Equity release: upsizing to the house of your dreams
In this scenario, Lucy and Max are using a lifetime mortgage to supplement the purchase of a property which would otherwise be outside their reach.*
Lucy and Max Ford are a retired married couple aged 65 and 67. It has been their dream to move to a coastal village, and now that their children have moved away, they have no ties to where they currently live.
An equivalent property in the area they want to move to costs around £350,000. Their present home, on which they have no mortgage, is valued at £270,000, so they need to find an extra £80,000 to meet the cost of the new property.
They decide to release equity from their house by using a lifetime mortgage to supplement the purchase. Once they have found the property they want and a buyer for their current home, they simultaneously complete on the new house and release funds from the lifetime mortgage, enabling them to fund the price difference.
Their lifetime mortgage allows them to retain ownership of their home while guaranteeing no negative equity. It also gives them the option of monthly repayments if they want to reduce interest roll-up.
Things to consider
Before applying for equity release, weighing alternative options and looking at the possible effects on your finances is important. These include:
- Downsizing and other forms of finance
- Compound interest roll-up if chosen
- Early repayment charges
- Long-term care and state benefits considerations
- A lifetime mortgage may impact the inheritance you leave
Get in touch
Speak to our Wealth Specialist, Toni Chalmers-Smith or Senior Associate Solicitor Catherine Banks at Tees today.
*Examples of customer scenarios only. Every case will be different.
This material is intended for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice. Some information quoted was obtained from external sources we consider to be reliable.
Tees is a trading name of Tees Financial Limited, authorised and regulated by the Financial Conduct Authority. Its registered number is 211314.
Tees Financial Limited is registered in England and Wales, registered number 4342506.
Chat to the Author, Catherine Banks
Senior Associate, Residential Property, Bishop's Stortford office
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Caroline & Alan
Bishop's Stortford
'A big thank you Catherine for your help in securing our recent equity release. Your clear and precise speaking made the process very easy'
Brenda Green
Bishop's Stortford
'I wanted to say a big thank you to you Catherine and your team at Bishop's Stortford for your most impressive and responsive service in helping things go smoothly. I've sold a few houses over the years but never had the benefit of such a good conveyancing service and without your help I have a feeling that things would have progressed very slowly. I'm looking to buy my next house very soon and will certainly be knocking on your door again'
Roger Anthony
Bishop's Stortford
Staff dealt with were professional and well informed and assisted us extremely well during time taken (5 months) during our discussions. Would use firm again should needs occur.
David Marsh
Bishop's Stortford
I was always kept informed of the progress of the transaction by the friendly and efficient Conveyancing Team at Tees. There was always someone available to answer my questions. All in all, a service well worth the very reasonable fee. Thank you very much Tees for a stress-free process.