A client recently came to me as he was looking for a relatively straightforward remortgage of £600,000 on his residential property which was worth £1.35m. There was a minor complication that came with this, however, as the client was in his 60’s and in need of a pure interest only loan. This client had a large pension pot and owned some properties in the background, which were all mortgage free except for one.
His plan was to retire at the age of 70 and sell everything, however, he wanted at least a 2 to 3 year grace period, so he would be able to do so gradually.
He had previously contacted his existing lender, who was only willing to give an interest only remortgage up to the age of 70, yet they were still happy to offer the cheaper rates he required if he opted for a longer term.
Essentially, the key challenge in this case was securing a mortgage over the age of 70 on pure interest only, as most lenders tend to steer clear of this because they typically have a maximum lending age of 65 or 70 in place.
Generally, lenders will also start looking at a client’s pension income in this instance, so they can determine whether it will be enough to cover the mortgage alone. Although this can be a challenge, I knew I would be able to source a solution with a more specialist lender and use my client’s lucrative pension pot to service the loan.
I was able to secure the required interest only remortgage of £600,000 for my client’s £1.35m property, using the pension to service the loan and his property portfolio as a repayment vehicle.
My client was extremely happy with this result and I was able to secure it at a very competitive five year fixed rate of just 1.99%.