Using equity release to move to a new home
Lucy & Max Ford
- Married
- Aged 65 and 68
- Retired
- Current house value: £270,000
Average value of a property by the sea: £350,000
Require: £80,000
Maximum loan-to-value: 30%, release 23.14%, joint applicants, lump sum
Lucy and Max’s story:
Lucy and Max have always dreamt of living in a village near the coast. Their children have moved away and reside around the UK, so they have no ties to where they currently live. They have no residential mortgage on their property and have a potential buyer lined up.
Properties by the sea attract a premium, and a two-bedroom home costs a further £80,000.
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.
Lucy and Max select a Lifetime Mortgage.
The maximum loan-to-value available for Lucy and Max’s age range is 30%.
They release a lump-sum of £80,000 (23.14% LTV).
They could access the remaining equity later as a further advance, potentially for care costs in the future.
How it works
Once Lucy and Max have secured 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.
Lifetime mortgage features:
- Guaranteed no negative equity
- Optional monthly repayments
- Client retains ownership of the property
Things to consider:
- Downsizing and other forms of finance should be considered
- 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
Thinking about equity release?
It is important to consider all options before applying for equity release. Speak to one of our wealth specialists, Toni Chalmers-Smith or Senior Associate Solicitor Catherine Banks at Tees today.
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
Meet Catherine
- Areas of expertise
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- Testimonials
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.