CASE STUDY ONE ABLE TO RETIRE

Mr and Mrs A had lived in their home for over 20 years and although were getting a bit older, at 63 and 65, did not want to downsize at all. Their home had space for visits from their children and room for the grandchildren to play in and so was ideal.

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Their issue was that Mrs A was wanted to retire, which would see a drop in income until the State Pension kicked in, which would not be a few years. On top of this, Mr A wanted to reduce his working hours, so that he could enjoy more time with his wife and helping with the grandkids.

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They had worked out that they would see a drop in income of around £20,000 a year and did not want their quality of life to be affected by the decisions.

Our adviser sat with Mr and Mrs A, and looked at all viable alternatives, before concentrating on a Lifetime Mortgage as an ideal solution.

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Mr and Mrs A were worried that they were too young for these plans and did not want lots of interest to build up against the property, meaning that there would be “nothing left” in their words, at the end for their children.

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Our adviser explained that the two best ways to combat a build of interest in future were to either:

 

Initially take only what was needed for the first 12 months and then have a drawdown facility set up so that more money could be taken as and when required. This way interest would only be charged on what has been actually taken and used, rather than on the whole facility.

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Consider making payments on the loan. This would help the build up of any interest to be at a slower rate.

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Our adviser showed the clients what would be owed in the future if they made no repayments and repaid various amounts of their choice, whilst giving examples of what their home might be worth over this period of time.

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After understanding all of this information, the clients took out an initial loan of £20,000 with a drawdown facility of £200,000. When taking into account future pension income, they felt that this buffer would give them another 20 years of peace of mind and were happy with what might be left to their loved ones.