Article | August 2007 | by Duncan Young
An equity release Case Study question
Mark and Alice are aged 73 and 80. They own a property in the UK worth £200,000. She has a history of heart problems and his doctor has warned him of a possible shortened life expectancy. They have a big problem with a badly performing Home Income Plan that’s linked to their £100,000 mortgage and they need to raise the maximum amount available – at least £100,000 to pay it off. They don’t want to downsize if at all possible.
Response
Mark and Alice have few options available to them to make life a little easier in their last years together. The need to raise finance off at least half of the value of their property makes it very unlikely that a conventional lifetime mortgage will meet their needs, so their adviser will have to look to the home reversion market for a solution. Raising sufficient funds will still be difficult in the normal home reversion market but there is the opportunity of seeking an impaired life quotation from three providers. It is probable with their medical history that Mark and Alice would be able to raise a reasonable amount, more than £100,000 if they so wish – probably around £114,000. One hopes that their adviser has taken the trouble to take the necessary home reversion exams and is aware of the impaired life options available.