Welcome to our October newsletter

Equity Release

If you’re 65 and over, in a home worth a lot of money and need extra capital or income in retirement, it is possible to take some of the equity from the house to meet your requirements. There are a number of companies specialising in Equity Release.
 
When these plans first became available there were many concerns about the wisdom of such an approach – but these have now been addressed, with the providers being part of the Safe Home Income Plan (SHIP) code of conduct.

In any case life time mortgages, as they are sometimes called, are regulated by the Financial Conduct Authority – as are the firms that provide them.
 
There are two main types of scheme available in the market place and much depends on individual circumstances when deciding which to use. 

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Our Investment Philosophy
 
We believe in keeping investment solutions simple, transparent, tax efficient and cost effective.
 
We need to be sure that our clients understand the recommendations we make and how they ensure that goals are met.
 
So, the first step for us is to understand your particular and unique requirements. 

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Mortgage Market Risk

One month after the crash of 2008, the mortgage market died a death. Much of the money for mortgages came from banks loaning to the mortgage lenders at one price – with the lenders moving the same funds rapidly on to borrowers at a higher price. The quicker the money moved through the system, the quicker the lender could cover the cost of the initial borrowing and begin to see a return.
 
It was the need to move the funds rapidly around the system that led to profligate lending practices. There was an interview on television at the time with an individual in the USA, who had been granted a mortgage of forty times his income – clearly unaffordable. 

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Mortgage Market Anomalies

We are coming across more and more young people with deposits, albeit around the 10% mark, who are being refused mortgages because of their income and expenditure. However, they are being accepted by buy to let landlords to rent – for similar monthly payments. By comparison, these payments would provide them with reasonable mortgages.
 
Recently we interviewed a young couple paying £975 per month for a one bedroomed flat, looking for a mortgage of around £100,000. This monthly rental figure would support a mortgage of around £150,000. They’ve been paying this rent for two or three years now and have not missed a payment – clearly they would be better off buying their own home, instead of helping their landlord to pay off his buy to let mortgage and materially benefiting from an increase in the equity. 

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Everyone's circumstances are different, so why not work with a Financial Advisor at Anderson Lloyd and explore all the options available - and what's right for you!