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A real-life case study of why signposting is important - 

A recent example concerned a client referred to us by an IFA.

The client wanted to buy a new property for around £1.7m with finance of £600,000.

The pre-existing assumption was that the client would need equity release or, potentially, bridging finance as they had investments which would mature over the coming months.

The referral and assumptions were both made in utmost good faith and either product would, arguably, be suitable as, although the client’s evidenced income was comfortable, it was not enough to meet conventional affordability criteria.  

Bridging finance was quickly discounted due to the potential timescales for repayment but a lifetime mortgage would have provided the solution very neatly, except… the best interest rate available to the client at the time would have involved early repayment penalties of nine per cent in year one decreasing by one per cent each year meaning a hefty premium on repaying the loan as the client wished.  

By applying a holistic and thorough factfinding process we were able to use derived income from investments plus a detailed schedule of lump sum repayments to make a case to a mainstream lender who has accepted the case on a tracker product at 1.25 per cent less than the equivalent lifetime mortgage with no early repayment charges.

The savings and benefits to the client in cases like these are self-evident on a case-by-case basis but they are complex to convey within a financial promotion whereas the basic concepts of a lifetime mortgage – release tax-free cash, optional repayments, no negative equity, income assessed etc are relatively easy to convey and undeniably attractive.   

Are you or your current later-life referral partner signposting properly? 

Dan Osman - Head of Later Life Lending
07732 603230
https://ukmoneyman.com/campaigns/become-a-referral-partner/