Capital raising in retirement

Posted on 23 August 2012 by john

My mother is widowed, and 85. she has a good pension income, around £45,000, but does not have capital put aside.  She is looking at some home improvements to help with mobility, are there any companies that will lend to her on an interest only basis, given her age?  The house is valued at £450,000 and there are no loans or mortgage outstanding.


Halifax used to run a Retirement Home plan mortgage which allowed retired applicants to borrow money on an interest only basis.  With these the interest was paid monthly and the capital only repaid upon the death of the borrower or the sale of the property.  These are no only available to existing customers and I am only aware of one small building society who has a similar product.

More common are Equity Release mortgages, these are again arranged on an interest only basis but the interest is rolled up and repaid with the capital when the borrower moves into long term care, moves house or dies.  Because the interest rolls up, the debt on repayment can be substantially higher than the amount borrowed and any beneficiaries will get less than they might otherwise have expected.  For this reason we recommend that you get independent legal advise before arranging an Equity Release mortgage and any potential beneficiaries are kept fully informed of the plans.  Releasing equity may also affect any means tested state benefits and you mother needs to be made aware of this so that she can check her own position before going ahead.

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 arrange to an appointment with a firm of equity release specialists for you.


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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