Equity release can be a useful way to access cash otherwise tied up within property for homeowners aged 55 and over. The case study below illustrates how we helped Grace* to access her equity.
Grace was introduced to John Harris, our Later Life Lending Adviser, by a financial consultant from Cooper Associates Wealth Management. She had an existing Lifetime Mortgage in place, with no repayments being made. As her expenditure was exceeding her income (approximate annual deficit of £7,000 per annum), she wanted advice about how to bridge the retirement gap.
Grace was not expecting to live longer than 10 years due to an ongoing heart condition and has two older financially secure children.
John helped her to arrange a replacement Lifetime Mortgage with the same lender, borrowing an initial sum of £199,995, with a £93,335 cash reserve. Approximately £130,000 was used to clear the existing loan, while the remaining £70,000 covered what Grace needed over a four-year period. The cash reserve would cover a further five-year period if it were to be required.
In this case, because of the gilt rate at the time, there were no early repayment charges for the existing Lifetime Mortgage. Though some fees were applicable, John was able to secure a new lower rate on borrowing, saving Grace money on a like-for-like basis.
Grace was very concerned about her financial future and aware her savings reserves were being exhausted at a quick rate. She wanted to stay in her home and take away any financial stress during her retirement by having access to further funds and formulating a plan with the help of financial professionals. Her children supported her accessing the equity in her property which could allow her to enjoy retirement with an initial amount to cover the next couple of years and further money should she need it later on.
The peace of mind this provided Grace was huge. There is still a significant amount of equity in the property, meaning it is highly likely that there will be an inheritance passed on, which was important to Grace. Most importantly, it eliminates her vulnerability immediately and allows her to enjoy her retirement in a more stable financial position.
Is equity release something you are considering to support your finances? Contact our equity release specialists today who will be happy to talk you through your options.
*Name changed for anonymity
