Everything You Need To Know About Mortgages Part 1

Posted on Dec 29, 2011 in Mortgage Help | 0 comments

How Much Will Your New Loan Cost You
Mortgage Calculators

As many of you know the entire world is seemingly amidst a crisis. It is not the type of crisis that you would normally expect (though they still exist). World hunger is still an issue we have to see every single day that we drive our cars to and from work, to the local market or just for a night out. We cannot ever escape the problems of pollution or anything else that is seemingly dire or detrimental to the world health. Another problem sweeping the world is a dirty word to homeowners: foreclosure. For any person that watches or pays attention to world news we know that the United States of America has been hit hard in this department and though we would like to be immune or turn a blind eye we simply can’t. The United Kingdom is in the same exact trouble as our western counterparts and maybe even worse than they are.

I often wonder, as I am sure you have, if owning a home is a worthwhile undertaking. A home you purchase is, of course, an asset. You can borrow against its value if you absolutely have to but who wants to do that? That just means you have to worry about another dirty word to homeowners: refinance. The hard truth in the matter of foreclosures is lack of money.

Ten years ago we looked at the booming housing market and we thought to ourselves that NOW was the time to get in to the lending officer and ask for some money. We got it and we were happy because the payments were manageable. In fact the rates were a lot better than we had initially thought they would be upon asking for the loan! Our fatal era here was not asking for more information on the bottom line. Sure – the loan was cheap and that should have been our first indicator that something may be amiss but out judgment, like so many of you, was clouded. The bottom line of that agreement was the balloon payment at the end of the term!

It is a sad fact that we could have avoided this matter totally if we would have used a loan calculator. I know the numbers are general in natural and based on the current situation; the here and now. In the end any idea would have helped greatly to persuade us to ask more questions. There is also the thought of being practical. If there are two bits of advice that I can offer you, from personal experience, it is thus:

1. Use a mortgage calculator! They’re not hard to use and they are a LOT easier to find online these days. There is even one on this site for you to use. Just put in the pertinent information and hit send.

2. This is an old saying: Hope for the best; plan for the worst. In other words you should NOT expect to be in your cushy job five years from now.

You should not expect the world to continue paying dividends on your home. If you have kids then expect them to go to University.

Expect your home to not remain in perfect condition and certainly do not expect Mother Nature to play by your rules.

If you follow those two bits of advice you may avoid some bas circumstances down the road.

Now I’m sure you want to know more about these loan calculators. It is important that you find a loan calculator that is not affiliated with any singular lending institution. I do not want to be accused of being negative let alone claiming that these lenders are less than ethical but this is your life and your money so you have the right to be certain that you are not being manipulated. The loan calculator can easily be modified in the favor of the lending institution. Protect yourself from the get go by using an independent one like provided.

Our loan and/or mortgage calculator will serve to give any potential customer a rough estimate on what type of payments you should expect to pay monthly. We have tried to be as thorough as possible by allowing you the ability to select the type of mortgage that you are looking for. From here you can enter the amount of the loan you are seeking as well as the interest rate. The number you get back is what you should expect to pay per month. Do the math though because if your loan is for 10 years you may need to do some extra math to figure out what will be due in one lump sum at the end of 10 years.

Keep in mind that the figures do not include your cost of insurance or any type of investment that is based on a mortgage repayment vehicle (which is required for an interest-only type of mortgage). Also keep in mind that the calculator will only give you an idea of what to expect to pay out each month without use of any type of discounts or possible increases over the years.

I know that you are hurting in this marketing. It is also time to retake control. You can do this by refinancing and getting out of that hole. It is a good time to do so because the lending institutions are falling down too and need picking up. They get themselves back in the game by helping you get back in the game as well so expect very nice discounts to come your way.

Fixed-Rate and Long-Term Mortgages: Good Idea or Big Mistake?

When you look around the news channels today or peer through the vast amount of newspapers and other magazine you cannot escape one ugly fact: the economy is bad. Regardless of what people are saying we have no idea when we will hit an upswing only that it will eventually happen. There are many things we, as homeowners, can do to help ourselves out of the proverbial weeds. One possibility, and the basis for this article, is getting a mortgage that not only is fixed at a rate but is also retained for a long period of time. What this means for you is that you will how much, per month, you will be paying to the lender which means your other financial obligations can be planned around your mortgage.

If you want to compare the fixed-rate mortgage loan to those that use a variable interest rate you will notice some very bad things. Unlike the fixed-rate the variable mortgages can rise and fall like the tides of the ocean. This means you may not always be very clear what you have to pay out each month so then your other obligations may be late or simply not paid at all which just means a bad credit score for you. I do not mean to say that the variable rate mortgages are bad because their benefits certainly are there and it really depends on your circumstances. In a stable economy they may work out better than a fixed-rate mortgage loan but when the economy is fluctuating as it is the uncertainty is pretty high.

In the past the loans for a fixed-rate mortgage only lasted a couple of years; two or three at the most. Times are changing now because lending institutions realize that their customers (new and old) need stability. They have to be comfortable from the onset of the loan and if they are not then bad things can happen not to just them but to the customer as well. Over the last few years lenders have begun to give fixed-rate loans like they have for variable-rates! You can expect to get a loan period from 10 and 15 years to 25 years!

What follows is a much unbiased look at the reasons why the fixed-rate loans are good but also possible cons to them.

Pros of Fixed-Rate and Long-Term Mortgages

Security in the Long-Term

Let us face the easy reason why fixed-rates are good: possible long-term solution! Unlike their counterparts you will know how much your mortgage is for EVERY single month! Instead of being secure just one, two or three years you can be secure for 25 years! What this means to you in the long run is that you will be fully aware how much of your income, every month for up to 25 years, is going to have to be paid out. This allows you to have the ability to plan all of your other bills out a lot easier than you have been able to otherwise. The rates may prove a little higher but that’s a small price to pay when you won’t be hit with a huge rise in your rates (one of the main risks in variable rates).

One Arrangement Fee to be Paid

When you are getting a fixed loan payment for a short period of time (1-3 years) the chance that you will pay an arrangement fee is higher. You should expect to pay the arrangement fee every 2 or 3 years as you renew your loan. In many cases the lender you choose will figure this amount into your loan as added interest so then your monthly payment will also increase. Currently the average arrangement fee is roughly £860. That is a lot of money to be added EACH time you renew and is just an added burden.

Selecting a longer period for your fixed loan means that you usually will only pay one arrangement fee. Of course you wonder if this fee would be higher since the lender will be losing out every couple of years but in many cases it is roughly the same! That alone, basing the loan at 25 years and a £860 arrangement fee, means you could save up to £10,320 is arrangement fees alone!

Cons of Fixed-Rate and Long-Term Mortgages

Don’t Believe All You’ve Heard – Could Still Pay More

One major downfall of having a fixed mortgage is in the fact that there is always a possibility that the interest rates may drop. Unfortunately if you happen to have a fixed rate you will be stuck paying the same rate. If the trend were to continue you would wind up paying more money than you would have if you had gone with the variable mortgage loan. Of course the likelihood of that occurring is very slim indeed.

Short-Term May Wind Up Being Cheaper Than Long-Term Fixed-Rates
There is a certain convenience with having the long-term and fixed-rate mortgage loan which is in the arrangement fee and only paying one. Unfortunately your long-term loan may cost more than if you have gone the shorter route. You could refinance every few years, pay the fee, and then wind up with the lower interest rate. This is a gamble for you of course.

Let me try and break down the numbers for you. Assume you took out a £120,000 mortgage. You were also able to secure a fixed-rate over the course of 25 years with the rate being 6%. Your arrangement fee is our £860 from earlier. The total for your loan, per month, would be a little over £775.

Pretend for a moment that you decided to go with a variable loan instead. You have to remortgage every couple of years and doing so winds up averaging out to be 5.5% over that same 25 year length. With these numbers your average monthly mortgage would be £734. If you spread out your arrangement fees among your payments that is still giving you £758 each month on a three year loan or £770 on two years.

Charges for Early Repayment

Unfortunately many of the mortgage deals that you find for fixed-rate repayment also have with them a penalty if you try to pay off early. They do this in order to make back some of the money they lost from the fixed income. In the end you could wind up not only paying too much for your loan but it may cost you more to pay it off faster.

Should You or Shouldn’t You Go With Long-Term and Fixed-Rate Mortgages
There is never any right or wrong answer to these tough financial decisions without knowing your individual situation.

There is no single person on the planet that can begin to predict the future of the financial markets (despite the vast attempts to do so). When you get to the point of choosing your mortgage you hope to the heavens that the rate you are getting is the best you can get and that next week another one will not come to your door.

In all reality there is only thing to consider that is if you can pay the mortgage loan fee each month without neglecting your other obligations. If you can’t afford the loan then wait until a better deal comes along. Take a look at all of the past rates over the last year or two so you can have an idea on the trend of interest rates. If after all of this you are still not sure then consider consulting an expert.

The Big Credit Squeeze
Not Letting the Credit Crunch Kill You: Remortgaging Tips

We are, without a doubt, in the middle of one of the worst economic depressions that the world has ever seen. The funny thing about this economic down turn is that it makes for a great time to remortgage. Let me try to explain the reasoning here because I am certain a few of you (probably more like all of you) are laughing. I know it sounds like a big joke but think about it.

This economic choke is not limited to just you and I; “The Consumer”. Lending institutions are also feeling the hurt because guess who is actually at fault for the current state of things? That’s right! The bankers. These guys thought it was a good idea to offer great mortgage rates at insane percentage rates. What they failed to tell us is that the rather large balloon payments would be due in ten years. With the job market down and prices up along with a housing market that leaves much to be desired caused homeowners to balk and fold.

When the dust settled the bankers are scratching their heads and the homeowner is facing an impossible balloon payment that may lead them to bankruptcy. The lending institution wants their money and you want to keep your house. With this in mind there is no doubt that the lender will do anything they can to get paid and that spells out big savings for you.

Needless to say that we are in an economic “crunch” and we are all feeling the crushing sensation. This entire affair is a very stressful one for you; the homeowner. Remortgaging now offers, for many, more possible headaches than sleepless nights but read on for hope.

There are very good mortgage rates out there so do not be afraid to look just expect to pay a fee known as an “arrangement fee”. Look at these fees as a sort of paper work or finder’s fee. Be careful though because you may find yourself paying out more money especially if you are looking at variable rate mortgages. The goal is to allow it to get better and not worse!

Despite the fact that the lenders are being cautious they are still remaining very competitive. Keep their competitive nature in mind as you price the rates of mortgage loans.

Never feel bad about looking around for the absolute best rate and, if you get a chance, pit the lenders against each other.

It is just like going to buy a car. The absolute “bottom line” number is never what they tell you it is especially if they know that you are actively looking elsewhere. This will drive them into frenzy and even though they may not make a fortune off of the loan they still make a sale and gain a long-term customer (assuming you were not a customer prior) and these two things can make them eligible for a bonus or advancement.

Even though this can be a stressful situation keep the following things in mind in order to get the best possible remortgage rates:

Plan, Plan, Plan

Planning ahead is an essential part of the remortgaging procedure. There is such a thing as too late in this remortgaging game. If you wait until the last minute do not expect rates to be overly favorable for you. If you wish to get the best rates, as well as be able to give yourself some shopping around time, start looking for rates at least 3 months prior to you actually needing to remortgage.

Read the Fine Print on Costs

When you got your first mortgage there were a lot of other added costs associated with it. You would hope that remortgaging would be simpler but there are still costs involved in the refinancing. Be certain on how much money you will need. There is no need to be caught off-guard! Read the bottom line stuff or let a barrister look it over.

One fee that is often forgotten about is the arrangement fee. This fee is typically assessed with each mortgage and remortgage that you participate in. One loan that usually lacks this fee is the variable-rate mortgage loan because your payment can increase each month. The arrangement fee acts to offset the lack of funds associated from low interest rates. The fact that the likelihood of you getting a variable-rate loan to continuously be low is not very good which makes looking for a fixed-rate loan look better if you don’t mind the arrangement fee.

The fixed-rate loan allows you to know exactly how much, per month, you will have to pay out to your lending institution. There is a very small price to pay for having peace of mind. This fee can be added into your monthly payments so you don’t have to worry about yet another bill. The warning here is that if the rates happen to go down you will be stuck at the higher rate.

There are also other services labeled as “additional” that you may need to consider that are offered with your mortgage loan. One such added fee is PPI (Payment Protection Insurance). If you could manage to afford this additional fee then do so because if for some reason you can’t pay your loan the PPI can take care of your repayment amount for up to a year. Do not opt for it though if it would further harm your financial position.

Always be Prepared in Case Payments Rise

Despite how hard some people try they simply cannot predict the future. There is no hard or fast rule to how rates will go in any given month. Will the rates go up a little or will they skyrocket? Is my loan going to drop the basement and save me money? In the end the one steadfast rule is to always be prepared for the inevitable mortgage rate increase. This is yet another reason why a fixed-rate mortgage loan can be better in the long run for you than a variable-rate loan. If you don’t think you could qualify for the fixed-rate loan then consider asking about a variable loan amount that has a cap. What the cap does for you is give you the ability to know exactly how much money, on the high end, you will need each month.

Don’t be Caught in the Early Repayment Trap

Sometimes the unforeseen can happen and we wind up getting a financial boon. The first bill we want to get taken care of is the largest – the mortgage! Under most circumstances there are not any penalties for good repayment behavior but make sure you take the time to read the fine print or ask that question of your lender. You would think that repaying your loan early would be a good thing and it is – for you. For the lender the early repayment fee is there to make up for any interest they may lose out on if you had continued with the payment schedule. These fees usually apply when you have a fixed-rate mortgage loan or a discounted one.

Added Annual Interest Fee

There are some mortgage loans that will, on top of their normal taxes and fees, hit you with an annual fee at the end of the year. In other cases the lender may assess you a fee based on what you owe them at the beginning of the year so if you have a lower interest loan you will be hit harder over time.

Daily Interest Rate – Worthwhile or Waste of Time?
The easy answer here is YES! There are some lenders that will assess your loans interest on a daily basis. They base the interest on the current prime rate then multiply that by what you owe at that time. The more you pay off on your mortgage the less in interest you will pay. This may not seem like an enormous difference at the time but once you look at the money saved over the course of the entire loan you will notice the savings. You may be able to pay off your loan several years before it is due but just watch out for those early payment fees.

Tracker Loans: Mortgage Godsend

Mortgage Now With the Best Rates Possible in This Economic Crunch

The economic crunch is being felt by everyone regardless of where you live. The United Kingdom, like the United States; and other countries all over the world, the down turn in the economy has not left them unscathed. Under any other circumstances this could spell horror for anyone wishing to apply for a mortgage loan but this also provides a unique opportunity. Lending institutions are feeling the same crunch and hurt that we are. Let us face the facts that if we are not borrowing they are not lending. This means they are staring down a loss in interest rate revenues. What this means for us are some very good deals.

Normally I wouldn’t personally advocate for a lender because I am supposed to be an unbiased channel for information. With this being said I cannot help but to recommend First Direct because at this point in time they have one of if not the best rates currently published on the Internet or in print. But you have to act fast because they give out a limited number of loans based on these rate numbers not to mention these rates can change on a moment’s notice.

First Direct specializes in offset mortgage loans and, like I said, their rates are currently the best thing going. They have several products available for you and even better deals if you happen to be a new customer! Once you look these numbers over you will be as thrilled as I am and will be hurrying to phone them! When that time comes called 08 456 100 103 if you are already a customer with First Direct and 0800 48 24 48 if you are a new customer.

What is an Offset Mortgage Anyway

Like most people this financial stuff is all Greek to me. Unless you are banking professional you may not have a clue as to what this stuff means. I have done a lot of research and I hope my explanation helps you make an informed decision.

The Basics

An easy explanation is that this kind of mortgage is there to reduce the interest and uses an existing balance of credit that is used against the debt of the mortgage. If your balance is £200,000 for example and you have a balance of credit that is £50,000 then you are only charged the interest of £150,000 which saves you money. Many lenders will setup a limit of credit with the mortgage so that as a borrower you can redraw up to this limit. It is subject to review of course. Beware of lenders that want to give you a balloon payment at the term of the loan. Different lenders handle these accounts in various ways.

Tax Advantage

You may see advertisements for the Offset Mortgage being called tax efficient or a savings. When you earn interest for your deposited accounts it is considered to be income. Due to this distinction it is taxed at the source and the rate has been a nice 20%. The Offset Mortgage is a little bit different because the credit balance does not create income because it, in fact, saves mortgage interest which would have been charged previously. Since there is no payment on interest made you cannot be taxed on it.

Fighting for Your Business

Many lending companies are offering offset mortgages and they will do what they can to win your business. They will add features to the loan or vary the basic concept of the offset mortgage loan. Some lenders will offer the loan in an “interest only” schedule of payments and offer full month offsets on the interest. What this means is that you are charged interest on the balance less your deposits and savings. So you will be paying less interest each month.

One other variant you may commonly come into contact with is where you pay off the capital of the loan as well as the interest. This is like repaying a normal like if the offset variant didn’t exist. The interest that is finally charged to the mortgage is less because of the offset arrangement. You will basically be overpaying your loan and paying it off early.

Current Base Rates

The current base rate offset tracker program is being based on the Bank of England’s current base rate in addition to 2.39% for the entire term of the loan. Roughly this is 2.89% but this can fluctuate quite rapidly. The overall comparison cost is currently 3.0% APR with an arrangement fee of under £800 and there is no booking fee. Unfortunately this specific tracker mortgage is not available if you are a current customer with First Direct that is remortgaging.

Fixed Rates – Tracker Mortgage

One loan product that is available is a fixed rate offset mortgage. The initial rate is set at 2.99% and is fixed over a 2 year period. The current variable rate is set at 3.69% with a £299 arrangement fee. This loan product does have a booking of fee of £599 currently. This is a limited time offer so jump on it before it changes. This is available for loans of £30,000 and up but the booking and arrangement fees will be added to any loan up to £400,000 and for every £400,000 afterward.

With this loan it is important to note that if the rte decides to fall you may wind up paying more for your mortgage during the period of the loan that is at the fixed rate. This is, of course, more than you would pay with a variable rate loan. First Direct does charge a fee if you plan to repay the balance of the loan early. All of these figures will be given to you when you go ahead with First Direct for a tracker loan. You can call the numbers listed above for more details.

Variable Rates – Tracker Mortgage

Unlike the fixed rate mortgage a variable rate is in a state of constant flux. This can be good or bad for you as the consumer. When your loan is fixed you will know how much you are paying each month without fail. If you have a variable rate this means that your payments can change, for the good or the bad, each month based on the current interest rate.

At the moment First Direct is offering a loan, based on a loan of £30,000 or more, at a 3.8% APR overall. There is no booking fee but there is arrangement fee of £299.

Life Tracker Mortgage & Repayment

This type of financing is available on loans of £10,000 and up with a £999 arrangement fee. The booking fee is waived with this type of loan. The overall APR is 3.2% based off the current 2.99% from the Bank of England’s base rate (for the course of the mortgage) which then averages out to 3.09%.

When you are looking at this type of loan please think about it carefully. Securing your other bills on your own is risky business. If you don’t continue to make payments on the loan there is always the possibility of your home being repossessed by the lender.

The UK Reverse Mortgage aka Equity Release

With the economy crumbling all around us we look for any hope that we could possibly steal back out earnings and possessions. Lenders are stuck between a rock and a hard place because they are losing money from homeowners not being able to repay their mortgages. Houses are winding up being repossessed and left for dead as there are not many people looking to take the risk to purchase in this near lifeless market. A reverse mortgage (otherwise known as equity release) could be that ray of hope.

A reverse mortgage, simply put, is a way for a homeowner to utilize the assets they own (house or other things). The purpose of this is that the homeowner can maintain a steady income while remaining in the home.

The old saying applies heavily here: if it is too good to be true; it probably is. There is a catch to these reverse mortgages. You have to, at some point, repay the person providing the income. This usually transpires after you have passed on. This is a type of loan that has gained popularity among senior citizens especially those that do not want to leave a large estate to their family. There is an American equivalent available for their citizens over 62 years of age.

Mortgage Arrangement Types

With all of the mortgage services available there is no exception to the reverse mortgage in having several types of products or arrangements to fit many circumstances.

Lifetime Mortgage

This type of loan uses the borrower’s home as a source of income with the payments of interest being added to the capital over the entirety of the loan. This mortgage is repaid after the borrower moves or dies and the home is sold. You do remain the legal title holder as long as you occupy the property but you are also still responsible to the upkeep of the home, taxes etc.

Interest Only

While you continue to live in the mortgaged property the interest is paid out of your income. The capital of the loan is paid upon your death and subsequent sale of the property.

Home Reversion

This mortgage product may be the most unique of them all and doesn’t seem like it has any real downside. It is definitely best suited for an elderly individual or couple. The homeowner sells their home, either all or part of it, to a third party. This third party could be a reversion company but it could also be an individual. Basically your home now belongs to someone else. This money for your home is given to you in one large some or it is paid to you as a sort of stipend that acts as an income. You are allowed to live in the home for as long as you wish. If you decide to move (like to a care facility) or you die then the home become the sole property of the reversion company or individual.

Shared Appreciation Mortgage

This is a risky loan type for the lending institution as it hinges on your property earning money. As the borrower you are being loaned money by the lender as a “capital sum”. What they receive is a portion of the growth of the asset. You are allowed to remain in the home until you die and the way it works is that the older you are then the less of a share the lender will take.

Home Income Plan Mortgage

This mortgage is typically handled by an insurance company (so make sure you read the fine print – you know how they can be). This is known as a “lifetime” mortgage as you purchase an annuity using your home’s capital as a means to have an income.

Equity Release Advantages – Yes, There Are some!

With everything that I’ve gone over you are probably seeing more downfalls than boons of favor. There are plenty of those downfalls, don’t get me wrong, but there are several advantages that simply cannot be ignored and less so in these unsure times.

*They can provide you with a lump-sum and tax free cash payout or provide you with an annuity to act as income that can last for the rest of your life and index-linked.
*When you pass on to the nether your taxes that your heirs will have to pay can be severely reduced.
*You, as the homeowner, are still protected just in case the housing market plunges. This is known as the “No Negative Equity Guarantee” or the NNEG.
*Just because the capital in your home is being used does not mean you cannot try to get lower rates. If the interest rates fall you are allowed to refinance the current mortgage in order to hopefully get a rate and you can do so with another lender if you choose.

This Disadvantages of Equity Release aka The Bad Stuff

With all good news there is always the bad to follow. This is the bad stuff you were assuming previously but were still trying to remain hopeful. The exact nature of the “evil of reverse mortgage” is really a personal opinion kind of thing.

*Since many of those going for these types of mortgages are elderly and are using their assets upon your passing your heirs could be left with less of an inheritance. This is dependent on the property capital growing a lot slower than the mortgage interest rate. Of course, if you don’t have a family (or don’t like them and, don’t worry, I won’t tell them), you won’t have nothing to worry about.
*As previously stated with the heirs the same thing can be said about what you can leave to charity.
*Living the United Kingdom and participating in these mortgage types can impact any means tested benefits that you might be entitled to.

The Reverse Mortgage Market in the UK

The release market in the UK is essentially split into two types of products with the most popular being the “lifetime mortgage”. This is popular since you are allowed to maintain ownership of your home with it being charged with repayment. The interest accrued is rolled up in interest until your death. The second favorite reverse mortgage loan type is the reversion plan. This plan allows the homeowner to sell of all or part of their home to gain an income paid as an annuity (or lump sum) by the lender. You still remain in your home without having to pay rent.

The equity release market is strictly regulated in the UK. Both of the popular plans are covered by the Financial Services Authority (FSA). Before the institution of the FSA the bulk of the lenders were applying to SHIP (Safe Home Income Plans) which was a completely voluntary “code of conduct”. That afforded the borrower several guarantees.

The SHIP code was created in 1991 and served as an attempt to make the equity release market not just viable but seemingly safe for the consumer. It’s no surprise that the early days of this mortgage type was wrought with fraud and unsavory characters. The code included the “right to stay” perk of the lifetime mortgage product but did not have the NNEG which basically says that amount to repay the equity release (be it leaving the home to enter a care facility or death) cannot be more than the value of the property in question and that the debt cannot be left for your heirs. Under SHIP lenders were able to pad the amounts as well as make your family pay for it. Some banks that are part of SHIP include:

*Norwich Union
*Prudential Bridgewater
*New Life
*Julian Hodge Bank
*Liverpool Victoria
*Just Retirement
*National Countie & Godiva
*.. among others.

With SHIP it is necessary for the consumer to acquire the services of a non-affiliated solicitor. This is a requirement because we know lenders aren’t always as honest as they should be and to be certain that the consumer understands everything. The Equity Release Solicitors Alliance was formed in 2008 and consisted of seven firms. These 7 firms chose to be specialise in equity release and can provide wide coverage in all of England and Wales.

Between 2007 and 2008 there was a lot of product re-visioning due to the bad state of the financial market. In order to make the plans more appetizing for consumers many lenders, like Norwich Union and Prudential, got to the point to renovate the programs so that key issues would be addressed and dealt with.

Such enhancements included modifying the draw-down element of the loan. Meaning they changed how a consumer borrows an amount from the outset but with reserve funding (agreed upon) available for their use down the road with it only using interest. Coventry Building Society (using their subsidiary; Godiva Mortgages) entered the reverse mortgage market with a bang when they introduced the popular lifetime mortgage but without fees to paying it off early so this allowed customers to make ad-hoc payments that can subsequently mitigate the interest roll-up.

The downturn in this economic market has been a blessing in disguise for the reverse mortgage market. 2008 saw many lenders having issues with producing equity leases because they simply could not compete with the big companies. The large companies typically fund all of this stuff from in-house so this made 2008 the year for Prudential and Norwich Union. Both of these large companies offered preferential plans thorough several specialists. This year also saw the creation of SAFER (Specialist Advisers for Equity Release) when three major players came together. These companies sought to improve the advice standards for the consumer as far as equity release was concerned despite the FAS code of conduct.

Even though the current state of affairs seems bleak there is hope for the consumer and especially our ageing population here in the UK. We are lucky to have a short-term inflation and other credit sources are closing so this means that the equity release programs, in the short-term, will continue to grow in popularity.