Can equity release mortgages reshape society?

Monday, 1st February, 2021
equity release mortgages

Admittedly, this sounds like the type of question you might expect to find in a journal (or, at the very least, a trade media title). However, as an equity release mortgage specialist and Guildford mortgage broker, we believe that the answer is ‘yes’ – and here’s why.

For a whole host of reasons, many of which are generational (and not all of which can be blamed on the current global situation), young people are finding it increasingly tough to get a first time buyer mortgage.

This might be related to a reduction in available first time buyer mortgage deals. Or, it might be simple economics, whereby demand has pushed up the price of property, thus decreasing the ‘real’ value of a deposit that someone may have taken years to save and leaving homeownership out of reach. Regardless of the cause, it’s really not that easy for the next generation of homeowners.

And this is where equity release mortgage deals are making a big difference.

See, many of those aged 55 and over (the pre-requisite for equity release) are at the opposite end of the spectrum. They made money – sometimes a lot of money – on their property. More often than not, it was by pure luck and in no way the result of any shrewd business decisions. Property simply went up, and up and up.

But now, as they find themselves either financially secure or in the latter stages of their life, equity release – the process of freeing up wealth currently tied up in bricks and mortar – is becoming a way in which to help their children, and even grandchildren, get that foot on the property ladder.

We’re all aware of the term ‘bank of mum and dad’, but now the ‘bank of grandma and granddad’ is also becoming more commonplace, too.

Age Partnership has reported an increase in equity release as a way in which for those of a certain age to provide their loved ones with early inheritance gifts. Maybe last year’s equity release boom was to help family members buy a property before the stamp duty holiday ends this spring. Either way, it seems as though equity release mortgages are becoming a balancer – a way for the older generation to move wealth down a generation or two in order to give younger family members the same opportunities they once had.

In any case, equity release mortgages are becoming more popular. Given the struggles the youth of today face, it’s not hard to see why.

Are you 55 and over and thinking of applying for an equity release mortgage? If so, contact the Complete Mortgages team today on 01483 238280 or email info@complete-mortgages.co.uk. Similarly, if you’re the recipient of an equity release inheritance gift and are looking to apply for a first time buyer mortgage, get in touch.

By Mark Finnegan, Equity Release Adviser at Complete Mortgages


Putting the ‘ease’ in Equity Release mortgages

Thursday, 31st October, 2019

There are numerous reasons why aging homeowners would want to release property wealth.

Whether it’s to boost the pension pot, help your children (or grandchildren) afford their first home or simply free up some money to buy that dream car you’ve always wanted, equity release mortgages have come to represent a viable route in which homeowners can convert bricks and mortar into ready cash.

Furthermore, thanks to the proliferation of equity release mortgage deals over the last few years, it’s also an easy and cost efficient route, too.

According to the Equity Release Council – a trade body that represents the equity release mortgage sector and promotes high standards of conduct and practice in the provision of and advice on equity release – a staggering £1.85billion in housing wealth was released in the first half of 2019.

And this growing popularity is also helping to drive down equity release mortgage rates, too, with some lifetime mortgage rates coming in at under 3 per cent. In summary, going down the equity release route is now a very easy process to carry out.

If you’re about to apply for an equity release mortgage and would like to know more about how they work, then read our guide to equity release mortgages. Similarly, read the top tips on equity release mortgages to get Complete Mortgages’ take on what you should be considering before you start the process.

However, as easy as it is to get an equity release mortgage, there are a few things to consider:

1. Borrow in stages

Regardless of the amount you agree to free up via equity release, don’t take it all in one go (if you can help it). After all, as soon as you borrow, interest – and the effects of compound interest – quickly begins to have an effect. If you think £20,000 can cover you for 10 years, just take that and wait before taking the next sum. There’s little point paying interest on money you don’t need.

2. Quality counts

As mentioned previously, the Equity Release Council exists to promote high standards and uphold quality. So, make sure that when it comes to applying for equity release, you use a company that is a member of the Equity Release Council.

3.  For your benefit…

Check your benefits status. If you’re entitled to – or currently receiving – benefits, a significant injection of cash (which is treated very differently to equity locked in a property) may change your benefits status. In fact, it could result in the reduction, or even the complete stoppage, of your benefits.

4Get good mortgage advice

A good mortgage broker in Guildford, such as Complete Mortgages, will be able to help you make the right choice when it comes to equity release. There is a lot to consider when it comes to this type of mortgage, so speaking with an expert is an absolute essential from our perspective.

As an equity release mortgage specialist, let Complete Mortgages help you decide if equity release is the best way forward for you. Contact the team on 01483 238280 or email info@complete-motgages.co.uk.


Why the sudden interest in interest only mortgages?

Friday, 23rd February, 2018
interest only mortgages

First it was the interest rate rise. Now it’s the interest only mortgage. So, what’s with the sudden interest in all things interest-related?

Well, an interest rate increase is always enough to create debate (and keep an eye out for more articles from us on this topic as we watch – with interest – to see whether another interest rate rise happens in spring), however the debate around interest-only mortgages is a reoccurring one.

It wasn’t until the financial crash of 2007/8 that interest rates found themselves under scrutiny. Up until that point it was assumed that property prices – and therefore equity – was going to continue growing, leaving the homeowner with a pot of gold when they sold their property.

Now, with property prices beginning to slow, it would seem that the opportunity to make money on property like days of old is no longer a sure thing and this has the potential to leave homeowners exposed. On that basis, it’s no doubt one of the reasons why the Financial Conduct Authority has brought the interest-only mortgage back into focus.

According to Which?, new research has revealed that there are three points over the next decade-and-a-half whereby a large number of the UK’s interest-only mortgages will reach maturity, with more recent borrowers most at risk of a shortfall.

If you are currently on an interest only mortgage deal and concerned by the recent media coverage surrounding them, then our advice would be to contact a good mortgage adviser, who will be able to go through the pros and cons of interest only deals in relation to your own circumstances. However, for now, here are a few things you will need to consider.

1. Place your head in the future – not the sand

Will you be able to repay your mortgage at the point of maturation based on your current circumstances and income? If the answer’s ‘no’, then maybe it’s time to switch to a repayment mortgage. There really is little point in ignoring the issue or putting it off until tomorrow. Besides, the sooner you address it the sooner you can apply for a repayment mortgage or remortgage.

2. Seek mortgage advice

As a Guildford mortgage broker, helping people to establish the right mortgage for them is what we do well. And given how it’s our job, we know the mortgage landscape inside out as well as the best alternatives to interest only mortgages currently available.

3. Equity release mortgages may be an option

Even if you’ve come to the conclusion that you’ve gone too far and for too long on an interest only mortgage to be able to pay the balance, there are still options. Applying for an equity release mortgage is one of those – and one that may mean you don’t have to compromise your current standard of living. As an equity release mortgage specialist Complete Mortgages can guide you through this process.

Regardless of mortgage type, we always recommend that you speak with a reputable and trusted mortgage adviser – even if it’s not us. By doing so, you will be able to shortcut the process, save time and energy on researching the market and get professional guidance and advice when it comes to making a decision that’s right for you.

If you’d like to discuss your options when it comes to switching from an interest only mortgage to a repayment mortgage, contact Complete Mortgages on 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages