Life expectancy in the UK is now almost 87 years of age for men and 89 for women[1]. Latest figures show that nearly half a million over 70s in the UK are still in full or part-time work. That equates to nearly one in 12 of the population in their 70s. Putting that into context, 10 years ago that figure was one in 22[2]. We are all living longer and working past retirement age is often a choice for many who find they hit 65 and don’t want – or need – to slow down.
At largemortgageloans.com one of our specialist areas is Equity Release. We have a number of advisers fully qualified in equity release and other later life lending options including Associate Director, Nigel Bedford. Recently, he helped clients in their 80s raise £840,000 to gift to their children. Although they owned two homes, they had little in the way of liquid investments and insufficient income to get a residential mortgage; therefore Equity Release was the best option available to them.
Case profile
Our clients owned two homes; an unencumbered property in the Cotswolds and a London pied a terre with a mortgage of over £2million. The couple were a UK national and foreign national, one of which was still working. Their earnings and pensions combined were nowhere near enough to service the mortgage they had, and would certainly not support additional borrowing of £840,000.
Coupled with this challenge, many lenders are cautious of lending on large, single assets. That, and the couple’s age, meant that their options were limited even further.
Solution
Having been referred to largemortgageloans.com by their Solicitor, Nigel was able to use his expert knowledge of HNW Equity Release lenders to present a compelling credit proposal to the small number of providers that would be able to consider such a complex case.
Although still working in a responsible role, our clients were deemed ‘vulnerable’ due to their age. Therefore, we ensured that extra care was taken and that the ramifications of the lending package were fully understood. This also involved engaging with the next generation. Although their offspring were keen to receive the lump sum, they needed to be aware that, long-term, the rolled-up interest charged on the property would have an effect on their inheritance.
Nigel was able to secure fantastic terms and a low lifetime fixed rate.
Deal Highlights
| Loan amount: | £840,000 |
| Rate: | 3.75% fixed for life |
| Loan To Value: | 42% |
| APRC: | Overall cost for comparison 3.80% APRC representative variable |
| Term: | Life |
| Type: | Interest only rolled up |
| Loan purpose: | Residential remortgage - equity release |
| Lenders arrangement fee: | £0 |
| Early repayment charges: | 5% for 5 Years and then 3% for the next 5 Years |
This case study is for information and illustration purposes only. It is not an offer, or suggestion of an offer. Each mortgage case is assessed on an individual basis and there is no guarantee that the solution described here can be repeated in the future.
Please note that this specific deal may not be available to – or suitable for – all customers, dependent on their individual circumstances. The rate quoted may become out of date at short notice and may not be available at the point at which customers enquire about it. This document may not contain all the information needed for customers to make a decision and they should seek advice.
The overall cost for comparison is 3.80% APRC representative variable based on monthly payments at the lenders fixed rate of 3.75% for the life of the mortgage and fees. The mortgage is estimated at 15 years but could run for a longer or shorter time.
A lifetime mortgage is a loan secured against your home. Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits. Home reversion plans and lifetime mortgages are complex products. To understand the features and risks, ask for a personalised illustration. If you are in doubt, seek independent legal and financial advice.
[1]https://www.theguardian.com/society/2019/mar/07/life-expectancy-slumps-by-five-months
[2] https://www.theguardian.com/money/2019/may/27/number-of-over-70s-still-in-work-more-than-doubles-in-a-decade
