Equity release: upsizing to the house of your dreams

In this scenario, Lucy and Max are using a lifetime mortgage to supplement the purchase of a property which would otherwise be outside their reach.*

Lucy and Max Ford are a retired married couple aged 65 and 67. It has been their dream to move to a coastal village, and now that their children have moved away, they have no ties to where they currently live.

An equivalent property in the area they want to move to costs around £350,000. Their present home, on which they have no mortgage, is valued at £270,000, so they need to find an extra £80,000 to meet the cost of the new property.

They decide to release equity from their house by using a lifetime mortgage to supplement the purchase. Once they have found the property they want and a buyer for their current home, they simultaneously complete on the new house and release funds from the lifetime mortgage, enabling them to fund the price difference.

Their lifetime mortgage allows them to retain ownership of their home while guaranteeing no negative equity. It also gives them the option of monthly repayments if they want to reduce interest roll-up.

Things to consider

Before applying for equity release, weighing alternative options and looking at the possible effects on your finances is important. These include:

  • Downsizing and other forms of finance
  • Compound interest roll-up if chosen
  • Early repayment charges
  • Long-term care and state benefits considerations
  • A lifetime mortgage may impact the inheritance you leave

Get in touch

Speak to our Wealth Specialist, Toni Chalmers-Smith or Senior Associate Solicitor Catherine Banks at Tees today.

 *Examples of customer scenarios only. Every case will be different.

This material is intended for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice. Some information quoted was obtained from external sources we consider to be reliable.

Tees is a trading name of Tees Financial Limited, authorised and regulated by the Financial Conduct Authority. Its registered number is 211314.

Tees Financial Limited is registered in England and Wales, registered number 4342506.

Chat to the Author, Catherine Banks

Senior Associate, Residential Property, Bishop's Stortford office

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