Capital Raising in Retirement

Posted on 18 August 2012 by Gwen


I am a retired nurse aged 78. I own my own home with no mortgage and would like to borrow £60,000. Current house value is around £135,000. I have my state and NHS pension of around £1000 per month and my daughter will also help pay the loan back with around £900 per month wages. Can you suggest the best way to do this please?

Gwen

The market for ordinary residential mortgages is severely restricted for people aged over 75.  Only a handful of lenders have no age restriction and they are very careful who they will lend to and on what terms.  Unless your daughter is also named on the mortgage and can afford this in addition to any of her own commitments it is unlikely her income will be taken into account when calculating how much you can borrow. 

The easiest way for you to borrow the money is by taking an Equity Release mortgage.  These are lifetime mortgages where the amount you can borrow is based on your age and the property value and not your income.  The reason for this is there is no requirement to make monthly payments and the interest charged is added to the loan, only being repaid when the property is sold, you go into long term care or on your death.  You would need to take independent legal and financial advice because they can drastically reduce the amount of your estate and the lump sum released may affect your tax position and any entitlement to means tested benefits.  It is also recommended that you include your family in any decisions because of the reduction in any inheritance that they may otherwise receive.

I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you find the right solution for your situation.

Peter

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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