Case Study - How a Lifetime Mortgage Helped Fund My Divorce
Lifetime mortgages are a highly regulated financial solution that can help later-life clients access the capital locked up in their homes without having to sell their home.
They provide a way to release tax-free funds for various purposes, such as funding a divorce, as in the case of Ms P.
Ms P, aged 61yrs old and going through a difficult divorce, agreed to buy out her ex-husband from the marital home, which she wanted to keep.
Whilst she had savings, she needed to raise a further £136,000. Her solicitor suggested she consider a Lifetime Mortgage plan to raise the shortfall amount against the property, as she was not working at the time and had no income.
She was referred to Prab Singh, an equity release specialist with 20 years of experience in the industry, who recommended a Lifetime Mortgage as a suitable solution.
Here is how he addressed her concerns:
Security to stay in her home for life: The Lifetime mortgage offered tenure for life to Ms P, allowing her to stay in her property for the rest of her life if she wanted. The mortgage is repayable upon her passing away or moving into long-term care.
Flexible repayment options: Ms P wanted the flexibility to make repayments to prevent the interest from rolling up over time once she found a job. The Lifetime mortgage allowed her to make voluntary repayments of up to 10% per annum on a regular or ad hoc basis. She could also choose to make interest-only repayments or decide not to make any repayments at all, giving her the flexibility, security, and freedom to make payments when it suited her without the risk of repossession.
Downsize: Ms P also had the option to downsize her property, penalty-free after 5 years, as she was unsure of her future plans.
Knowledge of mortgage balance: Ms P wanted to know how much the mortgage balance would increase if she made no payments. The Lifetime Mortgage that Prab recommended offered a fixed interest rate for life and she would receive an annual mortgage statement.
Independent legal advice: Ms P received independent legal advice before proceeding with the Lifetime Mortgage.
In addition to these benefits, the Lifetime Mortgage plan that Prab recommended offered Ms P:
A No Negative Equity Guarantee
Ability to move home and port the plan, subject to approval
Ability to redeem the mortgage at any time, subject to any early repayment charges if applicable
Funds released to her Tax-Free
5 Star Review
Ms P was delighted with the outcome and the service provided by Prab Singh throughout the whole process. She was happy that he recommended a solution that not only offered her numerous flexibilities, but also security of tenure and protected her from the threat of repossession.
Prab has helped me tremendously right from the start, explaining all the potential risks involved and the benefits of the mortgage, which has helped me through a very stressful time.
He always kept me in the loop with all the steps involved with solicitors, etc.
I would highly recommend Prab Singh and he is a total asset to your company. Thank you.
Posted by Ms P. - Middlesex - 13/12/2023
Here is how Prab addressed her concerns...
Security to stay in her home for life: The lifetime mortgage allowed Mrs A to stay in her property for the rest of her life. The repayment of the mortgage is only triggered when the last surviving borrower passes away or moves into a care home.
Flexible repayment options: Mrs A wanted the flexibility to make repayments to prevent the interest from rolling up over time. The recommended lifetime mortgage allowed her to make repayments of up to 10% per annum. She could also choose to make interest-only repayments or decide not to make any repayments at all, giving her the freedom to fund future care costs without the risk of repossession.
Knowledge of mortgage balance: Mrs A wanted to know how much the mortgage balance would increase if she made no payments. The lifetime mortgage Prab recommended offered a fixed interest rate for life, which allowed her to know the mortgage balance each year.
Independent legal advice: Mrs A received independent legal advice before proceeding with the lifetime mortgage. This is a crucial step to ensure that the individual fully understands the implications and consequences of the financial decision.
In addition to arranging the equity release mortgage, Prab referred Mrs A to a care fees specialist.
Prab Singh
After exploring a wide range of options, the care fees specialist recommended using the equity release cash to purchase a care fees annuity.
The care annuity provided several benefits:
Guaranteed income for life: The care annuity offered a guaranteed index-linked income for the rest of Mrs A's life, providing financial stability and peace of mind.
Flexibility in changing circumstances: The annuity income would continue to be paid even if Mrs A's circumstances changed and she had to move into a care home.
Tax-free income: The annuity income when paid to a registered care provider paid tax-free, maximising the funds available for care expenses.
5 Star Review
"Acting for my 95-year-old Aunt, I was looking for a means to raise funding for her long-term care. She was close to exhausting her liquid cash assets and needed to find some way to use the capital locked up in her home to finance the care.
Prab looked at the range of products that might be available to help my aunt in this situation and found that most were not available to a person of her age. He eventually found an Equity Release/Lifetime mortgage product that addressed the problem."
Posted by RM - 02/06/2023
As you can see, Mrs A and her family were satisfied with the outcome and the service provided by Prab Singh. They felt that they were offered a safe, secure, and guaranteed solution to cover Mrs A's live-in care costs.
If you are interested in exploring how equity release could help you or your loved ones with long-term care financing, call Prab Singh on 07966 060 535.
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