Stonehaven offers two options for equity release. These two options are: a roll-up equity release scheme and an interest only lifetime mortgage. In order to determine the better option, your equity release mortgage adviser will look at your requirements and will then determine the best option with the most competitive interest rate. Both types of the Stonehaven equity release plans make it possible for pensioners to obtain mortgages, while at the same time, they are offered flexibility and financial control.
Introduction to Roll-up Equity
The roll-up equity plan is a very common option for pensioners today. It allows them to release money that is free from taxes without having to pay monthly payments. The roll-up equity plan of Stonehaven, however, adds interest thus resulting in an increase of the mortgage balance over the years.
Exploring Interest-Only Lifetime Mortgage
The interest only lifetime mortgage deal on the other hand is more beneficial to pensioners. When it comes to the interest only plan, Stonehaven offers a plan in which pensioners will have to pay monthly interest-only payments for the rest of their lives thus ensuring that the original mortgage balance will never change during the duration of the mortgage. The monthly interest-only payments are normally made by the pensioners, but in some cases, their children are allowed to make the payments as a protection of their inheritance.
In order to apply for a Stonehaven interest-only mortgage, a person needs to be 55 years and must have a property with a value of £70,000. Currently only properties in Wales and England are accepted. The minimum loan that can be obtained is £10,000 and can be increased to a maximum of 44% of the value of the property.
The interest select plan is an interest-only lifetime mortgage which means that there is no fixed duration applied to the scheme. It is only paid back if the property is sold or if the borrower dies. The interest is fixed for the duration of the mortgage which means that the monthly interest-only payments will never increase. They will remain the same.
This scheme is flexible in that people are given the opportunity to make payments that are affordable and that fit their budgets. The monthly interest-only payments are commonly called contributions in that a person can choose to pay a part of the interest payment or the entire interest payment. This depends on how much he can afford. In this case we recommend using a London Equity Release Calculator.
Differences of the Two Loan Types
The main difference of payment versus no payment has already been discussed. The fact is the qualifications for the amount of loan, age, and the home value is all the same. It is a matter of choosing what is more comfortable for you and your family.
One other difference between the Stonehaven equity release options, in discussion, is inheritance. A roll-up plan may offer a fixed interest rate, but it accrues over the life of the loan. As it continues to accrue and you live longer it may mean the borrower is unable to leave an inheritance behind. The home is mostly likely going to be sold. With the interest-only option there is at least the potential of leaving behind money as an inheritance even if the home has to be sold in the end.
Stonehaven is One Company
Stonehaven is just one mortgage company offering products for retirees in the UK. If neither plan is suitable to the borrower there may be an alternative. Equity release plans have at least two other types available even if Stonehaven concentrates on just two. The other potential choice is a drawdown mortgage. This mortgage allows the borrower to take a smaller lump sum at the initial setup and then money as needed from an equity release account. As long as money remains in equity there is no interest charged on the available amount. It is only when the money is pulled from the account and used that it becomes part of the interest accruing balance.
The other choice is an illness lifetime mortgage for those with a serious illness that wish to take out more money quickly. The concept is for the person to repay the loan quicker than other lifetime mortgages given a shorter life expectancy. The only difference between a roll-up and illness equity release is the lump sum and time.
There are many benefits to a Stonehaven interest-only mortgage plan especially for pensioners. Do not discount Stonehaven equity release plans like the roll-up version either as you may decide a monthly payment is too much throughout the life of the loan.