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Lifetime mortgage for consolidation of debts and home improvements

  • A woman in her 60s struggling to service debts
  • Lifetime mortgage recommended to pay off her debts and provide funds for home improvements and an emergency fund
  • Client now has increased disposable income to either build up her savings or reduce her lifetime mortgage balance

Client’s circumstances

A single woman in her 60s with a property valued at £400,000.

Issues addressed 

The client had £25,000 in credit card and loan debt. It was costing her £600 per month to repay these debts, so this was having an impact on day-to-day living, even though her monthly income was £1,800.

She also wanted to carry out some home improvements but had no savings and was unable to obtain further credit due to her impaired credit history.

She would have been unable to raise funds against her property via a standard residential mortgage as she would be likely to fail the lenders’ income and affordability assessments, and her credit history was poor as well.

Tailored solution provided by John Lamb Hill Oldridge

We recommended a lifetime mortgage for £37,500. This provided sufficient funds to clear her existing debts, provide the funds she required for home improvements and give her a small extra amount to use as an emergency fund.

A lifetime mortgage is based on age and property value rather than affordability so the client’s income was not taken into account. We were also able to include a drawdown facility to provide her with financial security for the future.

The initial loan amount released had an interest rate of just 2.30%, fixed for life. This reduced the costs of servicing her debt from the original £600 per month to just £63, to cover the interest only.

As a result of our recommendation, the client now has much more disposable income. She now has the choice of using this income to build up her savings or to reduce the balance on the lifetime mortgage – her new mortgage lender allows her to make voluntary repayments of up to 10%.

This example illustrates how a lifetime mortgage can be an effective solution for some clients who might be struggling with debt repayments. If you believe a lifetime mortgage might be the solution to your issues, please call John Lamb Hill Oldridge today for the very best advice.

Other Case Studies

Re-mortgaging a lifetime mortgage to a more beneficial arrangement

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A recently widowed man in his 80s. His existing lifetime mortgage had an interest rate above 6% and there was no facility to make fee-free repayments due to being an older product, which was far from an ideal arrangement. He was also due to inherit a large cash lump sum and wanted to use some of this to reduce the debt secured against his property

Re-mortgaging from an interest only mortgage to a lifetime mortgage

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A married couple in their early 70s, who had recently retired after selling their business. Their interest-only mortgage would shortly come to an end. Although they now had large savings and individual pension funds, they did not have sufficient regular income to meet the affordability requirements needed for a standard residential mortgage.