Equity Release Case Studies
Please find below a number of Equity Release case studies based on real-life customer scenarios, and see how Equity Release has already worked for SYH Charterhouse customers with a range of different personal circumstances and financial requirements.
Please note: customer’s names have been changed to protect their anonymity.
70 year old male
Property value of £400,000
Required funds to pay for a divorce settlement
Divorce is an unfortunate situation, but one that a number of couples find themselves having to face. In some cases, Equity Release can help with this difficult transition by enabling one party to stay in the property whilst a suitable settlement can be made to the other party.
This was the case with one SYH Charterhouse client, Mr. Grant who required £80,000 to pay a divorce settlement to his estranged wife. Having lived in his property for a great many years, he was intent on remaining in his home after their separation.
Located on a large piece of land close to the business that he owned in Wales, Mr. Grant’s property offered him the versatility he required to store his private collection of cars as well as a number of business vehicles. Mr. Grant had made a great number of improvements to his property over the period of time he had lived there, and he felt sure that he would not find a property as suitable for his needs if he were to relocate, particularly given the current economic climate.
Whilst Mr. Grant had a small number of investments and funds, it was not enough to pay for the divorce settlement, and he therefore decided to take out an Equity Release plan through SYH Charterhouse to raise the additional amounts.
Mr. Grant’s property was valued by an independent Chartered Surveyor at £400,000 and although this was £50,000 less than Mr. Grant had anticipated, it enabled him to raise a total of £120,000, with which he could pay off the remainder of his mortgage and provide the required £80,000 for the divorce settlement.
Having run a successful business for many years, Mr. Grant elected to take out a plan that would provide him with the flexibility to made ad-hoc payments towards the loan if and when he elected to, in order to limit the amount of interest accruing over the years. Depending on the success of his business, he may even redeem the Lifetime Mortgage in full at some time in the future – and with his particular plan, he is able to do so without penalty. In the meantime Mr. Grant is not required to make any monthly repayments as the interest simply rolls up and is added to the original loan amount.
Equity Release has enabled Mr. Grant to clear his mortgage, pay his divorce settlement and remain in the property that he loves, all with the added flexibility to repay part or the entire amount borrowed at some point in the future, should he so wish.
Couple – male 61, female 60
Realising their caravan dreams
Mr. & Mrs. Harris love caravanning, spending as much time as possible on the south coast of England in the static caravan they inherited 15 years ago from Mr. Harris’s parents. After a great many years of use however, the caravan had become very tired and when the time came to renew their lease at the site, Mr. & Mrs. Harris saw this as a perfect opportunity to upgrade to the caravan they had always dreamed of, with a more appealing position within the grounds.
Due to Mr. & Mrs. Harris’s low incomes, they did not feel that they were in a position to take out finance on a new caravan on top of their existing mortgage, as the monthly payments would be far too high for them to manage. With little savings and without family members who could help them financially, Mr. & Mrs. Harris approached SYH Charterhouse in order to discuss the ways in which Equity Release could help them to release the funds they required for their dream caravan, whilst enabling them to stay in the home they loved, close to their family and friends.
In order to clear their mortgage of £15,000 and purchase their dream caravan for just over £30,000, the couple elected to release the maximum lump sum available to them. They were able to release £50,700 from their property which was valued £195,000.
Equity Release has enabled Mr. & Mrs. Harris to realise their dream of purchasing their ideal caravan in a location they love, whilst enabling them to remain in their home without being tied to monthly repayments, setting them up for more enjoyable and relaxed retirement.
Single pensioner, aged 76
Financial freedom during her golden years
76 year-old pensioner Mrs. Murray approached SYH Charterhouse in early 2009. As a fit and active retiree, she was looking to unlock some of the money tied up in her home in order to have more financial freedom to do the things she had always wanted to do in her golden years. Initially, she wished to clear her remaining mortgage and purchase a new car, but she also wanted the option to release further funds at a later date for other aspirations – such as holidays with friends and alterations to her property.
Although Mrs. Murray had some initial concerns about reducing the inheritance she would leave to her two children if she went ahead with an Equity Release plan, her children actively encouraged her to pursue her wants. Having helped them both on to the property ladder some years earlier, they believed that she should make the most of the hard earned capital she had built up over the years and enjoy her retirement as she wished.
With a property worth £250,000 she was able to release an initial lump sum of £50,000 and also keep an additional £50,000 in a drawdown facility, enabling her to draw down additional funds at any time in the future at her will. The benefit to Mrs. Murray of this type of Equity Release plan is that she only ever incurs interest on the amount she has drawn down, so if she doesn’t decide to use the draw down portion she will never incur interest on it. Mrs. Murray felt this was the best option for her as she was unsure at which point in the future the additional monies would be required.
By releasing equity with this particular provider, Mrs. Murray did not have to pay any valuation or set up fees – the only fees she incurred were from her solicitor and the SYH Charterhouse advice fee.
Mrs. Murray can now enjoy the rest of her retirement without any financial concerns or worries, content in the knowledge that she has additional funds available to draw down, if and when she requires them.
78 year old male, living alone
Raising funds for a loft conversion enabling him to move in with his family
78 year old widower Mr. Donaldson had found living alone extremely difficult after the recent death of his wife. Concerned for her father, Mr. Donaldson’s daughter and son in law were determined to find a way for him to be able to live with them in their family home. The problem was a lack of space and in order for everyone to be comfortable in the same house, a loft conversion was required to create Mr. Donaldson’s own living space. Unfortunately neither Mr. Donaldson nor his family were able to raise the funds needed to convert the home as required.
Having researched Equity Release online, Mr. Donaldson’s daughter contacted SYH Charterhouse to ascertain if Equity Release could provide a solution to the family’s situation. After discussing all of their potential options with the specialists at SYH Charterhouse, a solution was found and Mr. Donaldson proceeded with a Lifetime Mortgage to raise the funds required.
With his property valued at £200,000, Mr. Donaldson was able to raise £60,000 for the loft conversion at his daughter’s home. After five months, the work had been completed and Mr. Donaldson was able to move in with his daughter and her family. She wanted to take over her father’s property and subsequently redeemed the Lifetime Mortgage with a buy-to-let arrangement. They had this in mind when raising the funds and were advised to select a Lifetime Mortgage that allowed them to pay off the sums borrowed at any time without penalty. The Lifetime Mortgage was redeemed and Mrs. Donaldson’s daughter now owns the former family home.
In this particular case, Equity Release provided a much needed and timely solution to the family’s dilemma, providing Mr. Donaldson with the cash funds his family needed to change his living situation for the better, whilst enabling his daughter to take over ownership of his former property as an investment opportunity.
Equity Release may involve a Lifetime Mortgage or a Home Reversion plan. To understand the features and risks, please ask for a Personal Illustration.