Using equity release to pay for holidays & home improvements
“Mr & Mrs Jones own a property in Devon valued at £150,000 with no mortgage. They are aged 72 and 70 respectively. They have almost no cash but just about enough income on which to live. Their house needs to be decorated, they want a new kitchen, for which they have been quoted £15,000. Also, as Mr Jones is not in the best of health, they decided that they want to go on a cruise to America before he is too ill to go away. This had a cost of £3,000. All in all they needed £20,000 to pay for all their requirements.
We also recommended that they set up Last Powers of Attorney at a cost of £1,500 altogether.
To include all their fees and other legal costs it was agreed they would borrow £24,000 on a lifetime mortgage from Aviva at a fixed interest rate of 5.64%. They had discussed the matter with their 2 grown up children who were in agreement. One of them attended our 2 meetings with Mr & Mrs Jones and we sent both of them a copy of our written recommendations which they signed indicating that they were happy with our advice and that we had acted properly and ethically, not putting undue pressure on their parents.
The money came through in 6 weeks and Mr & Mrs Jones are at present on the high seas, hopefully enjoying their cruise, while the builders are completing their kitchen and decorations. They have an appointment, upon their return, to commence the preparation of the Lasting Powers of Attorney”
By Right Equity Release Adviser Laurence Silver
Using equity release to help children financially
Couple in early sixties, Mr self-employed and finding it difficult to find work. Mrs in employed work but finding it hard to do job, exhausted. They have unsecured debts of £12,900 and a secured mortgage of £47,000. They have 2 daughters, one needs financial assistance through a recent split with partner, the other is getting married and parents are paying for it. They also need to complete a number of home improvements, and have no savings.
Aim: They want to clear all their debt and allow themselves to complete their home improvements, cover the cost of the wedding and provide support to their daughter and grandson. They also want to be able to either stop work entirely or not be pressured into continuing to stay in work until their mortgage is repaid in 5 years.
Solution: Understanding the implications to their estate and future inheritances, the clients opted for a maximum release plan to clear all debts. They reduced their monthly expenditure by over 50% which allowed them to not worry about finishing work earlier. Provided funds for the wedding, support for daughter and grandson, put some funds into an emergency fund and completed the home improvements.
Using equity release to help grandchildren with University fees
“My initial appointment with Mr and Mrs X was for a basic lump sum release lifetime mortgage. During the fact find process I discovered that the clients wanted the monies to help their granddaughter through her 5 year course in medicine at Manchester University.
After the initial appointment I asked the clients to find the yearly cost of the course and when the monies were likely to be needed. After researching the costs the clients contacted me and advised that the annual cost would be in the region of £13000 per annum. I researched the options with different providers and found that a drawdown plan would be ideal to be used in the client’s situation.
On the 2nd appointment I explained the savings the clients would make by using this type of plan, we decided that the initial draw down would be £32,500 the reason for the amount was due to the reserve facility, as a majority of providers only have a reserve facility which matches the initial lump sum released.
This would be used during her 5 years at University, by advising the clients in this manner, the first 2 years of costs would be used in the initial release, and then using the drawdown lifetime facility on an annual basis after year 2, drawing down the amount needed for the following years education fees.
I explained by using this option they would only be paying interest on the monies released at any one time, saving them monies on interest instead of releasing the full amount at the start of the plan were they would be paying the full interest from day one.
The clients were very happy with my advice and went ahead with my recommendations.” By Right Equity Release Adviser Carl Baker
Using equity release to clear debt
“Mrs Kyle who is 65 and a retired widow approached me as her bank who had arranged her interest only mortgage five years ago had contacted her to advise her that her mortgage term was up in a few months time and asked her how she was going to repay the capital. She was quote shocked at this as the banks mortgage adviser 5 years ago had said they would simply renew it for a further term when the 5 years were up. The bank stated that due to a policy change they would not be able to do this and had advised her she would need to repay the debt or risk the bank taking action to sell her property if she did not do so. She owed the bank £58,000.She had also been paying back a couple of credit card debts she had take out to help out her family and had wanted them to be cleared.
Based on her age and the value of her home I was able to raise sufficient to repay her mortgage and clear her credit card debt with a new lifetime mortgage and as she was saving over £500 per month in monthly payments .
Because of this saving and her reasonable pension income she elected to make a monthly interest payment keeping her debt at the same level protecting the interests of her beneficiaries which was important to her whilst giving her the peace of mind that she can remain in her own home” By Right Equity Release Adviser Ken Cadman
Using equity release to carry out home improvements
“Customer had lived in her house for over 35 years, was widowed and received a state and late husband pension. The income received was sufficient for her normal standard of living however, the house was falling into disrepair needing improvements.
Customer had considered moving home as the funds for the repairs were not available and although some help could be provided from a grant to help with costs, this was not sufficient.
The customer did not want to move from the family home as it held good memories and she could not imagine closing the front door for the last time. The option of loans and mortgages were not suitable due to the cost of the repayments. However, the family were concerned that mum should be comfortable and understood that the improvements should be completed ready for the winter. An equity release mortgage plan was arranged within eight weeks providing the capital required for improvements and to provide additional funds in reserve for a financial emergency. The equity release mortgage plan helped the customer to remain in her own home, giving peace of mind to the family, knowing mum was comfortable and no longer worried about the repairs.” By Right Equity Release Adviser Ron Ellis
Using equity release to paying off Interest Only Mortgages
“Mrs West’s husband died three years ago, since then she has been paying all the bills including the mortgage out of her pension income. Mr West had always looked after the financial transactions for the household. Six months ago Barclays contacted her asking for £30,000 that was outstanding on her mortgage. Mrs West had no idea that she had inherited on interest only mortgage and had no means of paying off the outstanding loan. Barclays gave her no alternatives other than to sell her property and downsize. Mrs W has lived in the property for more than 30 years and did not want to move, and at 69 and with only her pension income, had no means of raising the money. I was contacted via a personal friend (her daughter) and subsequently was able to release the amount required with a Lifetime Mortgage (which also gave her a significant reserve, or draw down facility), thus enabling Mrs West to pay off the debt and remain in her family home, hopefully, for the rest of her life.” By Right Equity Release Adviser Chris Whitehead
Using equity release to paying off Interest Only Mortgages
“Mr & Mrs G, have been clients of mine for the last 5 years. They wanted to do Equity Release several years ago in order to pay off their existing Interest Only mortgage they have. But at that time and both were in good health, they could not release sufficient funds to pay off this mortgage. I met my clients again in the summer as they told me their mortgage lender would not extend the term and repayment date, which was going to be June next year. In light of this and the fact they had some savings now and their respective health’s had suffered in recent times, this meant they could both be eligible for an enhanced release. This was the case and their are specialist ER lenders that will enhance the normal loan to value’s. I was able to place this with a company called More 2 Life and the amount released now in tandem with there some of their savings was sufficient to pay off the mortgage. This was a major worry as if they could of not paid off this, then next summer the clients could of been forced to sell their home, which certainly in not want these clients wanted. This has now given them peace of mind, stability and long term security.” By Right Equity Release Adviser Anthony Delmont
Using equity release to help children to buy a house
I have found with the introduction of the ‘Help to Buy’ government scheme and mortgage lenders providing the widest range of mortgages since the credit crunch, parents and grandparents are looking at equity release as a means of providing the deposit required for their children or grandchildren.
I saw some clients recently who enquired about releasing equity from their home so they could gift funds to their daughter for the deposit she required. The clients viewed this as helping their daughter when she needed the money most rather than waiting until they passed away before she inherited their money. They were worried about how their daughter would be able to buy a home given that she was looking to buy on her own, the amount of her salary and the average property price in the area. The clients I spoke to, having done some investigations into mortgages as well as equity release, felt that their daughter’s monthly mortgage repayment would be less than the amount of rent she paid each month which they viewed as ‘dead money’. They released sufficient money to provide the deposit their daughter required to buy a newly built flat nearby giving them peace of mind. Their daughter is now the proud owner of a two bedroomed flat that she moved into a few months ago. By Right Equity Release Advisor Jane Aldred
Using equity release to help grandchildren with a deposit to buy a house
“Mrs W is in her late 70’s and has 2 grand daughters and 1 grandson. The grand daughters who are twins had recently left university and were living in London. They had started full time employment as accountant / solicitor but were desperate to buy their own homes as the rental monthly payments were astronomical. Mrs W, who owned the property outright, contacted TRER Ltd via a local introducer IFA and released sufficient equity from her own property to be able to give her grand daughters enough money for a deposit on a property near to were they both worked. She said that ‘they might as well have it now when they need it rather than having to wait until I have died before they gets anything.” By Right Equity Release Adviser Steve Branch