Saga mortgages (A review)

In this brief blog, we are going to cover Saga mortgages.

Saga mortgages

Saga mortgages only provide equity release products

The two equity release products which Saga mortgages offer are:

• Saga Regular Drawdown Lifetime Mortgage
• Saga Equity Release Plan

What is equity release?

Equity release is when you release the equity you own in your home. The equity you own is based on what your property home value and the mortgage balance you have. If you subtract your property value from your outstanding mortgage it will let you know how much equity you have left in your home.

Equity release is essentially trading the equity you have in return for cash but usually, you will be allowed to continue living in the house until you die or move into long term care. 

There are various equity release products which differ in some regard and you should look to get independent financial advice before you take out an equity release product.

When you take out an equity release product you will not need to release all the equity in your home but rather you can just release some of the equity in your home and then ring-fence the rest of your equity to pass your estate as an inheritance to your beneficiaries.

Equity release eligibility:

To be required for equity release you will usually need to be at least 55 years of age

You will usually need to have a home which is worth at least £70,000

Some equity release providers will usually have a minimum amount of equity they can release.

Is equity release right for you?

This is an important question as equity release may not be right for everybody. There may be many other products in the market which may be more suited to you and the amount of equity you will be able to release will usually depend on a host of factors but mainly on your age and your current health. The more likely you are to die sooner the more equity you will usually be able to release from your home. 

If you are considering taking out an equity release product then it is certainly worth discussing this with an independent financial adviser as an equity release plan could affect the inheritance left behind for your family.

When considering an equity release product the adviser will look into:

Your outstanding mortgage

The current property market and the rate at which property values are rising

Your intended inheritance you want to leave back from your property

Alternative sources of funding other than an equity release product

The effects of an equity release product on the benefits you are able to claim.

The effects of an equity release product on your income tax.

Equity release from saga mortgages

Saga mortgages deals solely in equity release products.  Saga mortgages provide equity release advice through their partner “HUB Financial Solutions Limited,”.

You will get access to a range of equity release providers through Saga mortgages and its partner Hub financial solutions limited. Hub financial solutions limited will advise you on the range of products available. They will also advise you on the equity release products which are best suited to your personal circumstances and needs. They may also let you know if equity release is right for you or if you should consider alternative lending.

The equity release advice service provider by Saga mortgages through its partner Hub financial solutions limited is a free no-obligation consultation, however, if you choose to proceed with any products that they recommend then there is an advice fee of £750 which you must pay on completion.

Saga mortgages also offer two equity release products which are exclusive to those taking the Saga mortgages equity release advice provided through Hub financial solutions limited.

These exclusive products are:

• Saga Regular Drawdown Lifetime Mortgage
• Saga Equity Release Plan

If you take up any of these products through the saga mortgages equity release advice service then you will get £425 towards your legal fees and no set-up costs or valuation fees to pay.

Of the two products provided above by Saga mortgages, one is a lifetime mortgage and the other may be a home reversion plan. It is essential to get a full understanding of these products before going any further.

What is a lifetime mortgage?

A lifetime mortgage is a type of equity release product which provides you either a large lump sumo upfront, regular payments or a combination of both. You don’t have to make any monthly mortgage repayments but you can choose to pay back the interest portion of your lifetime mortgage each month to stop it from compounding and causing you to have a much bigger debt.

Your lifetime mortgage is repaid when you go into long term care or die by the provider selling your home and sending back any extra funds gained to your estate.

You can ring-fence some of the equity in your home to pass down to your family as an inheritance. Most equity release providers also have a no negative equity guarantee which means that the amount you owe on your equity release will never be more than your property is worth.

It is important to note that equity release products have compounding interest which can make the debts on them rise much faster than predicted.

What is a home reversion plan?

A home reversion plan is a type of equity release plan where the home reversion plan provider buys all or some of your home in exchange for a lump sum, regular payments or a combination of both.  Home reversion plans will usually offer you between 20% to 60% of the value of your home.

You will continue to live in the home on a lifetime lease rent-free. You will have to ensure your home is kept in a good shape as part of it is now owned by the home reversion plan company. With a home reversion scheme you can ring-fence the remaining shares you have in your property to pass on to your kids as an inheritance.

Upon your death or when you move into a care home, you property will be sold by the home reversion company and they will take their share of the proceeds and give the rest to your family. Your family can also simply buy out the share of the home reversion company if they decide they want to continue living in the property beyond your death or you move into long term care.

You can ring-fence some of the equity in your home to pass down to your family as an inheritance. Most equity release providers also have a no negative equity guarantee which means that the amount you owe on your equity release will never be more than your property is worth.

It is important to note that equity release products have compounding interest which can make the debts on them rise much faster than predicted.

Saga mortgages:  Regular Drawdown Lifetime Mortgage

The Regular drawdown lifetime mortgage provided by Saga mortgages is only available to people aged between 60 and 80 years of age who are residents of the UK with a UK home which is worth at least £150,000.

The Regular drawdown lifetime mortgage provided by Saga mortgages provides a tax-free lump sum as well as regular monthly payments which will allow you to have a regular income.

The interest cost on this product may be much lower as interest is only charged on money that has been released rather than a large lump sum which has been released at the beginning of the equity release term.

The Regular drawdown lifetime mortgage provided by Saga mortgages is secured against your home.

You can see more information about the Regular drawdown lifetime mortgage provided by Saga mortgages here.

Saga mortgages: Equity Release Plan

The equity release plan by Saga mortgages is a lifetime mortgage.

To be eligible for the equity release plan by Saga mortgages, you will need:

To be at least 55 years of age

Tobe no more than 80 years of age if you have chosen to pay all or some of the monthly interest being charged on the equity release plan by Saga mortgages

To Have a Uk home worth at least £70,000

This product will allow you to:

Drawdown from your equity release product

Borrow jointly

Reduce overall mortgage cost with monthly interest payments

Interest rate reductions for customers who choose to pay some or all of the monthly interest from the roll-up rate

If you are borrowing jointly, you can fully repay the mortgage within three years of one of you dying or moving into permanent long-term care without early repayment charges applying.

The equity release plan by Saga mortgages is secured against your home.

How to contact saga mortgages

You can contact saga mortgages from their website here.

Or via calling this number: 0800 096 7120

Weekdays

9:00am – 5:00pm

(excluding bank holidays)

In this brief blog, we covered the Saga mortgages, the products they offer and how to find out more information about saga mortgages.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.