Experience has shown it’s essential you review your finances regularly. Equity release schemes are no exception.
Who would have thought that 8 years ago, with essentially a handful of providers; namely Norwich Union, Northern Rock, Hodge & Mortgage Express were the only companies in the market. How times have changed!
The equity release market now has over 20 companies competing for business. This has proved a healthy scenario given the inflexibility & higher interest rates of the earlier plans & enabled such schemes to develop towards the more flexible & competitive plans they are today. But complacency must not prevail.
Competition with the equity release providers has developed new strategies of releasing equity & consequently driven interest rates lower.
It is one of these former companies; Mortgage Express that is of concern.
Customers of Mortgage Express who have equity release schemes with them have received communication over the past months detailing an interesting scenario.
Mortgage Express were one of the earlier companies to recently suffer from the credit crunch after mainly being caught out in the buy-to-let market of which they were a major player. They are a subsiduary of the Bradford & Bingley.
Due to the lending difficulties they have experienced they have now closed to new business & consequently have written to its mortgagors including holders of its equity release schemes. They are willing to release these mortgages, without penalty to a new equity release company of your choice.
For plan holders of the aforementioned it is a big decision to make as some of their schemes have interest rates as low as 5.99%, but some as high as 8%.
So would it be worth remortgaging?
The answer lies in the following factors; current property value, age, interest rate at inception & the increased balance of the equity release plan. This is where independent financial advice is essential.
Analysis can show where any break even point is. This will confirm whether there would be any benefit in transferring your Mortgage Express scheme to a new lender. Research is conducted from the whole of the market & dependent on your requirements, a recommendation can be made from a panel of over 20 companies.
Costs are an important factor in the equation as they can detract any obvious gains of moving to a lower interest rate. This is where specialist deals with lenders are of assistance, as the lower the transfer costs are, the earlier the break even point is for justifying a remortgage.
The lowest interest rate at the time of writing is 5.79% with LV=, hence for some people major savings can be made, however this rate is not available to everybody & independent advice must always be sought
By: Mark Greggs
Posts Tagged New Business
Business angels fall under the category of equity finance. They form the most popular form of equity finance and can truly do wonders for your business venture.
When it comes to starting up your own business the most important thing to sort out before anything else is your start-up business finance. You will need funding for your business before you even start trading. No matter what type of business you are planning to go into, whether you are selling a product or a service you will need to secure finance before you open your business up for trading.
Funding for your business can come in many forms, ensuring that you choose the one that is best for your business is the tricky part so here’s some helpful advice. Most new business fail due to incorrect funding with many making the mistake of turning to their bank for finance only to find out that the bank refuses to give them the capital they need and with many more finding out the hard way that they can’t keep up with repayments, which ends with them losing not only their business venture but typically their house that they thought was a good idea at the time to use as an asset to their bank loan.
You’re probably left thinking now ‘what am I going to do?’ well lucky for you there are people out their waiting to give you money for your business start-up funding that you, wait for it, don’t have to pay back! Who are these kind people I hear you cry, business angels of course. A business angel is a high net worth, wealthy individual who has already made their fortune through other business ventures. They are often retired individuals who invest their skills as well as capital into new and developing businesses. Business angels invest money into your business that you never have to pay back in return for a growth share of your business.
Business angels typically seek investments that will give them ten times more back than their original investment within five years of your business being active. They invest their own funds and usually invest between £10,000 and £750,000.
As well as cash, business angels can offer years of experience in the business world. Although some prefer to become a sleeping partner, others will get actively involved in your business from writing a marketing plan to taking the company through a flotation on the stock market.
Business angels will invest across most industry sectors and stages of business development. They tend to generally look for the following within your business as a basis of whether to go ahead with an investment:
• The expertise and track record of the management
• Your businesses competitive edge or unique selling point
• The characteristics and growth potential of the market
• Compatibility between the management, business proposal and their skills and investment preferences
If you do decide to choose the help of a business angel within your business start-up funding then you must ensure that the angel you choose is right for your business needs. You should choose a business angel that is best suited to the needs of your business.
It is also important to keep in mind that business angels tend to mainly invest locally and within a specialised area.
By: Helen Cox