Given the recent withdrawal of Godiva from the equity release market, we look ahead into the street and the impact of their actions.
If the lifetime mortgage market now meanders at a time when innovation was to develop and what the products will remain for people who are potentially looking different on early repayment of equity release schemes?
Godiva equity release plans were "temporarily" withdrawn from the market as quickly as it came in February 2008.Coventry have no fixed date for a return, but are convinced that this is not the end for the lifetime of Godiva's mortgage.
However, 18 months longevity was not in line with the product, they were supported - namely, the "lifetime" of mortgages.
Nevertheless Godiva's daring attempt was made to implement a product welcomed. Equity Release firms in the market now you have a niche that can prove the part of the market corner. You made it.
Godiva, where two equity release plansthat had no early repayment charges that were lost and package plans.
At the expense of paying a higher interest rate, the client was able to repay their equity release plan at any time without penalty. No other company has ever been brave enough to break the mold.
Previously, early repayment charges (ERC) were was placed either over a certain period with a minimum of 5 years with such companies as Lifetime Hodge or New Life mortgage. ERC could also be connected toGovernment rates applicable as Aviva & Just Retirement, or the Bank of England base rate, follow the Prudential Lifetime. (This special scheme, I will) discuss later again.
Therefore, do not bring a company into a product to ERC opened new doors for many advisors.
Especially popular was the use of consultants for this plan as a secured loan.
Customers would with the fact that they pay a premium on the interest rate as a result of happy. It makes it possible to help the citizens,her family in the short term, and was particularly popular with the over 60's who could not sell their properties and needed capital in the short term, until the house was sold. The perfect product for this there was also a free evaluation - Godiva!
Why Godiva have withdrawn their equity release schemes?
Coventry blamed the cost of financing as a reason for their back-tracking. And it is the main reason given for the product are. Long-term 30 or 40 years the Fund has increased and withthe lender offering customers a long-term contracts that can be redeemed without an ERC, Coventry may have determined that it could not afford, to go the product.
So, what do we have to look forward with the remaining lifetime mortgage market?
Well prepared for the relevant equity release specialist who knows their products there are a few alternatives to be considered.
Lifetime mortgages are still in force, as the name suggest "a mortgage for life." Equity Release Provider Costthese products accordingly, and thus when they are redeemed, they may suffer financial losses as a result.
Nevertheless, I still have their "equity release" is a plan, which may support the system Godiva comfortable with, but it lacks only Godiva's "guarantee".
For consultants in the know, has joined Prudential lifetime mortgage scheme is a redemption penalty to the Bank of England base rate, currently only 0.5%. Prudential just ERC should submit their fall from the base rateBeginning of the plan, on the final redemption.
Although no guarantee exists, market forces dictate that the interest rates will remain at such an unprecedented low level much longer.
Therefore, it can be assumed that every completion of their "equity release scheme with the base rate at 0.5% can safely assume that if they did not even ask for early repayment repaid collected.
Prudential permit only, repayment has expired after 12 months and they will alsoreluctantly allowed ad-hoc payments to their accounts as a means, should be sent to them.
With the current mortgage market continues to stagnate, but could, with signs of improvement, this Prudential equity release plan will be a temporary alternative to Godiva's regime who are now in the distance, which already features the gallop.
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