Equity Release Purchase
You can now use the simplicity of Equity Release to help you buy a more expensive property. In simple terms you take some of the equity out of the property you are going to buy, to enable you to afford it.
More and more often these days, people, either because of necessity or circumstance, are still left with quite a large mortgage (often interest only). This means that if they need or have to sell (for whatever the reason), the amount of equity left is not enough to buy the sort of home they want to call their forever home. In some circumstances, there isn’t even enough equity left to buy another home and they are left with no other option than to rent which will eat into their remaining equity.
Equity Release Purchase allows you to take the existing equity (after selling your home and clearing any mortgage or secured loan on it), and along with a lifetime mortgage (secured on the new house you want to buy) this will give you enough to purchase the home outright. A big advantage of a lifetime mortgage is that you don’t have to make any mortgage payments if you don’t want to. Contact us to find out more.
It all happens at the same time. Using the Equity Release Purchase calculator on this site you can see the maximum amount that you can go and house hunt for. Then, when you have found the property you want to buy, you clear the old mortgage and move into the new property (which will have an equity release mortgage on it) just as you would if you were buying a new home and moving normally.
Below are a couple of case studies to show the sort of Equity Release Purchase schemes that could be done.
As with all Equity Release plans you should take expert advice and the amount you can borrow will depend on your age and circumstances.
Couple (youngest person aged 60)
- Existing House Value - £250,000
- Outstanding Mortgage - £101,000
When the property is sold they will have £149,000 of equity left over.
With an Equity Release purchase they could buy a new property with a value of £205,000 (149,000 + a £56,000 Equity Release mortgage on the new property).
So, when looking to sell their existing mortgage they can go house hunting for a house valued up to (It can always be less) £205,000, knowing that they will own it and have no repayments if they choose to roll up the interest.
*example is for illustrative purposes only
Couple (youngest person 64)
- Existing House Value - £300,000
- Outstanding Mortgage - £120,000
When the property is sold they will have £180,000 of equity left over.
It might be that £180,000 will buy them the property that they want, however, they could purchase a new property with a value of £276,000 (180,000 + a £96,000 Equity Release mortgage on the new property) and own it outright.
*example is for illustrative purposes only
As you can see you can get a property worth at least a third more than you thought using Equity Release Purchase to help you buy your forever home.
To understand the features and risks of a lifetime mortgage, please ask for a personalised illustration.