Long-term Borrowing Helps a Successful Client Gain
Clients of ours, a male and female both aged 70, are considering selling their main UK residence in the next few years. Their home is valued at £2,000,000.
The clients required a short term facility with the security of a lifetime fixed interest rate, along with a lifetime term with the option of zero early repayment charges from day one on sale of the property. The clients were permitted to borrow a maximum of £600,000 and there was an option to borrow funds in one lump sum or through a drawdown type facility. Our clients have a large portfolio of wealth but did not wish to unwrap this wealth due to certain tax advantages.
On this occasion our clients requested £500,000 to gift to their family which started the clock ticking on the 7 year IHT gifting rule. The clients confirmed they would move in the next few years, sell the home and repay the borrowing.
Our plan enabled the clients to achieve this, without charging a penalty for early settlement, whilst also attached to a 3.6% lifetime fixed interest rate. This option enabled our client to move value out of their estate now to the family, whilst keeping all future options open for moving and selling.
The lowest rates we can access are circa 3.2% at this current time, these interest rates are all dependent on the size of the loan and lender criteria.
Purchase of a Holiday Home Through Re-mortgage
The client had passed state retirement age but still has a shareholding in 2 successful businesses. Our client doesn’t take any income from the businesses, as he has a pension income which is sufficient to service their lifestyle costs and current mortgage payments. However, the client’s pension income is not enough to stand up against bank stress calculations for affordability purposes.
The team at James Evans Financial Services were able to obtain a re-mortgage for the client to borrow the amount that a bank would allow on his pension income, topped up and supported by his share of retained business profits, and increased furthermore to enable him to purchase a holiday home by forward funding mortgage interest payments using cash balances which were held in an account with the bank.