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Using a Lifetime Mortgage to release equity to buy the retirement home of your dreams

All our life we have dreamed of moving out of the city to spend our retirement by the coast. We would love a property all on one level preferably with a much smaller garden. We have been looking at a property in the area we often visit on holiday and but realise even if we sold the home we have now we would not have enough to buy the perfect home without spending all our savings as well. We don’t have a mortgage but the area we really like and the property we have seen is beyond our budget. It’s such a disappointment, we wondered if we had any options? 

We don’t want to take out a mortgage with monthly payments at our time of life and have been reading about equity release mortgages but didn’t think we would be eligible because we want to move. We have good pensions to live on and our health and our children are very supportive of our plans. They realise this could reduce their inheritance but really want us to fulfil our lifetime dream.”

One of the most common motives for moving in retirement is to have a more practical and comfortable home in a more desirable area. The adviser from Apex CB explained that a Lifetime Mortgage could provide a lump sum secured against the new property to replace the savings that were required to buy the new home by the coast. Lifetime Mortgages are not like a standard mortgage where the borrowers’ income is assessed for affordability, the main criteria being the age of the youngest borrower and the value of the new house. As there are no monthly payments to make the couple’s pensions are free to give them a good lifestyle.

Despite the effect of interest being added to the loan, being in a desirable area the property is expected to increase in value in the long term*, so the children could still receive an inheritance. Despite using the equity from the current home they will still have access to money even after paying all the costs of moving, helping them to realise their retirement dream with the blessing of the family who can’t wait to come and visit.

*Since 1991 house prices have increased 270% and the average home is now worth nearly £300,000 for anyone over 45 (Nationwide House Price Index and Aviva Real Retirement Report 2016).

 

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