this link to request a Stonehaven Interest Select quote.
more2life which is part owned by Key Retirement Solutions, has recently launched their Interest Choice Plan with a fixed lifetime interest rate.
This is a flexible drawdown interest only lifetime equity release plan, and allows applicants the option to repay between upto 100% of the monthly interest. The minimum amount that needs to be repaid is £25. The drawdown facility however, is provided only on a roll-up basis, not an interest only basis.
Plans start at age 60, with a minimum property value of £70,000 in England & Wales and with a minimum initial release of just £10,000.
If you wish to request a quote from more2life follow this link.
For additional information on any of these interest only lifetime mortgage schemes call freephone 0800 678 5159 or email [email protected].