Case Studies

Case Studies

Gifted Deposit

Paul is 32 years old and lives with his parents. He now has a good job and wants to get on the property ladder. He has seen a house for £100,000 that he thinks will be ideal. He has 5% deposit saved and has been offered a rate of 4.88% from his bank. His repayments on a £95,000 mortgage would be £554.97 per month.

After having a conversation with his parents, they agreed to help him out with the deposit by taking out Equity Release on their property to release funds on an interest servicing option.

Paul’s parents were able to release £20,000 through Equity Release at a rate of 2.82%, meaning monthly interest payments would be £47.00. Paul has decided to pay this interest on behalf of his parents.

By now having a 25% deposit, his bank has offered him a rate of 2.58%, meaning that his monthly repayments are now £342.34, and with the interest on the Equity Release, the total Paul will pay is now £389.34.

Total monthly savings made with Equity Release – £165.63

Objective

Raise funds for Paul’s deposit

Loan Required:

£20,000

Property Value

£220,000

Early Inheritance

Mr. & Mrs. Johnson are both in their 80’s, they do not have much savings and are on low income supported by credits. They want to gift £20,000 each to both their grandchildren for deposits on their first homes, as an early inheritance. James is 20 and John is 25. James is about to start university, and John is now working and wants to purchase his first home.

John required the funds straight away, but James won’t need them for at least another 5 years, Mr. & Mrs. Johnson are concerned about the effect the Equity release will have on their means-tested income.

After a call from their advisor, Mr. & Mrs. Johnson were able to release the initial £20,000 to gift to John for his deposit. The remaining £20,000 for James was put into a drawdown facility for them to access as and when they require in the future, no interest is charged on this until they draw it.

As they gave John the initial £20,000 immediately, they did not leave any surplus funds in their bank, therefore this did not impact their means tested benefits, and they continued to receive the same benefits as they previously did.

Objective

Raise funds for now and secure further for the future, without it impacting their means tested benefits

Loan Required:

£20,000

Initially

£20,000

Sometime in the future

Property Value

£350,000

Interest Only Shortfall

Mr. Anderson is aged 68 and has a £60,000 interest only mortgage outstanding on his property. His mortgage term is coming to an end and his lender has requested details on how he plans to repay the balance.

After visiting his mortgage broker, it became clear taking out another mortgage was not an option due to his age and income. His mortgage broker referred him to a later life broker.

Mr. Anderson released £60,000 to repay his mortgage and was able to remain in the property. With the extra disposable income that was freed up, he decided to make an annual interest repayment, eliminating the effects of the rolled-up interest.

Objective

Repay interest only mortgage

Loan Required:

£60,000

Property Value

£230,000

Debt Consolidation

Mr. & Mrs. Arnold are both aged 74 and retired with minimal pension income. Their home is mortgage free, but they have unsecured debts of £40,000 and have been finding it increasingly difficult to keep up with their monthly repayments.

They decide to speak to their financial advisor for help and he referred then to a later life broker.

Mr. & Mrs. Arnold released a £40,000 lump sum to repay all their outstanding debts, this freed up £1,100 of disposable income each month. They are not required to make any interest payments but so have the option to repay 10% each year without any penalty.

The scheme also offered a drawdown facility of £28,000 which is available to them should they need further funds in the future.

Objective

Consolidate outstanding unsecured debt

Loan Required:

£40,000

Property Value

£180,000

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