Ms Monk, a 69-year-old single lady, had been in touch with her mortgage adviser. She was extremely distraught after learning that her mortgage provider was about to start court proceedings against her for the re-possession of her home.
The term on Ms Monk’s existing interest only mortgage ended in 2012 when she was 65, at which point she still owed £155,000. Her provider had allowed monthly repayments to continue until very recently. This was based on finding a new lender which meant her credit record had not been affected. Other lenders had not been forthcoming due to age and circumstances, so Ms Monk had now been advised that the arrangement could not continue.
Extending the term of the mortgage was not an option. Ms Monk couldn’t meet the current lender’s criteria on age and affordability. Her mortgage adviser contacted Hodge Lifetime to discuss the circumstances.
Ms Monk was still working, earning £28,000 as a self-employed legal consultant and in receipt of a public-sector pension totalling £11,500 per year. Additionally, Ms Monk had a personal pension fund of £123,000 and a state pension she had deferred but that could be taken if required.
The total loan requested was £155,000 over a ten-year term. This would be used to clear in full her existing mortgage, allowing Ms Monk to remain in her home and regain peace of mind. Additionally, the loan would enable the monthly mortgage payments to drop from £563 to £402 (based on the 55+Mortgage 2-year fixed rate product and an interest rate of 3.10%).
Ms Monk’s property was valued at £400,000. As she planned to retire and move closer to family at age 80, downsizing as the repayment vehicle was a perfect choice. The
Hodge Lifetime 55+ Mortgage meant a loan of £155,000 was approved over a 10-year term. As a responsible lender, Hodge Lifetime considered not only her self-employed income but her pension income both current and future.
Why does this case work?
Due to the nature of Ms Monk’s work, which was mainly office based, it was considered acceptable that her self-employed income could be taken into account until aged 80, producing two years SA302’s as evidence to support her income.
Ms Monk’s current and additional pension availability could be used for affordability purposes, her current ‘in payment’ pension being used as income, supported by her ability to draw on both her state and personal pensions if she decided to give up work prior to the term of the mortgage ending. Bank and pension statements were used to evidence her payments and projections.
The loan size requested was agreed as it was less than 60% of the total property value (the maximum LTV that Hodge Lifetime can consider for 55+ is 60%). Downsizing was an acceptable repayment strategy as there was more than £150,000 equity left in the property after the loan had been taken out.
Hodge Lifetime were very happy to have helped restore this customer’s peace of mind in a situation where she thought there were simply no options available. Our personal approach to underwriting and our understanding that there is no such thing as a typical customer or a typical retirement meant that we could assist where many other lenders would not.