Flexible Mortgage Option
Introducing the Hodge Equity Release Flexible Mortgage Option
The Hodge Equity Release Flexible Mortgage Option is secured by a legal charge on your home and is repayable from the proceeds of the sale of your home. As well as an initial lump sum, it provides a pre-approved Cash Reserve facility, from which you may make further withdrawals.
What happens to the interest charged on the Flexible Option lifetime mortgage loan?
Interest is charged on the initial cash sum at a fixed rate current at the time of application. Interest for each withdrawal from the Cash Reserve is charged from the date of withdrawal and is fixed at the same rate as that being offered to new Flexible Mortgage Option customers. Interest is calculated daily and added to the loan each month.
As a result, there is nothing to pay until your death (the death of the survivor of joint plan holders) unless you decide to sell up permanently. The total lifetime mortgage loan, including interest and any charges that have been added, is repaid from the proceeds of sale of your property.
A statement of your account showing the interest added to the loan will be issued upon each plan anniversary.
Do I have to pay for my Cash Reserve?
There is no charge for your Cash Reserve facility and we do not charge for making withdrawals.
How much can I withdraw from my Cash Reserve?
The minimum withdrawal is £2,000. The maximum depends on your age and property value, and how much you have already borrowed.
When can I make withdrawals from my Cash Reserve?
You may make a withdrawal at any time from completion until the fifteenth anniversary of the plan. Within this time, you may make a withdrawal as often or as little as you wish. However, if your circumstances change, or you have any doubts about making withdrawals from your Cash Reserve, you should consult you financial adviser.
How much cash can be released?
The older you are the higher the benefit that can be released in relation to the value of your home. This is because the term of the loan will be based on your life expectancy (the life expectancy of the youngest applicant in the case of a joint application).
| Age of Youngest Applicant | Max Facility Size as a % of Property Value | Age of Youngest Applicant | Max Loan as a % of Property Value |
|---|---|---|---|
| 55 | 15% | 71 | 31% |
| 56 | 16% | 72 | 32% |
| 57 | 17% | 73 | 33% |
| 58 | 18% | 74 | 34% |
| 59 | 19% | 75 | 35% |
| 60 | 20% | 76 | 36% |
| 61 | 21% | 77 | 37% |
| 62 | 22% | 78 | 38% |
| 63 | 23% | 79 | 39% |
| 64 | 24% | 80 | 40% |
| 65 | 25% | 81 | 41% |
| 66 | 26% | 82 | 42% |
| 67 | 27% | 83 | 43% |
| 68 | 28% | 84 | 44% |
| 69 | 29% | 85 | 45% |
| 70 | 30% |
Minimum Property Value = £100,000 (properties below this value will be considered on referral)
Minimum initial withdrawal = the greater of £10,000 or 15% of facility
Maximum facility = £250,000 (facilities above this value may be considered on referral)
Who is eligible for the Hodge Equity Release Flexible Mortgage Option?
- The Flexible Mortgage Option can be arranged for either one or more people, who own and live permanently in their own home, which is located in England, Scotland or Wales. Plans are available to couples, relatives or friends.
N.B. Where there are two or more applicants, the property title must be held in joint names. - The property must be in sound condition, of standard construction, and worth at least £100,000. If any essential repairs are identified when the property is inspected, release of the initial cash sum (or an appropriate part of it) may be withheld until they are complete.
- If the property is leasehold, there must be at least 75 years left to run on the lease.
- If there is an outstanding mortgage or charge, it must be low enough to be repaid from the cash sum expected at completion, unless redeemed earlier from your own funds.
To find out if you and your property may be eligible, you can enter your details into our Equity Release Eligibility Calculator.
Commercial property, freehold flats, sheltered (or wardened) units, prefabricated concrete panel or mobile homes are not acceptable. All other types of property are subject to Hodge Equity Release being satisfied as to the nature of the property and its ownership.
Can additional borrowing be arranged?
Additional borrowing from your Cash Reserve has already been approved and withdrawals may be taken as previously described.
After the third anniversary of the plan, you may apply to increase your Cash Reserve, subject to our lending criteria at the time. We will need to review your plan, including re-valuing your property. Applications for such additional borrowing must be made via your Financial Adviser.
Can the Flexible Mortgage Option loan be repaid at anytime?
If you wish, this lifetime mortgage loan and interest may be repaid in part or in full at any time. If this is within 5 years of taking out the plan, Hodge Equity Release will make an early repayment charge of 5% of the capital amount repaid. Between years 6-10, an early repayment charge of 1% of the capital amount repaid will be made. For part-repayments where withdrawals have been made from the Cash Reserve, loans will be repaid in order of those with the highest interest rate first.
The early repayment charge will be waived if you repay this lifetime mortgage loan after moving into long-term care on medical or other specialist advice.
What about moving house?
You will be free to transfer your lifetime mortgage to a new home of your choice, so long as it provides adequate security for the Equity Release Plan. If the loan and the interest you owe is more than the amount you are eligible to borrow on the value of the new home, you may need to repay part of your existing loan from the sale proceeds. No early repayment charge is made in this event. If you move to a higher value home, no repayment will be necessary. You will also be responsible for any costs related to the transfer, including our solicitors’ fees for work which they will need to carry out (even if the move falls through).
What would happen to the Flexible Mortgage Option if I married (or re-married) in the future?
If a single plan holder marries, it may be possible to revise the terms of this lifetime mortgage to give the new partner a right of occupation. The new occupant will need to meet the age requirement for the plan and, if younger than the plan holder, a part-repayment will be due. This will be calculated by taking into account the amount of the loan and interest outstanding. If a right of occupation is not arranged, the new partner will have to sign an agreement to vacate should the plan holder die or move out permanently.
What happens when the property is vacated, or I die?
You, or your personal representatives, should arrange for the sale of the property as soon as it is clear that your occupation has ceased. Interest will continue to be added to the flexible mortgage loan until it is repaid. To avoid the risks associated with vacant property and the accumulation of interest, the earlier it is sold, the better.
The lifetime mortgage loan, interest outstanding, plus any fees and expenses related to the sale which are due to Hodge Equity Release will be payable from the sale proceeds. The balance of the sale proceeds will remain with you or form part of your estate.
Should your absence be due to an extended holiday, or a term of hospital care, for example, Hodge Equity Release would only require your confirmation that the property would be adequately secured during this period.
The lifetime mortgage loan and interest will become repayable if you leave the property for longer than 6 months without our written agreement.
What if the value of my property doesn’t cover what I owe at the end of the plan?
Hodge Equity Release give a watertight guarantee that if the proceeds from the sale of your property are insufficient to pay off your liability, no further sum will be payable. This will ensure that no outstanding mortgage debt is left to you, or to your estate.
This ‘no-negative equity’ guarantee is provided free of charge.
Future withdrawals - made easy
This flexible lifetime mortgage provides the option to withdraw additional monies from the Cash Reserve facility available on the plan. To withdraw cash from a plan is simple.
On completion of your plan you will be provided with a supply of withdrawal slips (illustrated below). You may withdraw any amount between £2,000 and the maximum available from your Cash Reserve.
To obtain future funds just sign the withdrawal slip indicating the amount required from your Cash Reserve, and return it to us.
On receipt of your withdrawal request we will forward the amount directly to your bank account by automated transfer and send you a letter confirming the details of the transaction. You will then have 21 days to return the funds if you decide that you do not wish to accept the terms.