Finding the Freedom Through Equity Release

How Andrew and Sarah Foreman paid off their interest-only mortgage and accessed cash for home improvements through a lifetime mortgage with Fluent.

What do you do when you’re in your 70s and you have an interest-only mortgage that needs paying off and are without the funds to do it? Andrew Foreman and his wife Sarah, who run a retirement home business in Torquay, recently faced this dilemma.

Their first port of call was the banks but their age was an issue. “We had a couple of options but the problem was that I am 70 and my wife is 75, even though we are both happy working until we’re 90,” Andrew explains. “I applied to Nationwide as they said they accepted mortgage customers up to the age of 85. But the interest rate on the loan was 6.5% and in actual fact they didn’t lend to anyone over the age of 70 and would only let us borrow £9,000.”

The couple, who had been loyal customers for decades, were in shock. “I’d been with [Nationwide] for 30 years,” Andrew says. “I’d been with HSBC for 40 years – I’d even borrowed money from them for my business, up to £500,000 at one point [but they wouldn’t help us].”

‘Downsizing wasn’t an option’

Downsizing is usually the best and cheapest way to raise funds in later life but it wasn’t viable for the couple who needed to stay in Torquay for their business. “We were going to have to think about moving and how much we could stretch our money,” says Andrew. “But downsizing wasn’t an option because we’d already downsized to a three-bedroomed property and didn’t want to leave our home.”

What’s more, following the Covid pandemic, their daughter - a former lawyer - was now living with them and retraining as a teacher, so Andrew and Sarah were in need of the extra space. They also needed cash for home improvements as Sarah is awaiting a hip replacement. “We needed a wet room for my wife as she can’t get in and out of the bath,” Andrew explains.

Exploring equity release

Turned away by the banks, Andrew began to look into equity release mortgages. “A friend who worked in finance looked into it for me and passed on some names,” he says. “One was Fluent Lifetime and we had some good reports of them. I was amazed by how efficient they were.”

A lifetime mortgage is secured on property and enables customers to gain access to cash otherwise locked up in their home. It ends either when you die or enter long-term care. However, taking out an equity release loan can reduce your financial options and access to certain mean-tested benefits, so it’s important to take time to make the right decision. Under Equity Release Council regulations, all customers must undergo a consultation period with their lender and receive independent legal advice.

Access to mortgages and loans for over-55s can come with challenges. Speak to our mortgage experts Fluent Money who are on hand to give you the best advice. Book a free call now.

‘It’s the best option for us’

Since taking out an equity release mortgage with Fluent Lifetime, Andrew and Sarah have paid off their old mortgage and are now paying a much lower interest rate. “At 2.28% our lifetime mortgage is cheaper than our old mortgage,” says Andrew. “We were previously paying 5.4% with Santander and they would only offer us an interest-only mortgage at the time as they said we were too old.”

Lifetime mortgages are not for everyone but have proved to be the right solution for Andrew and Sarah. “It’s worked out very well,” says Andrew. The [Fluent] app was useful and we’ve had lots of contact with the lender. They’ve been extremely helpful. It’s the best option for us.”

Taking out a lifetime mortgage will mean that your beneficiaries’ inheritance is significantly reduced but in Andrew and Sarah’s case, their daughter is comfortable with their decision. “She was previously a lawyer in a London shipping firm and understands these things,” says Andrew – and it’s also possible she may able to purchase their home when she has finished her teacher training, he adds. “In theory, if she can find £50,000 she could buy our home from the estate,” he says.

Peace of mind

In the meantime, Andrew says that in the right circumstances a lifetime mortgage may be a useful way to unlock cash that is tied up in your property. “It’s perfect for releasing some capital if you’ve got money locked up in your house,” he says. “It’s a good way to take the pressure off [in later life].

“No one knows what’s going to happen in the future and who knows how much of your home could go in [inheritance] tax payments? We might as well enjoy [the money]. It gives us peace of mind and means we can stay in our house. The constant worry of ‘Can we pay the mortgage?’ is gone.”

Always think carefully before securing a loan on your property. You must also take independent legal advice before taking out an equity release mortgage.

Written by Piper Terrett, Fluent Money Group