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Using a Lifetime Mortgage to release equity to support a better lifestyle

“We are both our mid 60’s and have finally taken the decision to retire. We have paid off our mortgage on our large family home and have enough income from our pensions to cover our everyday needs. Luckily we are extremely healthy and love to travel, enjoy our hobbies and visit our grown up children abroad, so we have decided to buy a new motorhome.

Like a lot of our friends we have seen our home grow in value over the years but have not managed to save much. We don’t want to take out a mortgage with monthly payments and our children keep saying we should look at raising cash from our property so we can really enjoy our retirement. They are all doing well financially and realise this could reduce their inheritance but they don’t really want mum and dad to sell the family home they grew up in.”

The concept of Flexible Lifetime Mortgages is to provide flexibility & this comes in the form of a cash reserve facility which is set up when the plan starts. The only decision you need to make then is to decide, based on your current & future spending plans, how much you initially require.

The remaining cash facility you don’t take upfront is then held by the equity release provider until you decide to take further cash in the future. Cash reserves can be accessed usually with a quick telephone call to the lender, and without the need to fill in more forms. The good news is that you are only charged interest on the amount of equity actually taken initially, NOT on the cash left in the reserve facility. You can keep interest costs down using a flexible lifetime mortgage, where instead of taking a large lump sum all in one go, you borrow smaller amounts gradually as and when you need them to pay for your holidays. This can make a significant difference to the amount of interest owing later in life.

Their Apex CB adviser discussed a range of options with them, including serious consideration of downsizing the property, but they felt that after the cost of moving was taken into account there wouldn’t be enough spare money to achieve their goals. As there was only enough in savings to provide for emergencies a Flexible Lifetime Mortgage was deemed to be the best option. In this case the couple chose to start with a tax-free lump sum of £40,000 to purchase the motorhome, followed by a cash reserve from which they would draw £4,000 a year to cover their travel and leisure costs. The couple decided to involve their children in the decision and so the Apex CB adviser explained all of this to them using Facetime. They outlined the process and all the fees to ensure that they were comfortable and making the right decision. The children are very pleased that their parents can afford to visit them whenever they like in the new motorhome, and enjoy their retirement without having to sell the family home.

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