Managing separation, later in life
- Our clients were an East Midlands couple who were separating in later life. Prior to coming to us, the client had completed their own research on trying to raise a mortgage to buy their partner out of the family home. However, they couldn’t find a solution which would raise a mortgage sufficient to do so.
- The client did have a small income, but it was insufficient to support a traditional mortgage. They were stuck at a crossroads and didn’t know what to do next.
- We presented the client with several options, however, not all of them were suitable for their circumstances.
- The first was to sell the family home and split the assets. This would have meant my client significantly downsizing, with associated moving costs and stamp duty on top. One thing was clear, my client wished to remain in the family home.
- They felt property prices were rising and believed it would have better prospects of capital growth.
They understood the cost of maintaining the home and due to its excellent condition, it was affordable to remain there on an upkeep basis.
- My client had children to whom they would like to benefit from their estate, including the equity in the home. They didn’t want to erode their equity so didn’t want to increase the debt by rolling up interest. They had to be smart about their decision as it would affect their children’s financial future.
- Our client was correct in thinking that a traditional mortgage wouldn’t have been a solution.
Therefore, a lifetime mortgage was the route to go down.
- Interest payments could be made on a voluntary basis and, consequently, are dependent on an income assessment by the lender. This allowed my client to borrow sufficient to buy out their partner and still be able to afford to pay the interest.
Sufficient funds were raised to enable the buyout of their partner.
My client was able to remain in their property.
The lifetime mortgage has an interest rate fixed for life, giving security of knowing how much the interest payments to the lender would be.
The client had sufficient income to pay for the interest so that the debt did not grow, safeguarding the equity for their children.