Lifetime Mortgage
Alan & Diane live in Milton Keynes, were aged 65 and 62 respectively and owned a property then valued at £225,000 on which they had no mortgage. They approached me in August 2007 with the intention of raising £60,000 which was to be used to purchase a static caravan and to trade in their current narrow boat for a more expensive one. Alan & Diane had sufficient income to meet their day-to-day needs but did not want to enter into a loan arrangement which would result in monthly repayments which would be a drain on their private and state pensions.
I met Alan & Diane and went through with them a comprehensive questionnaire aimed at establishing, firstly, whether there was any other means of raising some or all of the required funds. In the event we agreed that £5,000 of their existing emergency fund could safely be used towards the proposed transactions. At that meeting Alan & Diane disclosed that although the purchase of the static caravan was imminent the trading in of the narrow boat for a new one was unlikely to take place for some months.
After my initial meeting with the customers I carried out research amongst all of the relevant lenders to establish one which offered a lifetime mortgage at a competitive rate of interest but which also provided a "drawdown" arrangement so that the funds could be taken in instalments. I met Alan & Diane again, they agreed with my proposal and made a successful application to the lender concerned.
As a result of my advice Alan & Diane benefited in the following ways:-
1. Because the amount borrowed was slightly less than anticipated, less interest is being charged on their loan.
2. Because not all of the expenditure was to be incurred immediately, interest will only be charged on subsequent drawdowns as and when funds are needed.
3. Because I offer a "whole of market" service" I was able to secure the required funds at the best possible interest rate and so the debt will increase more slowly than would otherwise be the case.
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This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.