A lifetime mortgage could help your clients use the equity in their home to provide an income for their retirement. Here’s how it works.
We frequently work with clients who have amassed significant equity in their home but whose retirement income is insufficient to sustain their quality of life. A lifetime mortgage could provide a regular income for these clients, if they are able to raise funds on their home to use towards the deposit on one or more buy-to-let properties.
Here’s an example of how it works:
We worked with clients who were nearing retirement but had minimal provisions to give them a comfortable quality of life once they stopped working. Their only asset was their main residential property, which was unencumbered and worth around £400,000. The client wished to use this asset to generate a sensible income to enjoy retirement and it was advised that the purchase of high yielding buy-to-let properties would be a way of investing the capital to generate monthly income and potentially capital growth.
However, due to the client’s income and age it was not possible to obtain a standard residential mortgage and, as the client had no intention to move home, it was decided that a lifetime mortgage was the most appropriate solution in this scenario as there are no affordability checks as the underwriting is based on the age of the client and the property valuation.
The outcome was that, the client was able to raise £100,000 on a lifetime mortgage with no valuation fees or upfront costs and no monthly repayments, as the interest can be added to the loan. This has allowed the client to divide this sum into six deposits to purchase buy-to-let properties in the North East, which were each able to generate approximately £370 per month after the mortgage had been paid. This gave the client an income of well over £2,000 a month to use in retirement.
If you would like to discuss how your clients could generate an income for their retirement or anything else about lifetime mortgages, give Brightstar a call to discuss the possibilities.
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