Case Studies​

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COMING TO THE END OF AN INTEREST 

ONLY MORTGAGE TERM

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Margaret Owen / Widowed / Age 65

Current house value:  £325,000

Requires:  £80,000

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Margaret's Story
Margaret has an interest only mortgage still outstanding on her property. She would like to retire early but is unable to afford the payments on her retirement income. We identified
that she wouldn’t qualify for either a Retirement Interest Only (RIO) mortgage or a residential mortgage due to affordability assessments based on her age and income.
She doesn't see downsizing as a viable option as she lives close to family and friends.

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​We assisted Margaret in taking out a lifetime mortgage via Legal & General Home Finance.
She released £80,000 to pay off her residential mortgage and she chose at the same time to take an additional £10,000 for some home improvements she wanted to carry out on her property.  She decided to pay the full interest on a monthly basis so that the amount that she borrowed would never increase.   She also liked the fact that the monthly payments would be fixed for life.

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USING A LIFETIME MORTGAGE TO MOVE TO A NEW HOME

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Penny & Peter Brown / Married / Aged 65 & 68 / Retired
Current house value: £270,000
Value of property by the sea: £350,000
Requires: £80,000
 

Penny and Peter’s Story
Penny and Peter have always dreamt of living in a village near the coast, and as their children have moved away and reside around the UK, they have no ties to where they live. They have no residential mortgage on their property and have a buyer lined up.
Properties by the sea carry a premium, and they need a further £80,000 to buy a 2-bedroom home.

Their primary income is from their pensions, and they would struggle to meet the affordability requirements of a standard or RIO (Retirement Interest Only) mortgage. What little savings they have, they want to preserve to spend on the new property.

Trading Up
Using a lifetime mortgage to supplement the purchase can enable customers to buy properties outside their reach and achieve their retirement dreams.
We had concerns about the house's proximity to a commercial property, the village’s local
post-office. After checking with the lenders underwriters, they were happy to consider the case and, on further investigation, deemed it acceptable.
 

We advised Penny and Peter to take out a lifetime mortgage via Pure Retirement.
They borrowed an amount of £80,000 against the new property they were buying and along with the equity from their sale, were able to purchase their dream home by the sea. They would still be able to access future funds from Pure Retirement for other reasons, such as potential care costs.

 

How It Works
Once Penny and Peter have found a buyer for their existing home and settled on the property they would like to buy, they would simultaneously complete on the new house and release funds from the lifetime mortgage, enabling them to fund the price difference.
With all Pure Retirement lifetime mortgages, homeowners can make repayments to protect their remaining equity. Pure Retirement’s Classic lifetime mortgage enables optional repayments of up to 10% of the initial loan to be made annually without incurring any early repayment charges.

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DIVORCE: USING A LIFETIME MORTGAGE TO SIMPLIFY

THE ASSET-SPLITTING PROCESS IN DIVORCE​

 

Claire & George Reynolds / Divorced / Both aged
73 / Retired
Current house value: £375,000
Requires: £140,000
 

Claire’s Story
Divorce in later life can significantly impact personal finances - especially for women, who are statistically known to have lower savings and pension investments. Splitting assets and wealth can be stressful during divorce, with many parties involved.

Claire wished to stay in the marital home, and her ex-husband, George has agreed to move out and buy a new home. They have agreed on splitting the value of the home 50:50 and have a joint savings account containing £100,000.
 

Using Equity Release To Split Assets

There are three solicitors involved in the transaction, the two divorce lawyers and the specialist equity release solicitor. With the increased legal costs, Claire opts to use some of the equity released to pay the legal fees. George agrees to a settlement of £187,500, and Claire accesses £140,000 through a lifetime mortgage.  She uses her 50% of the joint savings to pay George the remainder of the balance.
 

Claire can remain in the property and George can now access his own financial options and buy himself a property.

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​​We advised Claire to take out a lifetime mortgage via Aviva.  She released a lump sum of £140,000. George receives £97,500 of the shared savings as part of the settlement.

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​ASSET-RICH, CASH-POOR COUPLE

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Gavin, aged 68 & Carmen aged 60 /

Retired & Part-time worker
Married couple, single application
Current house value: £1.1m
Requires: £99,000
 

Gavin and Carmen’s Story
Gavin and Carmen have been married for five years and live together in Gavin’s house, which he owns.

Carmen is not on the title of deeds as she moved in after they were married.
Gavin is now retired and while Carmen works part-time, her income isn’t enough to keep up with their lifestyle. Gavin already has some credit card debt which he has, so far, managed the monthly repayments, but as he has recently retired, its more difficult to clear the debt.

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Lifetime Mortgage Requirements

As his wife isn’t named on the property deeds, Gavin can only obtain a lifetime mortgage as a single applicant, which is exclusively in his name. We talked them through their options, as a single applicant, should Gavin die before his wife or go into long-term care then Carmen would need to leave the property for it to be sold to repay the lifetime mortgage.

 

Alternatively, they can put the property into joint names and apply together. In this instance, they jointly decided to proceed with Gavin as a single applicant as Carmen has another property from a previous marriage that is currently rented out.

 

We recommended Gavin takes out a lifetime mortgage via Canada Life who allow a married couple to submit a single application.  Gavin decided to initially borrow £40,000 to clear his credit card debts and enjoy a few holidays with his wife in the safe knowledge that there were additional funds available for them to take as and when required.  They chose not to pay the interest but to instead to allow it to roll-up onto the monies borrowed and fully understood that the amount owed will increase year on year but as neither of them have any children, leaving a future inheritance was not a key issue.