A man in his 70s and a woman in her 60s with a property worth £4 million.
Their existing lifetime mortgage of £1.6 million had a relatively high interest rate of just above 7%, which meant that the amount owing was increasing rapidly. The couple were concerned about the loss of equity from their property.
The existing lifetime mortgage was only in the name of the husband, which restricted the choice of lenders. It was not possible to switch the mortgage into joint names because of a 13-year age gap and because there was insufficient equity in the property.
Tailored solution provided by John Lamb Hill Oldridge
We recommended a new lifetime mortgage with a lower interest rate. The new loan amount was £1.7 million, providing enough to pay off the previous mortgage and also to pay £60,000 in early repayment charges. The remaining funds were to be used for various home improvements and to provide the clients with liquidity for the future, in the absence of any other accessible funds.
Despite these early repayment charges and the increased borrowing, the reduction in interest rate meant the clients would have £23,000 more equity in their property after only three years than would have been the case had they remained on their previous deal. This benefit will only increase further over time with almost £600,000 in equity in the property after 10 years.
This shows that although the product is known as a lifetime mortgage, the option to remortgage may be available. If you want to find out more about remortgaging to a more favourable arrangement, please get in touch with John Lamb Hill Oldridge today.