Mr and Mrs Gold are directors of their own successful IT and property development business and need a mortgage to fund the purchase of a holiday home.
Flexibility is a key consideration for them, as they have no immediate plans to fully retire. They wish to repay the loan in full at some point in the future, but don’t want to have a specific timescale for doing so.
The Retirement Mortgage may be suitable for Mr and Mrs Gold as it has no pre-defined end date, it offers a Flexible Repayment Option for capital overpayments, and there are no early repayment charges after 5 years.
||SIPP Pension Fund £560,000
||Defined benefit pension income: £13,427 per annum
Defined contribution pension income: £3,118 per annum
|Other Eligible Income
£150,000 per annum
|Rental Income: £3,000 per annum
Investment Income: £7,000 per annum
A Retirement Mortgage of £200,000 could allow Mr and Mrs Gold to buy their holiday home. In this particular case, whilst earned income is high, affordability of the load has to be maintained after retirement. As such the affordability assessment would include consideration of investment and rental income along with pension income.
This is a lifetime mortgage. It’s important your client understands the features and risks so provide a personalised illustration. The home may be repossessed if repayments are not kept up on the mortgage.
The Retirement Mortgage is a lifetime mortgage, meaning that the capital does not have to be repaid until death or until the mortgagee(s) enter into long term care. It has been designed as a flexible way of borrowing into retirement of those with retirement income who wish to repay the monthly interest.