The Retirement Home Plan is a really good alternative to an equity release scheme. It differs in that customers must still pay a small monthly contribution. To learn about this plan from Halifax you may want to use the Halifax affordability calculator. This tool will help answer how much you can borrow with this specific type of plan versus doing a blanket calculation.
What the Plan Entails
The plan is essentially an interest only lifetime mortgage and the repayments cover the interest. This is beneficial in the long-term as it means the balance owed does not grow, as it would with other equity release schemes. There is an element of manageability with the Retirement Home Plan.
Up to 75% of a property’s value can be accessed using the plan. A good way to gauge how much you would be able to access is to use the Halifax affordability calculator. This device allows you to input the relevant data and gain an idea of both your eligibility and also the amount you could access. It is also possible to incorporate existing mortgages within the plan.
What the Calculation Requires
There are pieces of information which need to be accurately fed into the calculator to ensure you receive proper results. Always remember with a calculator you use it is going to be an estimate of possibilities. You should only use it as a guide and not think it is 100% accurate.
First, your age is going to matter to the calculation. You need to be the proper age for the Halifax retirement home plan. Lifetime mortgages require an age of 55 for the youngest homeowner. You always need to use the youngest homeowner’s age. Using the Halifax calculator you will see the minimum age requirement as you choose your age from the list. If you are not old enough, then you won’t be able to take out this lifetime mortgage. It would give you a guide for when you are old enough, though, of course.
The home value is next.
Evaluating your Home’s Current Sale Price
The calculator cannot tell you what 75% of your home value will be in a loan until you provide it with the home’s actual value. This is the area most will not have accurate. Unless you recently went through a home appraisal you are probably working off a mortgage value you received ages ago or by getting the value from online. Right Move and Zoopla for instance show current sales in your area so you can see what homes like yours sold for recently. As it is not your home it is a guide of possibilities.
As long as you use the calculator with this knowledge, you can get an approximation of potential equity release funds. It also makes you ready for the next step.
Commit After Independent Advice
Before committing to any such scheme it is important to seek independent financial advice. Ask for a personalised illustration of your mortgage and any necessary repayments. Just because you can access a large amount does not mean it makes the most financial sense. Also, make sure that you fully understand how much the contributions would be on a monthly basis and also what will happen in the event of either a drop in the housing market or alternatively a sizeable increase.
Depreciation or Appreciation
Your home can depreciate or appreciate several times during your lifetime. Most have found out how detrimental depreciation can be to their equity situation. With depreciation you could lose inheritance you want to leave behind. You could find your loan is now the amount of your home value. Luckily there is a no negative equity clause in your mortgage; however, this won’t save the inheritance.
With appreciation, as long as the home sells for more, and the interest is paid off you will be able to leave any appreciated value to your family as an inheritance.
The calculator will help you when you shop around to see what other companies are willing to offer. You see up to 75% of your home value from Halifax, but what if there is a company willing to offer the same only they have a lower interest rate payment for your monthly payments?
Remember as you seek out lifetime mortgage plans the Halifax option discussed here is just one product. There are others and you may find another company offers a better product. Also bear in mind that having such a charge against your property will affect how much you are able to leave as an inheritance to your family members. This is another reason using the Halifax affordability calculator can be helpful.