CASE STUDY FOUR
HOLIDAY FUNDS & FUTURE NEEDS

Mr P, in his late 60's, was a widower, and although managed his day to day finances well, had run out of savings. These savings had been used over the years to pay for holidays for himself and his family.

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Mr P loved to go on cruises where he had met lovely people and made good friends over the years. This was a way that he felt that he could see the world in his retirement and not feel isolated by being single.

 

He also was very generous and was more than happy to pay for holidays where he could take his son, daughter in law and 2 grandchildren to short haul destinations such as Spain and Greece.

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When one of our advisers went out to meet Mr P, he was in a situation where he had not been able to pay for these holidays for over a year, and was feeling the side effects of this and being stuck at home, feeling isolated.

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After discussing his situation, current and future needs and what was important to Mr P, we recommended a Lifetime Mortgage for £20,000 with a reserve facility of £80,000.

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This initial money would allow Mr P to pay for a cruise that he had really been wanting to go on and a holiday with his family for later on in the year – something to look forward to!

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The reserve facility would not cost him anything until he took any part of it and he really liked this flexibility, as initially he was proposing to take out £100,000 in one go and leave what was not being used in the bank. After our adviser explained that this would cost his estate a lot of money, and that there was a much more efficient way of doing things, he changed his mind.

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This extra money was calculated as a “may be needed” fund that would pay for ongoing holidays over the next 10 years, which was important to Mr P. He could therefore take an amount needed each year to pay for the holidays for that year alone and then take further money on this basis after evert year that went by.

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Mr P was not in a position to pay the interest element of the loan back at all, and neither were his family in this position, and so we discussed at length the amount that would be owed in say 5,10 and 15 years and what the property value might be at that time.

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The son of Mr P, who was present at our meetings, was happy with this and understood that future inheritance would not be as much as it might have been. He was just happy that his father was now able to make holiday trips again and that he and his family would be able to spend time each year away from home with his father.