Voluntary Select Options - Fiona and Mike

 

Flexibility and certainty

Fiona and Mike:

  • In their mid-60s
  • Early retirement
  • Active lifestyle
  • Need extra cash to fund their retirement 

Fiona and Mike have both recently retired and are planning for their future. They want to maintain an active lifestyle which involves travelling as much as possible. They both have pension pots but realise that they may need to supplement this income if they wish to continue with their current lifestyle.

They own a detached house in Leicestershire which is valued at £550,000. They would like to borrow a lump sum of £100,000 to use over the course of their retirement. Traditional lenders will not loan to Fiona and Mike but their financial adviser has recommended a lifetime mortgage.

Fiona and Mike would like to be able to pay off their loan so as to preserve their property for their children’s inheritance, but they are worried that they will not be able to maintain regular monthly payments. They know that when they are travelling their outgoings will be more than when they are at home.

Their financial adviser suggested the Voluntary Select product which allows borrowers to make ad hoc payments, as and when they wish. With this product, Fiona and Mike can repay up to 15% of the loan amount per year, but there is no penalty if they repay less or make no payments at all. He also suggested that they could take an initial lump sum and add a cash reserve facility to their loan at the outset so that they can draw down more funds as and when they need them, rather than release all the money at once.

Fiona and Mike were able to borrow the money they wanted, and were not required to set up monthly direct debits to repay their loan. They were able to make repayments as and when they had the funds to do so, which gave them complete control over their finances.

Key benefits:

  • Release cash from property to use for improving retirement lifestyle
  • Preserve future inheritance by making repayments
  • Complete flexibility on repayments
  • Certainty of no penalties if repayments were not made

Important information

This case study is a worked example and is for illustrative purposes only. We have taken care to ensure the information is accurate, but we accept no liability for any of the information we provide that you decide to use or for the suitability of any of the statements made. Individual financial advice and tax advice should be sought prior to taking out a lifetime mortgage, as releasing equity can change the inheritance tax position of the borrower and their estate, as well as potentially altering their eligibility for welfare benefits.

Find out more about our Voluntary Select Options here.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.