By the end of 2019, the later life lending market is expected to be valued at £295 billion and it’s estimated that will rise to £548 billion by 2029, representing an 85% increase over a decade [i].
Why such growth? Well, we are all living longer and property prices are higher decade-on-decade. The mainstream mortgage market has changed significantly to cater for this audience, meaning there are more products available and these can sometimes be of help to our clients. However, our focus on finding bespoke solutions means that the majority of our large, later life mortgages are negotiated through the private bank sector.
Our recent case was a perfect example of this. Our clients were in their late 70s and early 80s with a home valued at £10m. Their existing £2.5m facility was coming to an end and the private bank they had worked with was looking for the clients to repay the mortgage due to their age.
The clients did not only wish to renew this £2.5m mortgage, they were also seeking to raise an additional £2m to fund the property’s upkeep and their living expenses. Their income was modest in relation to the size of the loan they were seeking and most lifetime mortgage lenders will only offer a maximum amount of £3m or 30% of the value of the property
It wasn’t a straightforward case to resolve. However, our relationships with decision makers meant that we were able to identify a private bank who were open to the case and negotiate a Lifetime Mortgage to suit all of our client’s requirements
|Rate:||Fixed lifetime rate of 5.32%|
|Loan To Value:||45%|
|APRC:||Overall cost for comparison 5.50% APRC representative variable|
|Type:||Interest roll up|
|Lenders arrangement fee:||None|
|Early repayment charge:||10% of the amount repaid in the first 5 years, reducing to 5% for the following 5 years|
The overall cost for comparison is 5.50% APRC representative variable based on monthly payments at the lenders fixed rate of 5.32% for the life of the mortgage.
A lifetime mortgage is a loan secured against your home. Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits. Home reversion plans and lifetime mortgages are complex products. To understand the features and risks, ask for a personalised illustration. If you are in doubt, seek independent legal and financial advice.