Interest only Mortgage due to be repaid with no repayment vehicle
Working as an equity release specialist adviser is always so rewarding advising on lifetime mortgages.
In these challenging times the focus of my advice is far more around helping people in distressing financial situations to provide them with peace of mind rather than releasing monies from their home to fund that trip of a lifetime!
I will be publishing a series of real-life case studies of some of the people I have advised over the last year, where a Lifetime Mortgage was the most suitable solution to meet their needs.
I was recently approached by a customer who had taken out an interest only mortgage years ago. As he was approaching retirement, he was contacted by his lender to demand repayment as the borrowing had reached the end of his agreed term. This customer had always meant to take a policy/ investment product to save to repay the borrowing but, for financial restrictions, did not initially arrange it then did not think about it again as time went on. This is a pretty common occurrence with many people at this later stage of life worrying about whether they can stay in their home. Often people have also had a repayment vehicle in place previously but have had to cash it in years earlier due to financial necessity and for various reasons had not replaced it later.
Virtually every later life customer I speak to has a number one priority which is to stay in their home in their later years. This situation is becoming an all-too-common threat to achieving that aspiration.
When customers are faced with this situation they find, much to their dismay, that their existing lender does not want to extend the term, due to their age and income in retirement, which of course will not fit many providers’ criteria.
Panic can often then set in at this point for people who really should be financially secure at this stage of their life.
Many also do not have the alternative level of pension in retirement to support lending by other means either because of fund performance or lack of provision.
Some customers do have the income to fund borrowing into their retirement, but many do not wish to look at funding a traditional mortgage or a retirement interest only mortgage where their home may be at risk if they do not keep up repayments on it.
A lifetime mortgage option, which in this case most suited the customer’s needs, allows the surety of knowing that the interest rate can be fixed for their lifetime or until they were to go into long term residential care. There is the option to either service the interest fully, partially, or indeed make no contributions at all to servicing the interest. Although not servicing the interest fully will mean that the interest will of course “roll up “and will increase the amount owed, therefore impacting on the value of the estate later.
However, depending upon the customer’s specific circumstances, it allows them to either have enough disposable income now to lead a comfortable retirement, stay in their home or both.
This customer was very concerned he would have to sell his home to repay his borrowing and had worries about the future.
I was very pleased that I could achieve a solution of a lifetime mortgage at a low and manageable interest rate which meant the customer could fully service the new borrowing. The rate acquired was manageable and gave him the peace of mind that the amount owed in the future would remain the same. This meant his children, who were involved throughout the process as well as their parent had surety that the value of the estate would not be eroded further as long as payments were met.
More importantly the whole family were happy that their parent could stay in in their own home.
MORTGAGES ON AND EQUITY RELEASED FROM YOUR HOME WILL BE SECURED AGAINST IT.
ASQUITH FINANCIAL SERVICES OFFERS ADVICE ON LIFETIME MORTGAGES ONLY.
A LIFETIME MORTGAGE WILL BE SECURED AGAINST YOUR HOME.
AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.
Can Asquith Financial Services help you?
For more information, please contact us on -
Tel 033 3303 4230 or 07500969167
www.asquithfinancialservices.co.uk
Working as an equity release specialist adviser is always so rewarding advising on lifetime mortgages.
In these challenging times the focus of my advice is far more around helping people in distressing financial situations to provide them with peace of mind rather than releasing monies from their home to fund that trip of a lifetime!
I will be publishing a series of real-life case studies of some of the people I have advised over the last year, where a Lifetime Mortgage was the most suitable solution to meet their needs.
I was recently approached by a customer who had taken out an interest only mortgage years ago. As he was approaching retirement, he was contacted by his lender to demand repayment as the borrowing had reached the end of his agreed term. This customer had always meant to take a policy/ investment product to save to repay the borrowing but, for financial restrictions, did not initially arrange it then did not think about it again as time went on. This is a pretty common occurrence with many people at this later stage of life worrying about whether they can stay in their home. Often people have also had a repayment vehicle in place previously but have had to cash it in years earlier due to financial necessity and for various reasons had not replaced it later.
Virtually every later life customer I speak to has a number one priority which is to stay in their home in their later years. This situation is becoming an all-too-common threat to achieving that aspiration.
When customers are faced with this situation they find, much to their dismay, that their existing lender does not want to extend the term, due to their age and income in retirement, which of course will not fit many providers’ criteria.
Panic can often then set in at this point for people who really should be financially secure at this stage of their life.
Many also do not have the alternative level of pension in retirement to support lending by other means either because of fund performance or lack of provision.
Some customers do have the income to fund borrowing into their retirement, but many do not wish to look at funding a traditional mortgage or a retirement interest only mortgage where their home may be at risk if they do not keep up repayments on it.
A lifetime mortgage option, which in this case most suited the customer’s needs, allows the surety of knowing that the interest rate can be fixed for their lifetime or until they were to go into long term residential care. There is the option to either service the interest fully, partially, or indeed make no contributions at all to servicing the interest. Although not servicing the interest fully will mean that the interest will of course “roll up “and will increase the amount owed, therefore impacting on the value of the estate later.
However, depending upon the customer’s specific circumstances, it allows them to either have enough disposable income now to lead a comfortable retirement, stay in their home or both.
This customer was very concerned he would have to sell his home to repay his borrowing and had worries about the future.
I was very pleased that I could achieve a solution of a lifetime mortgage at a low and manageable interest rate which meant the customer could fully service the new borrowing. The rate acquired was manageable and gave him the peace of mind that the amount owed in the future would remain the same. This meant his children, who were involved throughout the process as well as their parent had surety that the value of the estate would not be eroded further as long as payments were met.
More importantly the whole family were happy that their parent could stay in in their own home.
MORTGAGES ON AND EQUITY RELEASED FROM YOUR HOME WILL BE SECURED AGAINST IT.
ASQUITH FINANCIAL SERVICES OFFERS ADVICE ON LIFETIME MORTGAGES ONLY.
A LIFETIME MORTGAGE WILL BE SECURED AGAINST YOUR HOME.
AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.
Can Asquith Financial Services help you?
For more information, please contact us on -
Tel 033 3303 4230 or 07500969167
www.asquithfinancialservices.co.uk
Read less
