One of the most innovative equity release lender is Stonehaven which uses a variety of finance houses to make the release of equity possible with its Interest Select plan. The Interest Select plan which is also known as the self-certification or self-cert mortgage provides an interest mortgage with a lifetime duration. This plan is known as the self-certification plan because it does not require the verification of income because it results in interest-only payments which can be seen as contributions.
The advantage of the self cert mortgages for the retired is that it allows pensioners to choose the amount of interest they wish to pay on a monthly basis. The minimum amount that they can pay per month is £25 while the maximum amount would be the total interest amount per month. This allows the retired to fit the monthly interest-only payments into their budgets.
Another advantage of this plan is that borrowers can have peace of mind knowing that the interest rate will be the same for the duration of the loan. It does not matter what the external interest rates are, the interest rate of the interest only mortgage will never change.The interest rate of the self cert mortgage normally starts at 6.13% and as mentioned before, it is fixed.
If however, the borrower cannot repay the interest, the outstanding interest amount will be added up to the original capital which will either be repaid by selling the property of by the children or the beneficiaries.
The two main aspects that are taken into consideration in order to determine the amount that can be borrowed are the age of the borrower and the value of the property.
The Interest Select plan gives borrowers the possibility to switch to a roll-up equity release scheme if they want to in the future. While an interest select loan makes it possible for older borrowers to obtain a steady income, the downside is that they might end up having to sell their property to repay the loan thus not being able to leave a legacy behind for their children. So what is more important? Enjoying a comfortable retirement or leaving a legacy for their children?