Raising capital with equity release to pay off outstanding mortgage balance
What was the situation?
I was approached by a referred client who had historically been left in an awful position after their partner passed away suddenly at the age of 42.
At the time, and with two children to raise, the client collected together enough money to raise a deposit, therefore enabling them to purchase a property with a standard interest only residential mortgage.
Fast forward 15 years and with an outstanding balance to settle, the client was looking to explore their options now they were about to embark on their retirement and did not wish to sell the property, their family home.
What was the issue?
External family commitments meant that repaying the loan at the end of term was difficult, and with the lender chasing for repayment of the loan, the client approached me for my help.
Initially, the client was sceptical about an Equity Release mortgage and shared their concerns with me. Their end goal was to own their own property and not have to move, being able to leave an inheritance to their children which was something they had not experienced themselves.
What was the process?
After discussing their concerns in more detail, it became apparent that the client was unaware of a significant advantage of equity release mortgages; the client retains 100% ownership of the property and many later life or equity release mortgages enable the customer to make full or partial payments to negate or reduce the effect of the compounding interest.
What was the solution?
Following our discussion, I advised that an equity release mortgage would be the best solution. I was able to arrange a loan for £135,000, with an added benefit of being able to make regular overpayments of up to 10% of the initial loan.
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