Mr & Mrs Williams are aged 75 & 66 and are both self-employed in administrative positions for a London firm that they own and run. They intend to retire at age 80. Their outstanding mortgage is £100,000 and wish to borrow £500,000 in order to clear their existing mortgage and also £50,000 of existing debt. The remainder would be gifted to their children to buy a property.
Their property is currently valued at £1.1 million. They requested a 5 year term on a 2 year fixed rate of 3.49%. They have chosen downsizing as their preferred repayment strategy, wanting to remain in their existing property for the next 5 years and plan to look for something smaller.
Both applicants earn self-employed income – Mr Williams with £105,000 and £35,000 for Mrs Williams. Upon retirement, both will receive a full state pension and they are also in receipt of combined rental income of £33,000 per annum, most of which is currently paid to Mrs Williams.
The 55+ Mortgage from Hodge Lifetime could be offered for the £500,000 loan amount requested. This provides the Williams’s with the flexibility to pay off their mortgage and debts making them better off month to month financially. They’re also able to provide an early inheritance with peace of mind that their children can join the property ladder thanks to their help.
Why does this case work?
Income is acceptable as both Mr & Mrs Williams have good levels of self-employed income, with Mrs Williams receiving most of the rental income on top of her salary. This means the case remains affordable for both customers for the 5-year term requested.
As both Mr & Mrs Williams undertake office based duties in their roles, we consider it feasible that they could work until age 80. Therefore, we take 100% of this income into consideration.
Downsizing is an acceptable strategy because there is more than £150,000 equity left in the property after the loan has been taken out. As the property was worth over £1 million it was referred to property underwriters who confirmed its acceptability.