Michael Knight’s Blog

It’s been quite a while since I last posted a blog on here and many things have happened in the last 6 months or so. From the re-emergence of the housing market to a change of network to taking on a new adviser!

First things first, the market has picked up and I feel that confidence is returning. Houses are being sold but there remains a shortgage of stock. Is this because you need a HIP in place now before putting your house on the market? As a result of a shortgage of stock, prices have bounced a bit but we’ll have to see if it will be maintained longer-term.

The second point noted has had an equally large impact on business. My old network had been taken over by a company called Network Data Ltd who were already reported to be experiencing financial difficulties and not paying their creditors. After months of lies and smokescreens, the plug was pulled leaving Appointed Representatives up in the air and no income!

Happily, I have found a new network which has financial strength and  equally as importantly, a commitment to providing first-class levels of support and products. Now with them for four months and yet to find a significant fault.

Which takes me on to my last point - a new trainee adviser on board. Welcome goes to Ross Robinson who I have known for the last 4 or 5 years. We met when he was an estate agency manager and I was employed to run the mortgage side of things. We’ve kept in touch and recently he asked how to get into financial services. It was only after I had joined my new network that it became apparent how and that was for him to join Michael Knight Mortgages.

It’s not quite as easy as it sounds though as Ross has had to study for, and pass the first two papers for CeMAP (Certificate of Mortgage Advice and Practice). With some hard work, he did just that and passed his induction course with flying colours.

I will be acting as his supervisor which has meant I too have had to undertake additional training to do so. Ross is now entering onto 6 months of close supervision after which time he will be able to arrange mortgages and source insurances rom the whole of the market.

So, all in all, a very interesting 6 months out here in broker land. Roll on 2010!!

If you have any questions or queries about this article, please call me on 0845 029 1962 or email michael@michaelknightmortgages.com

1. What is it?

A scheme designed to allow older homeowners a way to ‘release’ money from their homes to spend as they wish without having to sell or move.

2. Are there different schemes?

There are two main types; lifetime mortgages and home reversion plans. Both are regulated by government watchdog, the Financial Services Authority. 

3. Home Reversion

This plan involves selling all or part of your home, at a substantial discount on its market value, to a third party for a lump sum or regular income. In return, you have the right to remain living there as long as you wish. When the property is sold, usually after your death, the reversion company receives its share of the property, including any increase in value from the sale proceeds.

4. Lifetime Mortgage

Currently the most popular way in the UK of unlocking cash from your home - letting you borrow a set sum against its value. You can then continue to live there and pay no interest during your lifetime. Instead, the interest is ‘rolled up’ and added to the loan, which is paid off from the proceeds when the house is sold, normally when you die or move into residential care.

5. Flexibility

Cash released by a lifetime mortgage is usually in the form of one lump sum. Newer, flexible and increasingly popular products such as Prudential’s Lifetime Mortgage allow you to take out money as and when you need it, which could reduce the total interest owed when the house is sold. This facility is subject to maximum limits and under exceptional circumstances, could be restricted.

6. Any Requirements?

Yes. To be eligible for a lifetime mortgage, you normally need to be over 55 and have paid off most or all of your mortgage. You may need to pay valuation and legal fees, so ask about all charges before committing. Other eligibility criteria apply.

7. Right for you?

Equity release schemes may not be suitable for everyone. They may for example, affect your eligibility for certain state benefits, your tax position and some options when selling your home or moving. (See point 10)

8. Any other options?

Before taking out a plan, consider other options for meeting your financial needs, such as releasing value in your home by moving to a smaller or lower-value property or using other assets you may have to help fund your retirement.

9. Think SHIP

The equity release industry is now fully regulated but it’s worth considering whether a company subscribes to Safe Home Income Plan’s (SHIP) code of practice. Members agree to abide by a voluntary code of practice designed to safeguard homeowners.

10. Talk to someone

Seek financial advice if you’re interested in equity release, but still have questions you’d like answered. Discuss your plans with your family too, as any scheme will reduce the amount of money you can leave as an inheritance. At Michael Knight Mortgages, I am fully qualified to discuss this very sensitive area with you. Why not call on 0845 029 9162 or email michael@michaelknightmortgages.com