|Sixty Plus Finance|
Sixty Plus Finance - Jargon Buster - Key Words & Terms Explained
1. Home Reversion Plan
A plan that allows a homeowner to sell part of their entire home in return for a cash lump sum to a reversion provider.
The cash lump sum is normally discounted from the full open market value. This reflects the fact that the customer has the right to live in the property until they die or leave the property permanently, for example to go into long term care.
When the home is sold the reversion provider takes the percentage they purchased from the proceeds and the rest is paid to the homeowner or their estate.
2. Lifetime Mortgage
A type of mortgage, where you take out a loan, secured on your property, to give you a cash lump sum. No repayments are made until your home is sold which is usually after your death or you leave your property because you need to go into long-term care.
The loan is given at a fixed rate of interest, and once the property is sold, the loan and all interest accumulated must be repaid.
3. Interest Only Mortgage
Interest payments must be made monthly. In the case of the Sixty Plus Finance Interest Only, the capital must be repaid at age 90.
4. Annual Percentage Rate (APR)
APR is an interest rate that is normally different from the loan contract rate. It is commonly used to compare the cost of loan facilities from different lenders. The APR is designed to measure the true cost of a loan and the law requires mortgage lenders to disclose the APR when they advertise a rate.
5. Approval in Principle
This term means that your loan application has been approved in principle, based on an initial application. Formal approval will then be issued once we provide required documentation such as life waivers, fee authorisations forms, etc.
When customers do not pay their monthly mortgage payment amount back to the lender, it is then termed as "arrears".
7. Buildings Insurance
This is an insurance policy that covers the cost of rebuilding or repairing the structure of a property.
8. Capital Acquisitions Tax (CAT)
This is a tax on lifetime gifts and an inheritance tax on benefits from a will or intestacy.
9. Capital Lump Sum
The amount of money you receive when you complete an equity release.
10. Capital Gains Tax
A tax applied to the selling or gifting of assets including a house, shares or business.
a. In equity release schemes, as you are selling a percentage of your home, which is your principal private residence, capital gains tax does not apply.
b. If you have previously run a business from your principal private residence, then you may be liable for capital gains tax, when you complete a home equity release scheme, and should consult a tax advisor or accountant.To top
11. Capital in Your Home
The wealth built up in your home over the years.
12. Contents Insurance
This is an insurance policy that covers the cost of repair or replacement of your possessions in case of loss, theft or damage. It is advisable, but not compulsory to have this insurance in place.
13. Credit Criteria
Each lender has a set of rules and policies with regard to whom they wish to give mortgages to.
14. Credit Search
This is where the lender undertakes an authorised search through the Irish Credit Bureau (ICB) to check a prospective borrower's credit history.
15. Debt Consolidation
This describes a facility which normally enables a customer to combine existing loans and reduce monthly outgoings.
16. Discounted Open Market Value
Once the independent valuer has given the value of your home to us, this Full Open Market Value is discounted based on your life expectancy to calculate the lump sum that you will receive. The discount reflects the right of the homeowner to live in the property until they die or leave the property permanently.
The value of your property in excess of any amount owed on a mortgage or other loan secured against it.
The value of your assets including all your savings, possessions and home.
19. Financial Advice
We recommend that you seek a second opinion and suggest two options:
20. Financial Regulator
21. Fixed Interest
This is an interest rate set for an agreed peiod of time, usually 1 to 5 years. At the end of this period, the customer has the option of taking out another fixed rate or moving toa variable rate mortgage. This type of interest rate means that you know for certain what your rpeayments will be for the fixed interest period, helping you to plan your finances.
22. Full Open Market Value
This is the amount than an independent auctioneer and valuer would confidently expect a property owner to obtain if the property was sold today.To top
23. House Price Inflation
House price inflation is the amount by which a property increases (inflation) or decreases (deflation) over time. For our house price inflation guarantee, we calculate the increase in value from date of purchase to the date of sale.
24. Independent Valuation
The inspection of your property by a qualified auctioneer and valuer who you choose, who will prepare a report which tells the equity release provider what condition your property is in, what it is worth and how much it should be insured for.
A charge by the lender for the benefit of the finance/money loaned.
26. Letter of Offer
If your Interest Only Mortgage application is approved, you will receive a "letter of offer" that clearly sets out the conditions of your loan. Your solicitor will also receive a copy of this letter, with a request to proceed with the legal aspect of the process.
With the Home Reversion Plan, you will also receive a letter of offer (2 copies) which is valid for 1 calendar month. Your solicitor will witness your acceptance, and 1 signed copy should be returned to Sixty Plus Finance, with documentation as requested.
27. Life Assurance
Term used to describe different types of personal protection, whose main purpose is to provide payment in the event of death. Generally it is compulsory, however, by law it is not required if you are over 50 and a waiver will need to be signed to this affect.
28. Life Expectancy
Based on age and gender, this is the number of years that our actuarial tables tell us that you are likely to live.
29. Loan to Value (LTV)
This is a ratio that expresses your mortgage loan as a percentage of the value of your property. The maximum LTV allowed for the Sixty Plus Finance Interest Only Mortgage is 30%.
The pledge of a property to the lender as security for payment of a debt. A mortgage is normally used to describe a loan agreement for the purpose of financing or re-financing a property. The property is usually assigned to the lender as security against the loan.
31. Mortgage Term
This is the length of time for which a mortgage is taken out. It can vary from 5 to 40 years. For the Sixty Plus Finance Interest Only Mortgage, the term runs to age 90.
32. Negative Equity
If the amount you owe in mortgage and loans secured against your home is more than its market value this is called negative equity. Good lifetime mortgages include a no negative equity guarantee, which ensures that your family will never be left in debt as a result of taking out a lifetime mortgage.To top
33. Net Disposable Income
This is the amount of money you have left after you deduct tax and other financial commitments.
34. Property Appreciation
The increase in the value of a property over time.
35. Self Certification
This enables self-employed customers to declare their current employment earnings, without having to provide audited financial accounts
36. Security of Tenure in your Home
This means that you have the right to live in your own home, for as long as you choose, or until you move into permanent care. All equity release providers should guarantee this.
37. Solicitorís Confirmation
This is a form that Sixty Plus Finance ask both you and your solicitor to sign, acknowledging that your solicitor has explained Sixty Plus Finance's Equity Release Plan to you and that you fully understand it. This may help in settling any disputes over your estate. This Solicitor's Confirmation is a required closing document for both the Home Reversion Plan and the Interest Only Mortgage.
38. Supplementary Earnings
These are earnings aside from your basic salary and normally consists of bonuses, commissions or overtime payments.
The process of assessing a mortgage application to determine the amount of risk involved to the lender. The lender will review the customer's credit history and property value to help determine the suitable mortgage product for each cusstomer.
A valuation is carried out by a qualified independent valuer from an approved list supplied by Sixty Plus Finance. It is a standard requirement for both equity release options and provides an assessment of the value of the property confirming its suitability for the purpose of securing a mortgage
41. Variable Interest Rate
As the term suggests, a variable interest rate is on where monthly repayments can rise or fall depending on overall interest rate movements.
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