SITUATION

We were referred a married couple in their 70's who had previously run their own businesses and had invested most of their earnings into their main residence. They were now mortgage free but had very little in the way of pension provisions. They had both recently retired and were struggling to get by on their current pension arrangements.

Their property was valued in excess of £2m and they had small amounts of cash available for emergencies. Their main concerns were:

1. Making sure they had adequate income in retirement
2. Reducing the inheritance tax burden on their children
3. Giving some money to their children to help them buy a property

We discovered that the monthly shortfall between their income and expenditure was £500 per month. We also established that their son required £100,000 as a deposit on a property that he wanted to purchase.

"By taking these steps, it allowed us to become financially secure and relax and enjoy retirement"

SOLUTION

We arranged an equity release on their main residence for an initial £100,000 with a drawdown facility. (The minimum drawdown from the recommended provider was £2,000 so we set this up to be paid every 4 months) This allowed our clients to effectively take out a lifetime mortgage on their main residence with the interest rolling up. The equity release provider was a member of the Equity Release Council and so the provider guarantees that the debt will never be greater than the value of the property, and the rate on the equity release was fixed for life.

The subsequent income drawdowns would be based on the interest rate at the time, but by having a drawdown facility, this resulted in as little interest rolling up as possible.

The £100,000 was released to allow their son to buy his property and now the clients are happily drawing the income they require from their property to sustain them in retirement.