How much can I release?
Lifetime mortgages have a whole range of flexible options today, including plans that allow you to withdraw as little as £10,000 and up to 55% of the value of your home.
A drawdown lifetime mortgage allows you to agree an amount that you can withdraw, although you don’t have to take it all in one go.
For example, you could agree a £60,000 total lifetime mortgage facility and access just £10,000 of it in the first instance.
That means you’ll only pay interest on that £10,000 until you opt to make another withdrawal. It’s a neat way to provide yourself with extra peace of mind that, should you be needing the cash in the future, it’s easily accessible.
Richard and Julia are both in their eighties, based in Lancaster and retired. Like so many, they saved long and hard to pay off their home so they could enjoy their retirement mortgage-free. But when they realised that their loved ones could really do with some support, Jon, a retired engineer, revisited the idea of releasing some equity from their home.
‘Equity release is something we had considered for many years,’ says Richard.
‘But our daughter Ruth’s car had just scraped through its MOT and was threatening to become a money pit, our grandson, Oliver, had bought his first home, but had nothing left over to furnish it with, and his sister, Naomi, needed help with university fees – she had just won a place at drama school.
‘This is why we felt it was a good time to look into equity release – at a time when money was needed.’
Having bought their bungalow more than 40 years before, Richard and Julia were in a good position to consider equity release. Richard did a lot of research and decided to get in touch with Key.
‘We wanted to go to a company that was totally reliable,’ he says.
Key arranged for their adviser, Jeff, to visit the couple at their home, and both Ruth and Oliver were there to find out more.
‘I always make sure my clients have given full consideration to other options, such as downsizing, using existing funds and help from family,’ says Jeff.
‘In this case, they were helping their family. That’s often the case these days.’
‘I had a long list of questions I’d prepared; Jeff answered every single one of them and was honest,’ says Richard. ‘It was obvious he had our best interest at heart. He wasn’t pushy, he didn’t pressure us and he gave us the pitfalls as well as the upsides. I don’t go into things lightly where money is concerned.’
Jeff talked the family through the costs involved and explained how the interest accrues over the lifetime of the loan.
‘A lot of people look for reassurance, asking questions such as, “Do many people do this now?” I think many grandparents are concerned about leaving an inheritance for their children and are worried that it’s a selfish act.
‘However, I explain how with some plans you can guarantee an inheritance. And with the money you release now, you can give a living inheritance and see your family enjoy the money when they need it most, just like Richard and Julia have done.’
With the cash raised and money released, the couple helped Ruth to buy a reliable new car and had money left over to help Oliver and Naomi.
‘From Jeff’s first visit and right through the whole procedure, everything has gone smoothly. We’ve made five people very happy,’ says Richard.
‘It’s well worth making that initial enquiry. It won’t cost you a penny and there is certainly no arm-twisting to contend with.’