What is an equity release mortgage?

Tuesday, 6th March, 2018
lifetime_mortgage

It’s a big year for equity release mortgages.

In fact, estimates by one UK equity release specialist suggest that the value of UK equity release mortgages increased by a staggering £10bn last year.

So, what’s happening?

Essentially, the cost of living has grown whilst wage growth has slowed down. However, as we all know, the one thing that has also grown over recent decades is property prices, the result of which means that those who have owned a home for many years have amassed significant equity.

However, what good is equity when a) it’s locked within bricks and mortar and b) you could do with the money right now?

It seems as though the UK’s public is asking similar questions.

The Equity Release Council has revealed that the total amount of housing wealth unlocked by the over 55s reached £3.06bn in 2017; the first time equity release lending has exceeded £3bn in a single year.

And the appetite for equity release borrowing shows no signs of slowing down as Legal and General research highlights how one in five homeowners would consider using equity release as a way in which to unlock funds.

As a mortgage adviser in Guildford we are seeing more and more people apply for an equity release mortgage. There was a time when only a handful of people would consider this approach. However, as people increasingly live longer and money needs to stretch further, homeowners are now viewing equity release mortgages as a viable way in which to continue enjoying a high quality of life without making compromises.

Although before you consider it an option you’ll need to know how it works, so here are five things to know about equity release mortgages.

1. What is equity release?

A way of freeing up money tied up in your property as equity. You can spend it however you wish and there are no mortgage payments to make; the lender is repaid through the sale of your property.

2. Who can access equity release deals?

Those over 55 – all the way up to 95 – and who typically own a property worth £70,000 and above.

3. Can I still benefit from equity release if I currently have a mortgage?

Yes, as long as the funds you release can clear any outstanding borrowing.

4. Is equity release safe?

The Financial Conduct Authority regulates equity release, however, you should make sure that the lender is a member of the Equity Release Council, which can help ensure that you don’t find yourself owing more than the value of the property at the end of the term.

5. Will I need to move?

Not at all. You can downsize in order to release equity but if you would rather not move, then this could be a win-win situation. Some lifetime mortgages now allow you to manage interest charges by making monthly repayments.  Or, instead of making monthly mortgage repayments, the interest can be rolled up and, when the plan finishes, the interest plus the original loan is paid pack to the lender via the sale of the property.  If you are moving home, many of the plans are portable.  The only thing to consider here is that it will decrease the value of your estate.

Still need more information? We understand that equity release is a big decision. So, for expert advice and guidance from a team of award winning mortgage advisers and equity release experts contact 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages


Self-employed friendly mortgages

Monday, 5th March, 2018

Sometimes, it’s as though those who take the most risks are penalised the most.

At least that seems to be the sentiment of 71% of self employed people who feel that they are discriminated against when it comes to getting a mortgage, according to new research from The Mortgage Lender.

Yes, mortgages for self-employed people seem to be that little bit harder to come by, which is a huge shame – particularly when it’s this demographic who play key roles in growing the UK economy and given how, according to new research by Data Line for Business, there are now record numbers of self-employed people in the UK.

Data Line for Business’s research highlighted how:

  • One in seven people now work for themselves
  • The number of self-employed people have grown by a million since a decade ago
  • Self employed women have grown 24% to 300,000 since Q2 2013

Whilst this is great news when it comes to the UK’s entrepreneurial spirit, it’s very much at odds with the barriers – and the perceived barriers – to self-employed mortgages.

What’s the problem with getting a mortgage if you’re self-employed? 

We often get self-employed people asking, ‘Why is it hard to get a mortgage, even when my monthly mortgage repayments would be significantly less than my current rental outgoings?’.

The truth is that lenders find it hard to assess self-employed people as they might pay themselves different amounts at different times. Some may choose not to pay themselves much at all in order to keep cash in the business.

Prior to the financial crash, self-certification mortgages enabled business owners to get a mortgage relatively easy. After the crash, lenders became less inclined to lend on the basis of what the applicant claimed they earned.

However, there are a number of accessible self-employed mortgages on the market right now. Also, as a Guildford mortgage broker that specialises in contractor mortgages and mortgages for the self-employed, we are well placed to help all business owners – from sole traders to owners of limited companies – get a mortgage.

Our advice would be to get in touch on 01483 238280 or email us on info@complete-mortgages.co.uk. Also, in advance of speaking – or meeting – with a member of the Complete Mortgages team, we would recommend that you gather the following documentation in readiness: –

1. Two years’ accounts (if you have a Limited Company or Partnership)

2. SA302 forms and Tax Year Overviews for the two past two years. Here’s a link for more information on how to obtain them

3. Proof of a deposit (or equity in your property, if remortgaging) of at least 5%

Getting a mortgage if you’re self-employed isn’t unachievable. It just requires a little more work. However, as a mortgage adviser in Guildford, we’ll handle the legwork on your behalf.

Remember, Complete Mortgages doesn’t just specialise in mortgages for self-employed people. We also specialise in mortgages for teachers, adverse credit mortgages, buy to let mortgages and limited company buy to let mortgages.

By Mark Finnegan, Director at Complete Mortgages