Older Client facing potential repossession due to interest only maturity, used the 55+ to help – Ms Monk
Ms Monk, a 69-year-old single lady had been in touch with her mortgage adviser, she was extremely distraught having discovered that her mortgage provider was about to start court proceedings against her for the re-possession of her home.
The term on Ms Monk’s existing interest only mortgage ended in 2012 when she was 65, she still owed £155,000. Her provider had allowed monthly repayments to continue until very recently in the hope she could find a new lender which meant her credit record had not been affected, but as other lenders had not been forthcoming due to age and circumstances Ms Monk had now been advised that the arrangement could not continue.
Extending the term of the mortgage was not an option due to Ms Monk’s current age and also her providers affordability criteria which she no longer met.
Ms Monk’s mortgage adviser got in touch with Hodge, confirming Ms Monk’s situation and requesting information on the 55+ residential interest only mortgage.
Ms Monk was still working, earning £28,000 as a self-employed legal consultant and also in receipt of a public-sector pension totalling £11,500 per year. Additionally, Ms Monk had a personal pension fund of £123,000 and a state pension she had deferred but that could be taken if required.
The total loan requested was £155,000 over a ten-year term, to be used to clear in full her existing mortgage, allowing Ms Monk to remain in her home and regain peace of mind. Additionally, the loan would allow Ms Monk to reduce her monthly mortgage repayments from £563 to £402 (based on the 55+ 2 year fixed rate product and an interest rate of 3.10%).
Ms Monk’s property was valued at £400,000 with downsizing after 10 years being selected as her chosen repayment vehicle as she planned to retire and move closer to family at around age 80.
Based on Hodge’s 55+ criteria we were able to help. A loan of £155,000 was approved over a 10-year term with Hodge taking into account not only her self-employed income but her pension income both current and future.
Why does this case work?
Due to the nature of Ms Monk’s work which was mainly office based it was considered acceptable that her self-employed income could be taken into account until aged 80, producing two years SA302’s as evidence to support her income.
Ms Monk’s current and additional pension availability could be used for affordability purposes, her current ‘in payment’ pension being used as income, supported by her ability to draw on both her state and personal pensions if she decided to give up work prior to the term of the mortgage ending. Bank and Pension statements were used to evidence her payments and projections.
The loan size requested was agreed as it was less than 60% of the total property value (the maximum LTV that Hodge can consider for 55+ is 60%). Downsizing was an acceptable repayment strategy as there was more than £150K equity left in the property after the loan had been taken out.
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For more information on our 55+ see our useful at a glance document. Or call 0800 731 4076 to speak to one of our dedicated Adviser support team.
