mortgage Archives

Interest rate adjustments and mortgage market shifts

Posted on 2 October 202428 March 2025 by Sophie Soraf

The Bank of England’s recent suggestion of a potential “soft landing” for the UK economy has provided a bit of hope amongst the ongoing economic challenges. While this news has been welcomed by many, the lingering effects of high-interest rates continue to impact various sectors, particularly the housing market.

In response to the changing economic landscape, mortgage lenders have begun to adjust their rates. Several lenders have recently announced reductions in their mortgage rates, sparking renewed interest among prospective homebuyers. This downward trend in rates has led to increased affordability for some, making it more accessible for individuals and families to enter the property market.

Navigating uncertainty

Despite the recent positive developments, there remains a degree of uncertainty surrounding the sustainability of this. Several factors continue to show challenges to the broader economy, including:

Inflationary pressures: While inflation rates have shown signs of easing, they remain elevated, impacting consumer spending and business confidence.
Geopolitical tensions: Global conflicts and economic uncertainties can influence investor attitudes and market stability.
Interest rates: The Bank of England’s monetary policy decisions will continue to shape the interest rate environment, affecting borrowing costs for both consumers and businesses.

Your trusted financial partner

Given the dynamic nature of the current economic climate, it’s key for individuals and families to seek expert financial advice. Our Wealth Team can provide valuable guidance and support in navigating these uncertain times.

We can assess how changes in interest rates may affect your financial situation, particularly if you have existing loans or mortgages. If needed, we can help you explore mortgage options while developing a personalised long-term financial plan, ensuring your wealth is protected through effective financial planning and risk management strategies.

Introducing Toni

With over 30 years of experience in the financial services industry, Toni specialises in providing expert advice to clients seeking guidance on later life financial matters. Her expertise extends to life, health, mortgage, and pension planning, with a particular focus on later life lending, equity release, and care fees planning.

Toni works closely with her colleagues at Tees Wealth and our legal teams to deliver comprehensive care fees planning and equity release advice. This involves liaising with local authorities and government departments on behalf of our clients to ensure they receive the best possible support.

Delivering what you really need

At Tees, we believe that financial and legal advice should empower you to make informed decisions. Our goal is to provide you with the information and options you need to confidently navigate your retirement years. Toni’s expertise and personalised approach will help you understand the complexities of later life planning and make informed choices.

Care funding: A personalised approach

We understand that planning for care funding can be a complex and emotional process. Our team is committed to making this process as straightforward as possible. We work closely with our clients to understand their specific needs and tailor our advice accordingly. Through careful planning, it may be possible to structure your finances in a way that allows you to pay for care fees without depleting all of your assets.

Equity release: Achieving your financial goals

Whether you’re looking to downsize, gift your property, or simply enhance your retirement lifestyle, equity release may be a suitable option. Toni can provide expert advice on the costs, risks, and potential implications of equity release on inheritance tax, care entitlements, and means-tested benefits.

Why choose equity release?

access tax-free cash from your home
maintain ownership and stay in your property
enhance your retirement lifestyle
repay outstanding mortgage or debt
provide financial support or care for loved ones
purchase a new home
gift to children or grandchildren
home and Garden improvements

This material is intended to be 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, or investment recommendations. Past performance is not a reliable indicator of future returns and all investments involve risks. Some information quoted was obtained from external sources we consider to be reliable.

Tees is a trading name of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered number 211314. Tees Financial Limited is registered in England and Wales. Registered number 4342506.

Release equity from your house: Increase your income

Posted on 3 July 202330 March 2025 by Sophie Soraf

As we’ll explain in this article, equity release is just one of several options that are now available to over 55s who wish to increase their income. Here at Tees our Equity Release Council member and SOLLA accredited experts are on hand to help and advise you every step of the way.

We’re all living longer and often, retiring later.

Changes to the state pension age, along with anticipated shortfalls in many private pensions, mean that we’re likely to need to look to alternative solutions as to how to fund our lifestyles in or approaching retirement – or risk relying on debt in later life.

In the past five years, the total value of debt held by the over-55s is estimated to have increased by 47 per cent and in another five years, this total value is forecast to increase by 35 per cent, rising to £397bn by 2024.

The good news is that the options to increase your income in later life are growing, becoming much more attractive – and can offer you peace of mind.

Since the government introduced pension reforms in 2015, the financial services industry as a whole – including the mortgage market – has begun to catch up with the challenges and opportunities of social change and consequently, lending criteria relating to age and retirement status have become a good deal more flexible.

Only a few years ago, there might have been a small handful of building societies prepared to lend to people of older age, however today, the options are many and varied and the previously niche equity release market has seen rapid growth and development into an industry that is now more commonly referred to as the later life lending market.

It is estimated that the UK’s over-55s currently own £1trillion in housing wealth.

What is later life lending?

Put simply, it is a mortgage offered to the over 55s that is designed to let you make use of the money that’s built up in your home and help you live better in your retirement.

What are the different types of later life lending?

Lifetime Mortgage

This is a form of equity release that lets you unlock the value in your home as a tax free lump sum of money.

How does equity release work?

Equity release is essentially like a long term loan. However, you don’t have to make monthly payments, unless you choose to, and the loan is usually repaid when the last borrower moves into long term care or dies, and you keep full ownership of the property. The maximum loan amount depends on your age and how much your property is worth.

Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.

Retirement Interest Only (RIO) Mortgage

A retirement interest only mortgage is very similar to a standard interest only mortgage, but with some differences.

The main part of the loan (capital) is usually only paid off when the last borrower moves into long term care or dies and you only have to prove you can afford the monthly interest payments.

Retirement Capital & Interest (RCI) Mortgage

Much like a standard repayment mortgage you pay back both interest and capital on a monthly basis.

The main difference is that you can borrow up to a higher age than on a standard mortgage but the product is still designed to repay your mortgage in full by the end of your term.

You’ll need to be able to afford the repayments on a monthly basis.

Home Reversion Plan

A Home Reversion Plan allows you to access all or part of the value of your property while retaining the right to remain in your property, rent free, for the rest of your life.

The plan provider will purchase all or part of your house taking into account your age and your health and will provide you with a tax free cash lump sum (or regular payments) and a lifetime lease, guaranteeing you the right to stay in your property rent-free for the rest of your life.

Is borrowing in later life right for me?

It’s often a good idea to speak with family members or trusted friends before taking on further borrowing in later life, they can often offer support and suggest other ways you could raise money. Borrowing in later life can have an impact on inheritance amounts you leave and any state benefits or local authority grants you get.

Is it wise with increasing interest rates for parents to release equity to assist in paying off or reducing their children’s mortgages?

This is a complex decision and will depend on various factors, here are some considerations:

Helping your children may be beneficial if you have excess funds and you are in a financially stable situation. It’s important to ensure that you have enough savings for your own needs and emergencies before considering assisting your children with their mortgages.
Releasing equity from your home may affect your retirement plans. It’s crucial to evaluate how using this equity will impact your future financial security, as you may be reducing the value of your estate or limiting your access to funds in the long term.
Before considering equity release, explore other possibilities for helping your children with their mortgages. For instance, you could recommend they seek financial advice or explore other forms of financial support that may not have long-term consequences for your own financial situation.
While helping your children reduce their mortgage loan can be beneficial, it’s essential to involve them in the decision-making process. Make sure they understand the implications and responsibilities associated with receiving financial assistance.
Releasing equity from your home may have tax implications, such as potential inheritance tax considerations.
Releasing equity may reduce your financial flexibility. Consider whether you may need access to the equity in the future for other purposes, such as long-term care costs or other unforeseen circumstances.

Ultimately, the decision to release equity to assist your children with their mortgages depends on your financial circumstances, risk tolerance, and long-term goals. It’s advisable to seek advice from a qualified financial adviser who specialises in this area of advice or a mortgage specialist who can provide personalised help and guidance on your specific situation.

Can I apply for a later life mortgage?

Many lenders will consider applications from people aged 55 up until their 85th birthday, with some lenders offering existing customers a mortgage up to their 95th birthday.

What can the money be used for?

The money released can be used for lots of different things. Some common uses include home improvements, family gifts, funding the purchase of a further property, buying a car, travelling abroad, or funding care.

Example

Mrs Hurst needed to carry out improvements on her home and gift her daughter money to aid her in buying a house. At the time, she held a lifetime mortgage previously arranged with another lender at an uncompetitive rate of 7.19%.

In order to achieve her goals, Mrs Hurst required an urgent loan of £226,160 and a more competitive rate of interest than her existing lifetime mortgage.

Tees’ Solution

Utilising a ‘whole of market’ approach, a new Lifetime Mortgage product was secured for Mrs Hurst, offering a significantly lower rate of interest of 3.92%.

As well as releasing an initial loan, Mrs Hurst released an additional £32,665 in order to fund the necessary £25,000 for home improvements and £10,000 to aid her daughter’s home purchase.

Even though the transaction involved releasing additional equity from her home, the lower rate of interest that was secured for Mrs Hurst on her new Lifetime Mortgage arrangement has resulted in a total saving of £256,049 of mortgage interest payments over a 15 year period, compared with if she had remained with her previous lender.

Outcome

The savings we secured for Mrs Hurst means she is now more able to enjoy a more comfortable retirement.

Our clients come to us for many different reasons. One of these is we offer lenders from the whole market and are able to access low rates. This ensures our clients can enjoy their retirement to the fullest and get the most out of the value of their home.

The Tees difference: a bespoke service that’s focused on delivering what you really need

Toni Chalmers-Smith is a later life lending specialist at Tees who has worked in the financial services industry for over 25 years. While fully qualified in all forms of life, health, mortgage and pension business, Toni is expert in advising clients who require later years advice, which includes investments, inheritance tax and estate planning, equity release and care fees planning. Toni works closely with Tees’ legal advisers in providing specialist advice on all areas of later life lending and also offers older clients a financial review and support service, especially if an individual or family member is unable to cope with day to day financial decisions.

Catherine Banks is an experienced solicitor in Tees’ residential conveyancing team, and specialises in later life lending conveyancing. Together Toni, Catherine and the rest of the Tees team work seamlessly together to ensure that the solutions they provide truly fulfil your needs, and are fully tailored to your individual circumstances.

Toni and Catherine pride themselves on offering a friendly, personal service which is designed to put you at ease and support you in these important financial decisions. Their approach is highly ethical; when dealing with older clients where there may be a vulnerability concern Toni can offer an advisory service and where necessary, work with a Power of Attorney and/or make an application to the Court of Protection on your behalf.

Expert financial and legal advice all under one roof

There are many advantages of having your financial advice and legal conveyancing services all under one roof:

a fast, efficient, joined-up service that is second to none
transparency in terms of our fees and any associated costs
a fully comprehensive service that is highly cost-effective

We at Tees strongly believe that financial and legal advice should take you to the stage where you can make clear and informed decisions, happy in the knowledge that you have received all the information and choices needed to reach those decisions.

Toni is a SOLLA Accredited Adviser and operates under its strict code of conduct. Both Toni and Catherine are members of the Equity Release Council: https://www.equityreleasecouncil.com/

Only specialist advisers can offer equity release advice.

Keeping gifts of money in the family

Posted on 5 November 202020 March 2025 by Sophie Soraf

Increasing numbers of parents are helping their children onto the property ladder. Money will often come from your own hard-earned savings or from a family inheritance so you will understandably want to make sure that your financial investment stays within the family.

This article looks at options to assist your child’s property purchase and ways of reducing the risk of that assistance leaving the family.

What should I do when providing money to my child for a house purchase?

It is sensible to agree and document whether the money is intended as a gift or loan, or whether you are taking a share in the property. There is risk of complication if your child is buying jointly with their partner, for instance in the event of a future relationship breakdown. However, even if your child is buying alone, future complications can still arise. For example, if they later cohabit with a partner and the partner acquires an interest in the property or if there is a future dispute between you and your child.

Both you and your child should also consider making a Will or reviewing existing Wills and consider the basis on which the property will be held to ensure that the property interest and any rights you have and your estate more generally will pass appropriately.

How can I help my child financially when buying a house?

There are various ways in which you can help your child onto the property ladder, for example:

Making an outright gift

This means giving the money to your child without retaining any rights to repayment or any interest in the property. Where Inheritance Tax is a concern, it is advisable to document the gift by a Deed of Gift as evidence that the money has been given.

Gifting to a child may necessitate a change to your Will. For example, if you have other children you may wish to give more of the remaining estate to the other children to balance out the lifetime gift given to their sibling. Or you may wish to ensure that the gift is not deducted from your child’s inheritance if that is the intention. Failure to consider and properly document the impact of the gift on your Will can lead to a result which is not in accordance with your wishes as well as the risk of future uncertainty and bad feeling within the family.

Lending funds to your child

Instead of gifting money to your child you may wish to lend funds. This gives you some protection as you will have the ability to get your money back if needed, for example if there is a relationship breakdown or if your financial circumstances change. It is advisable to enter into a loan agreement to avoid future disputes as to whether the money was a loan or a gift. Legal advice should be sought to make sure the loan complies with legal requirements.

Acting as guarantor on a mortgage or as a joint mortgage

Some lenders may grant a mortgage where a parent acts as guarantor for their child. Acting as a guarantor means agreeing to be legally responsible to the mortgage provider for repayment of the loan if the borrowers can’t pay. Alternatively, you could be joined as a party to the mortgage, meaning you would be jointly and severally liable for it together with the other borrowers. It would be sensible to enter into an agreement with the other borrowers giving you the right to reclaim from them any monies you pay to the lender (although this will not protect you if they are insolvent). In some circumstances you may be able to take a charge over the property as further protection.

These options avoid having to provide funds upfront to your child, however they could leave you financially exposed if the other borrowers cannot, or do not, meet their future loan repayment obligations. They can also affect your own ability to borrow in the future.

Buying jointly with your child

This involves you taking a share in the property, typically in proportion to the share of the purchase proceeds you provided to your child. On the one hand, this enables you to receive any future uplift in property price on that share which you can then dispose of as you wish in your Will (or enjoy during your lifetime). However, there are Capital Gains Tax and Stamp Duty Land Tax ramifications, on which advice should be sought.

A Declaration of Trust should be completed to record the shares of each purchaser.

What happens if my child is buying a property with their partner?

It is becoming more common for young couples and/or cohabitees to jointly buy a property together. It is therefore important to consider the risk of some or all of the amount provided to your child being lost in the event of death or if there is a future relationship breakdown (particularly where the provision is made by way of gift).

Where two people own property jointly, they can opt to hold it as “joint tenants” or as “tenants in common”. If they opt to hold as joint tenants, the share in the property of a deceased joint tenant would automatically pass to the surviving joint tenant. This has the advantage of simplicity where the co-owners want to leave their shares to each other, however it would mean that the share of the deceased co-owner could not be left to their own family. Furthermore, the co-owners cannot have unequal shares in the property, so a co-owner making an extra contribution to the purchase price could not take a larger share.

Where property is held by the co-owners as ‘tenants in common’, this enables the joint owners to hold different percentage shares in the property and for the share of each joint owner to be left to their intended beneficiaries if they die via their Will. The co-owners can enter into a declaration of trust setting out their respective shares. They should both consider who they would want to inherit their share and make Wills accordingly.

How can a declaration of trust help protect each co-owner’s property share?

A declaration of trust sets out the interests each co-owner has in the proceeds of sale of the property. This is especially important where one co-owner is contributing significantly more to the purchase price and/or mortgage repayments than the other, for example, with the benefit of a parental gift. The declaration of trust can give one co-owner a larger share of the future proceeds of sale, e.g. to reflect their additional contribution to the purchase price.

It is very important that the parties agree and properly document their respective interests in the property when it is purchased to reduce the risk of future uncertainty and disputes.

A declaration of trust can also set out other points the co-owners may wish to agree in relation to the property, for example what should happen if one of the co-owners wants to sell the property or buy out the other co-owner.

What other issues do I need to consider when helping my child buy a property?

Tax – the different options for assisting your child will have varying tax repercussions for both you and your child, which should be considered in advance
Wills – both you and your child should consider the impact of the arrangements on your Wills.
Your financial position – you should consider the impact of the proposed assistance on your own financial situation; for example, whether you can afford to help and whether you might need the funds back in the future. This will impact your decision as to whether to help and the option chosen. You should consider taking appropriate financial advice.
Family issues – if your child goes through a divorce or separation, their assets (including the property share you have helped them with) could potentially be reduced by the family courts. There are options to protect against this, for example cohabitation agreements, prenuptial and post nuptial agreements.