Customer Scenario

Mr & Mrs Jones


Mr & Mrs Jones are a retired couple, with no children. They live in  Cheshire in a property worth £300,000. They are fortunate in that they both worked for the same company all their life, and therefore they both have good occupational pensions which are linked to RPI. They have a high disposable income. However, they need to repay their interest only mortgage, as it has come to an end and they still owe £130,000. 

As they have no dependents, Mr & Mrs Jones are able to sell 100% of their property in order to release as much capital as possible. This will allow them to clear the mortgage and give them some savings to spend on holidays or other things they may require. 

The Bridgewater home reversion plan with rent will give the clients a higher release than a standard home reversion if they opt to pay rent. They can also choose to have the rent reduced by 50% on death of the first spouse, providing them security that the rent will remain affordable. 
On their property value of £300,000, with a rent payable of £400 per month increasing by 2.5 % per annum along with the added option of reducing the rent by 50% on death of the first spouse, Mr & Mrs Jones will be able to release £134,077. The interest only repayments would be £487.50 based on a 4.5% interest rate. If Mr & Mrs Jones wanted to increase the amount they would receive they could choose to increase the rent payable to £600 per month due to their high disposable income their release amount would go up to £147,069. On death of the 1st spouse the rent would reduce to £300 (plus whatever 2.5% increases had occurred). 

Once they have sold 100% they will not be able to release more cash in the future irrespective of what happens to the value of the property. They will however be able to move to a suitable alternative property and will have a lifetime lease guaranteeing them tenure in their home providing they make the rental payments, for the term or until they choose to permanently vacate their home. 

On the death of the remaining spouse, Bridgewater would sell the property in Cheshire and retain all the sales proceeds. 
Benefits to the clients: 
  • Ability to remain in their home.
  • Ability to repay their mortgage.
  • Pay a slightly reduced rental payment than their current mortgage payment or choose to pay a higher rent for a larger capital release.
  • Reassurance that the rental payments would be halved in the event of one of them dying.
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 2