Equity Release

Equity Release


When considering the Equity Release, there are a number of points to take into account.

I have pulled together a few of the pros and cons of Equity Release in short blog post which should be helpful to anyone considering one of these products.


What's it all about?

Essentially, Equity Release is a way of releasing the cash ‘tied up’ in your home, without having to actually move out. There are a number of different products available to homeowners, (usually available to those over the age of 55).


How does it work?

The two main types of scheme available are the Lifetime Mortgage and the Home Reversion plans. Both schemes have advantages and disadvantages.
The Lifetime Mortgage scheme is the most popular scheme in use in the UK. This is basically a loan secured against your property like a regular mortgage however you don’t pay anything back until you die or are taken into long term care.
The Home Reversion scheme involves you selling all or part of your home. You can use the equity released buy a regular income, cash lump sum, or a combination of the two.


Is It For Me?

Equity Release is not suitable for everyone, and it’s important to get sound financial advice before proceeding. You’re also unlikely to be accepted if you still have a large mortgage outstanding on your property.


Regulation

All companies offering such products can be checked out on the FCA Register. The Financial Conduct Authority regulate the financial services offered by companies to make sure that they are giving correct advice and not misleading and mis-selling policies to customers.

You can check the FCA Register here

Remortgages

If you're thinking about a remortgage; maybe to release some equity from your home or move to a cheaper deal, there are a number of things you should think about.

Firstly, it's important to understand the details of your current mortgage... 

Are you on an introductory rate? Does your mortgage come with any kind of extended
tie-in? If so there could be penalties of you switch mortgages too soon, however is certainly wise to consider your options prior to any introductory period ending.

Talk to your lender...

Check with your lender, maybe you'll be able to get a better deal without moving.

Apples and Oranges...

When you're looking around for a new mortgage, it's not enough to compare interest rates, it's vital to look at all the charges together in order to understand the real cost of each product.

Insurance...

Look out for insurance tie ins as they are often not the best deals.

Interest can be interesting...

Look for a mortgage that charges interest daily, not annually, this will save you a great deal of money.

The best way to ensure you get the best deal and don't make any costly mistakes is to talk to a financial advisor. If you get help from a professional well in advance you can be confident that appropriate options for your circumstances will be explored.

Top Tips for First Time Buyers

As a First Time house buyer there is more to consider than simply getting a deposit together (although that is of course an important element).

I've pulled together a few quick tips for First Time Buyers, or indeed anyone who is thinking about buying a property via a mortgage.

Voters Roll

The electoral roll (voters roll) is used for more than just voting, it is an essential tool for verifying the identity of individuals. Mortgage lenders have access to this information and can use it to confirm your address history.

If you are going to apply for any kind of credit you should get yourself added to the voters roll, it will significantly improve your chances of acceptance.


Credit Check Yourself

Credit reference agencies hold a vast array of information about all of us. Every loan, credit card, voters roll status, account balances and many other details are all recorded and made available to Mortgage Lenders, and any other financial institution whenever we apply for credit.

This information is also available to you. For a small fee you can get your full credit file. Do this, and you can see what prospective lenders can see.

For Experian click here Experian Credit Report

For Equifax click here Equifax Credit Report


Pace Yourself

Another thing you can do to improve your credit status (or rather, not to harm it) is to resist making too many applications in a short space of time. Too many credit applications on your credit file can make you appear desperate in the eyes of a lender. Remember; it's not just loan applications result in searches being recorded by Credit Reference Agencies, any kind of finance, mobile phone applications, and landlords searches, amongst others, show up on your credit file.

Try to spread out applications, particularly in the 12 month period before applying for a mortgage.


Too many or too few?

Credit cards (including store cards) will, as I've mentioned show on your file. If you have cards with no balance, some lenders may worry that you have too much potential credit available.

Close down any accounts you don’t need. However; it is also important not to overload the cards you keep, as 'maxed out' credit cards can also look bad on your credit file.


Too much or too little?

Mortgage and other lenders will regard too much credit a sign that you are struggling with your finances and you will be considered a higher risk. At the same time, avoiding credit all together means that potential Mortgage providers have nothing to look at when assessing your credit worthiness.

A little credit, in good order, is a great advantage when applying for a Mortgage.


Pay-day Loans

Avoid pay day loans at all cost. These small, high interest loans give Mortgage lenders the impression you're struggling with your finances and are desperate for money. Having a pay day loan on your credit file will make obtaining a Mortgage much harder.


For information on our services or to get in touch, please visit our website: Principal Wealth

Bury IFA Blog

Welcome to our new blog, (well after 30 years in the business I suppose it's about time)...

We'll see how things develop, however the plan right now is to blog about issues and facts that I come across while arranging Mortgages, Pensions and other Financial service for my clients.

Time will tell!