For most people, property is regarded as a long-term investment that provides stability in the milieu of daily life. But when life’s circumstances change, particularly in later life, knowing what’s best in terms of using your property’s equity to support your plans can be a tricky area to navigate.
Downsize without selling your home
For some people, selling their property and downsizing is a simple solution. This route can be made even easier by the use of short-term borrowing in the form of a bridging loan to secure a new property while the main, current home is sold at the best rate possible, with the additional opportunity to undertake any required refurbishments prior to moving home.
For others the thought of selling a home which they would like to leave intact as a legacy for dependents is not the ideal solution and equity release can provide an option to enable the owners to stay in their home while creating a source of funds to maintain or improve quality of life.
Getting a Mortgage when you’re retired
If the property still has a mortgage to pay, there are new products available which are aimed at those already at or approaching retirement age. Retirement interest-only mortgages provide an affordable way to stay in your own home, and lenders are happy to look beyond the ‘cut-off’ applicant age of traditional mortgages, so long as pension or other sources of income demonstrate that they can meet the monthly repayments. There are a growing number of lenders offering this type of product, and with an anticipated peak in maturing, poorly performing endowment mortgages ahead, this area of property finance is likely to grow.
Retire abroad without selling your home
For many retirees, the prospect of enjoying their work-free years in a warmer climate is hugely appealing. ‘A place in the sun’ has been an attractive proposition that has led many people to sell their UK homes and move overseas and join the ex-pat community. However, one concern that many ponder is how they might afford to return to the UK should their circumstances change again.
One option is to retain a foothold on the UK property ladder, to provide both a potential source of income and a base to return to, should they need to do so. A recent client of NM Finance took the decision to take a buy-to-let mortgage against his own property, which he owned outright, at the age of 78. This released sufficient equity to purchase a property outright in the Philippines, where he wished to relocate to be close to his brother who had already moved to the country.
Although the applicant only had a small state pension as a source of income and no previous experience as a landlord, NM Finance was able to source a suitable buy-to-let mortgage on his UK property, which provided a rental income to support his new life in the Philippines.
Should he wish or need to return to the UK, he has peace-of-mind that he still has property to call upon or a continued source of income should he move elsewhere.
Despite being older than most traditional buy-to-let mortgage applicants, at 78, and wishing to release funds to be used to purchase property overseas, this case demonstrates the way that the mortgage industry is adapting to provide property finance for clients with complex or unusual needs. Undoubtedly working with an independent, whole-of-market mortgage broker such as NM Finance gave the applicant the best chance possible of finding a sympathetic lender who was willing to support his case. NM Finance’s expertise and knowledge of the market ensured his dream of ‘a place in the sun’ became a reality.