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Caste study: Using Equity Release to gift a house deposit

One of the options for homeowners aged 55 or over, who want to give children or grandchildren money to buy a home, is to consider releasing equity from their own property. Equity release could allow you to give them their inheritance early, offering you the chance to see this money being put to use when it is needed.

Our Case Study shows how this works...

Mr and Mrs Edwards are both in their late 60s, they have their only daughter Rebecca who has a son of her own called Michael. Michael, Mr and Mrs Edwards grandson, has recently finished his degree and started full time employment as an accountant. His girlfriend has recently fallen pregnant, so Michael is desperate to move out from living with his mum to be able to provide for his new baby on the way. Michael has next to no savings as he needed them to help him through his time at university. He wants to stay in the same area as his mum and his grandparents but due to costs of houses in the area, he and his girlfriend are unable to save enough for a deposit.

The solution?

Mr and Mrs Edwards contact their financial adviser to see if they would be able to help Michael and his girlfriend. However, in conversation, their financial adviser let them know that Mrs and Mr Edwards are able to gift Michael his inheritance early. As Mr and Mrs Edwards own their house outright, they are able to use a lifetime mortgage to take out £20,000 of tax-free cash from their property and gift it in its entirety to Michael – giving him a great head start to be able to get on the property ladder. In fact, he is able to get a property right in the village with his mum and grandparents.

7 years later

After a few years in retirement, with their state pensions and a bit of a private pension, Mr and Mrs Edwards seek advice again from their financial adviser about the prospect of using a lifetime mortgage to enable them to enjoy their retirement a bit more comfortably. Their financial adviser went back to the lender to discuss a re-mortgage. As the property had already gone up in value, they were able to receive another £30,000 in a form of a drawdown. This meant, Mr and Mrs Edwards could take out the money as and when they wanted to spend it and they only accumulated interest on the amount they spent. Rebecca was more than happy for her parents to use their tied-up equity as funding, so she can see them live the rest of their lives as best they can.

Get in touch today to explore how a lifetime mortgage can help your loved ones onto the property ladder.

SPEAK TO AN ADVISER

This is a lifetime mortgage. to understand the features and risks, ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice. A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.

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Fairview Financial Ltd is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. Fairview Financial Ltd is registered in England and Wales no: 10912424. Registered office: 107 Promenade, Cheltenham, GL50 1NW.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

@ 2020 by Fairview Financial

Our Fees        

A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.

Our standard fee for mortgages is £395 and this is paid when the mortgage is offered. We charge a fee of £295 First-Time Buyers. Other fees may apply depending on the complexity of the work involved or loan amount. The maximum fee we can charge is £795.

Our standard fee for Equity Release is £895 and this is paid on completion.

We also receive a commission from the lender that will vary depending on the lender, product or other permissible factors. The nature of any commission model will be confirmed to you before you proceed. If we receive a commission, this will not affect the cost payable by you.

THINK CAREFULLY ABOUT SECURING OTHER DEBTS AGAINST YOUR HOME.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.

BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

EQUITY RELEASE: THIS IS A LIFETIME MORTGAGE. TO UNDERSTAND THE FEATURES AND RISKS, PLEASE ASK FOR A PERSONALISED ILLUSTRATION. CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE.


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