Hodge Lifetime equity release

The Provider in a Nutshell

Founded in 1965 and giving out their first equity release plan that same year, Hodge Life Assurance Company Ltd. stands as the longest-running established provider in the UK. They are a company solely focused on the over 55s market with various retiree-driven financial services including annuities and mortgages. Hodge claim that all of this time on the market has given them “a great depth of experience and developed a strong and solid reputation” among their peers.

They are members of the Equity Release Council and, as such, adhere to the ‘No Negative Equity Guarantee’. This means that any equity release schemes they sell include stipulations preventing the cost of the repayment from ever exceeding the total value of the property itself.

What do they offer?

General requirements

Before entering into any of Hodge’s equity release plans you must first fulfil the following criteria.

• You must be between the ages of 55/60 and 85. The age category is used is based on the plan itself.
• The property must be your own. The property with equity being released from it must either be mortgage-free or close enough that the cash released will pay off the last of the mortgage.
• The property must be freehold.
• The property’s value must exceed £100,000.
• The property must be located within England, Wales or Scotland.
• There can be no structural damage or flood risks.

Hodge Lump Sum Lifetime Mortgage

Hodge’s Lump Sum Lifetime Mortgage does as it describes. It is the simplest offer, giving you one single lump payment at the beginning of the agreement. The loan can be anything from £1,000 all the way up to £500,000, though the amounts available to each borrower varies based on age and the value of the property itself.

Every year, you have the option to pay back up to 10% of the loaned amount. Any payments that exceed this 10% will include an early repayment fee that decreases annually until it reaches zero at the six-year mark. Once these first five years are up, you then have the option to sell the home and pay off the loan.

Hodge Flexible Lifetime Mortgage

This second offering gives you more freedom in the money you borrow. While there are still the same initial cash amounts available as the Lump Sum Lifetime Mortgage, there is then the option to borrow further increments in the future.

Every year, you have the option to pay back up to 10% of the loaned amount. Any payments that exceed this 10% will include an early repayment fee that decreases annually until it reaches zero at the six-year mark. Once these first five years are up, you then have the option to sell the home and pay off the loan.

This affords you greater flexibility and can help to cover any sudden unexpected costs that arise, like medical bills or home renovations. These later withdrawals are given the interest rate at the time of withdrawal, not the same rates as the initial loan. They can also be paid back by up to 10% annually in addition to the payments toward the initial loan.

Hodge Lifetime Mortgage

Hodge’s Lifetime Mortgage deal varies slightly from the other two but is closer to the Lump Sum Lifetime Mortgage. One single payment is given which can then be repaid up to 10% annually. This loan does differ in a few key areas, however.

Firstly, it is available at an earlier age, 55 years old instead of the usual 60 of their other plans. There is also a higher ceiling on the amounts available to be borrowed, with plans ranging all the way up to £1,000,000. The repayment charges applied to the money borrowed are then payable for up to 10 years, on a fixed scale which is determined at the start of the plan.

Hodge Indexed Lifetime Mortgage

Similarly to the Lifetime Mortgage, the Indexed Lifetime Mortgage plan can offer loans of up to £1,000,000 to borrowers as young as 55 years old. The key difference in this plan, however, is that the interest is applied at a variable rate.

Using the All Items Consumer Price index, Hodge calculate the correct amount of interest to be paid on a yearly basis. There is a safety net on this plan, however, in that they establish a minimum and maximum rate at the start of the plan. This means that while interest rates will vary, they will remain within set parameters so that they will never drift too high.

The universal offerings

All of the above plans allow you to borrow between 15% and 50% of the property’s total value. These plans can also be transferred to other properties, as long as the new properties fulfil the requirements of the specific agreement.

Are these good deals?

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With any equity release scheme, it is always highly dependent on the financial situation of the homeowner. This is why Hodge do not offer their plans to the general public. If you wish to enter into any of the above plans, they require you to do so through a financial advisor who will assess your current individual financial situation.

There are strict rules and regulations governing the way that equity release providers operate that have made them much safer than they were in the 1980s. That said, there are still public concerns about the high interest rates involved and any plans like this that target retirees can be seen as predatory. It is always recommended that you seek help from a financial advisor and carefully go over all of the small print before entering into any such agreement.

Currently, the Flexible Lifetime Mortgage plan and the Lump Sum Lifetime Mortgage plans have been rated on Defaqto at three and two stars respectively, out of a possible five. Hodge was also named the winner of the 2017 Moneywise Mortgage Awards and was recommended by the Mortgage Finance Gazette that same year.

Hodge Lifetime Equity Release Calculator

If you were to visit Hodge’s website, you would find an equity release calculator. By putting in some details about yourself such as your age and the value of your property, you can receive an estimate of how much money you may be able to release through their plans.

It is important to mention, however, that the numbers their calculator provides are only rough estimates and may not be reflected in the actual loans available to you.

Right for you

A company with as extensive a history in equity release as Hodge does provide a deal of security. However, other providers out there do offer lower interest rates. Ultimately, the decision about which provider is best for you very much depends on your own financial situation so individual, tailored advise is always recommended.