Customer Scenario

Margaret Davis

Margaret was married to George who was 68 and they had an interest only mortgage. George retired on his 68th birthday and their mortgage  was due to end, however, they had no provision in place to repay the mortgage and when the interest only feature expired. The bank allowed the couple to extend the term for a further 2 years. Sadly, George passed away suddenly and Margaret is now left with a debt she is unable to repay. 

Margaret is worried when the extension comes to an end she will still be unable to repay the debt and faces the prospect of selling her beloved home. 

The property is valued at £250,000 with an outstanding mortgage of £95,000. As Margaret is now on her own and aged 75 it is difficult to find anyone who will lend enough money to repay the debt. 

A lifetime mortgage will only release £87,500 leaving Mrs Davis £7,500 short. 
The interest only mortgage is currently on a rate of 4% and she is paying £316 per month. As her income has reduced this repayment is now higher than she can afford. 

Bridgewater can offer Margaret a Home Reversion with Fixed rent and an option to stop her rent at 80. Based on her age, property value and a £200 per month rental payment she could receive a release of £107,751 which would comfortably repay her debt and allow her to remain in her home. 

The product also comes with an Early Vacancy Guarantee so if anything should happen to Margaret within the first 5 years her estate would benefit from a further payment of £92,249. 

The plan comes with many options, higher releases could be obtained if rent was changed to increasing or paid throughout her life. 

Having spoken at length with an advisor and discussing all the options and what is best for Margaret, a decision has been made to opt for a 90% release with £200 rent per month. Rent will be fixed and cease at 80. The release amount is £97,854 which is sufficient to repay the debt, allow the monthly payment currently being made to reduce, giving Margaret comfort that she can easily afford the rent and stay in her own home. 
Benefits to the Margaret: 
  • Ability to live in the home she loves.
  • Rental payment is affordable and fixed for 5 years.
  • The mortgage is repaid.
  • The rent will cease at age 80.
  • Should she die within the first 5 years her estate would receive a further payment as part of the Early Vacancy Guarantee.
N.B - A home reversion plan involves selling part or all of your property.

The above customer scenario is for illustration purposes only.  Important - this is a Home Reversion plan.  To understand the features and risks please ask for a personalised illustration from your Financial Adviser. Your home is at risk if you do not keep up repayments of rent. 
Case Study 3