Tag Archives: Interest Rates

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

Understanding the Drawdown Lifetime Mortgage

Taking equity from one’s property has been slowly gaining a lot of popularity over the years as the recession has hit most households. This is since a release of equity offers a chance for a person to get cash from the bricks and mortar within their property. In addition, the interest rates that one pays on the capital sum borrowed are usually reasonable compared to those of conventional mortgage rates. There are a number of schemes available when it comes to equity release like drawdown lifetime mortgage. Lenders will always insist on people obtaining equity release advice before letting them decide on the scheme they want.

However, today there has been a surge of interest in one of the more flexible equity release schemes known as the drawdown lifetime mortgage plan. This is an option that is popular in the field of lifetime mortgages and it has features that other plans do not offer. For instance with a drawdown lifetime mortgage it is possible for you to withdraw a bulk amount which can be lower than the maximum available. This still leaves a surplus of tax free cash held by the lender. This is the cash reserve facility that one can draw upon whenever further funds are required.

This is a feature that other plans do not have, and that is why there has been a growing interest in the Drawdown Lifetime Mortgage. In fact, at the moment this facility offers the best retirement solutions for many people looking to take equity from their property. So, it would be advisable to research and consider the option of the drawdown scheme.

Other features that make this financial product really popular is that it is flexible as you are usually charged lower interest rates, for instance Aviva currently offers their flexi lifetime mortgage at just 5.92% with companies such as Equity Release Supermarket. Therefore, there are many features that have propelled this plan to be one of the most popular by home owners looking for equity releases. Another benefit of the drawdown lifetime mortgage is you are only charged interest on what has actually been withdrawn.

Quick View of Drawdown Benefits
1. Interest rates are usually lower than standard mortgages.
2. You are only charged interest on the sum you withdraw from your credit account versus the amount available to you.
3. You can take out this mortgage at age 55 or up.
4. You can take a lump sum and then smaller payments or take small payments as you need them.

You have other lifetime mortgage options such as enhanced lifetime mortgage. Enhanced mortgages are for individuals that suffer from health issues that may reduce their life expectancy. Like the drawdown option this enhanced version does not work for every home owner. It is meant to give a large lump sum for the person’s expected lifetime versus the possibility of more years and retirement needs.

There is also the standard option which is a lump sum payment or instalment choice after you receive a lump sum. In this standard lifetime mortgage you do not pay interest until the end, but you do accrue interest on the lump sum you have taken or the instalments you intend on taking.

The last option is an interest-only lifetime mortgage, which allows you to make monthly payments of interest leaving only the principle balance in the end. For those with reserve income it might be the best option to ensuring an inheritance is left for your family members.

Family should be a part of your decision making process on any lifetime mortgage including drawdown lifetime mortgage plans. Your family or beneficiaries will be left to deal with your debts when you die and may be needed when someone goes into a retirement facility. Leaving a burden of debts that requires the family home to be sold may not be what your family desires.

Before entering into any contract understand the disadvantages of these schemes too. This helps you and your family make a decision, as well as, helps you understand the financial advice you received from an agent.

Drawdown Lifetime Mortgage is popular and for good reason. However, if you are looking for the best plan, it is best to get the advice of an equity release adviser so that you may know the best choice to make. Taking equity on your home is a big deal, and it is best that you take your time and do the right equity release.