Understanding Reverse Mortgage Terminology

[AD] Retirement is one of the most sort after phases of life; it is a period where an individual may have several life goals and can now sit back and reap the rewards of their efforts. However this beautiful dream can become a nightmare when there is no financial safety net. Most would-be retirees come up with various plans to live a hassle free post-retirement lifestyle, including opting for a reverse mortgage.

A reverse mortgage offers a certain level of financial security. So if you are considering this path, then you should familiarise yourself with its terminology, which I’m going to explain to you now.

What Is A Reverse Mortgage? – Do you know how a standard home loan works? Yes! Such loans come with monthly repayment options right? Now think of a reverse mortgage as being the opposite of that. What I’m trying to say here is that instead of repaying the loan under a regular loan, you receive monthly funds from an approved reverse mortgage loan.

Does this mean their are conditions to access such a long term loan option? For starters your home should be your permanent place of residence, which serves as collateral for your reverse mortgage. With this loan option you can access funds, depending on your agreement with the lender.

Reverse Mortgage Terminology – HECM: HECM stands for Home Equity Conversation Mortgage. What does this mean? Despite the similarities it bears to a standard reverse mortgage, a HECM has a distinct feature. This mortgage comes with a government insurance, whereas lenders issue a reverse home loan. An example of such lenders includes banks.

Reverse Mortgage Calculator – Lenders use reverse mortgage calculators to determine what options are available to a borrower. It evaluates the total home value and uses the information to rates the borrower’s financial status before the approval of the loan application. Here are some of the factors the lender will consider in your home:

• Age

• Condition

• Physical location(address)

By law homeowners cannot access loans based on the total market value of their home equity. Notwithstanding the calculator helps to estimate what amount(percentage) can be made to a borrower. And yes, individuals with an outstanding mortgage will have to settle them first before they can receive payments from the reverse mortgage balance.

What Ways Can I Receive Funds? – A reverse mortgage comes worth various payment options, depending on the borrowers needs and preferences. first off you can receive payment on a lump sum; this is ideal for retirees with several, immediate and demanding projects that need financing. Another option is create a line of credit which provides access to funds at any time. Finally you can opt for monthly loan payments, which is similar to receiving a pay-check. This option makes it easy to predict earnings and execute monthly plans.

You can select any one of these options, depending on your financial status and needs. However it is essential to discuss your options with a reputable lender to get the best deal. This type of mortgage is perfect for people in need of financial security once they retire.

Getting Pension Savvy With Profile Pensions

[AD] Retirement and pensions are words that a lot of us would associate with old age; and in a way this is true but they are also two very important things that need to be considered as early as possible to make for a worry free and comfortable time in our later years.

As well as being put on a back burner due to thinking we have all the time in the world to get this sorted it can more than a little confusing and all to tempting to bury your head in the sand…just as I did!

With over 10,000 pension schemes available, changing demographics in the way pensions work and a huge lack of knowledge on the subject is no wonder people don’t know where to start when it comes to choosing a pension.

A pension is in short a savings plan that you put into – usually monthly that allows you to have a regular income once you are retired. The bonus to saving in this way is that you don’t have to pay tax on this, making it the most effective way to save for your future.

We all need a pension as a way of being supported once we are no longer working and if provisions aren’t put in place then a state pension will have to be relied upon and in turn things will have to be sacrificed due to a limited income and I’m sure that this isn’t how any of us would like to spend our golden years.

Aside from the state pension there is a workplace pension and a personal pension.

Workplace pensions simply take a contribution from you, your employer and the government each month and this is then given to you once you reach retirement age; and a personal pension works by having money put into a plan on a monthly basis from a provider you have chosen yourself. These are best suited to self-employed persons such a myself.

This is of course a very brief outline of how pensions work and with limited access to advice unless you have the funds to a financial advisor it can still be very hard to know which provider is best suited to you and your needs. For me the worry of not having an employer to take away some of this pressure was huge and I wanted an bit of an idiots guide to help me make the right choices.

Pensions Profile offer an online pensions health check that is a great way to check the status of your pension with no cost to sign up, which is a bit of a no brainer really! Even if you already have a pension in place it could be poorly performing and they can get this checked for you. Many people are at risk of having a poorly performing pension, especially those with pension dating back pre-2000.  Sadly women tend to be paying higher fees than men as their pot sizes are often significantly lower than men’s. They can see if you have any missing pensions from previous employer, this was the case for me and it was great news to find this and know there is a little more available to me. They can even give you an outline of how much you will need to be comfortable during your retirement which gives you a real peace of mind in all areas.

I hope this has made things a little clearer for you and it has given you that push to get your future finances sorted as its really not as scary as we all think.

For more information and to sign up for your pension health check click HERE.

 

Helping Children To Save

Saving money had never been one of my strong points.

From the moment I got my first job at the age of fourteen the money got my sweaty hands and I was off to get that much wanted…but never needed new dress or pair of shoes.

This is something that has been a real struggle through my adult life and I want to be able to pass on better skills to my children as regards to saving with the hopes that they don’t make the same mistakes that I did.

I have listed a few ideas here they I am going to be trying out to build good foundations for those future, and hopefully there will be some here that you may want to try:

Filling A Piggy Bank – Children are very visual and having something there that they can add to and watch grow will give them the encouragement to keep saving.

Saving For A Treat – We all love to have a goal in life, something to work towards and strive for. This will then  encourage  them to save for that much longed for toy of item of clothing.

Matching Their Saving Amd Building For Thier Future – To give them a bit of encouragement we can help them reach their saving  goals a little quicker by matching what they have saved when they reach a certain amount or thinking more long term we could take out a savings account such as a Junior ISA so they know through their hard work you have created a sum of money to help out with something bigger such as their first home or uni fees for when they are older.

Earning Their Money – It’s all very well for them to be saving up their pennies but they need to realise that these have to be earned and not just given to them. Simple chores around the house such as tidying their rooms or washing the car are a great place to start.

Lead By Example – This is probably one of the most important ones for me. I want to let the children know that all the days out, holidays and treats we have come at a cost and these things need saving for. Having a jar on the side to save up spending money for a holiday or letting them know that you are forgoing that lunch out so that other important things can be paid for is a great way for them to follow in your footsteps.

I would love to know if you have any top tips for saving with your little ones.
*collaborated post