A fictitious example of the equity release Property Plan
A fictitious example of how a holder of an equity release Property Plan from Retirement Plus could benefit from a change for the better – and how it might work in practice, when property prices start to rise.
Partial Repayment worked example – with the property rising in value
Mr & Mrs Howley were aged 77 and 74 when they took out an equity release Property Plan in July 2007. They released the maximum amount available of £155,610 in exchange for granting Retirement Plus a starting share of 47.88% of the value of their property which was then valued at £325,000. The Retirement Plus share of their property is increasing at a rate of 0.48% per month until it reaches the agreed maximum level of 99.90% after 12 years and 10 months.
Mr Howley recently received an inheritance of £100,000 on the death of his brother and he now wishes to use this money to reduce the Retirement Plus share of their home.
The flexibility of the equity release Property Plan comes into play
The property was re-valued in September 2008 at £350,000. The Retirement Plus share in the property at the end of September was 51.207%. The new valuation of £350,000 is used to calculate the monetary value of the Retirement Plus share.
£350,000 x 51.207% = £179,224
The £100,000 payment now reduces the value of the Retirement Plus share to £79,224.
With an eye to the future, the Howleys opt for a Protected Share
£79,224 applied to the new valuation of £350,000 is equal to an adjusted Retirement Plus share of 22.635% and a new agreed maximum level of 42.79%. This means that Mr and Mrs Howley now have a Protected Share of 57.21% upon which they may be able to raise money later should they need to, or to leave as a guaranteed inheritance to their son and daughter.
03 November 2008