Case Study – RIO Later Life Lending
14 July 2022
Andrew & Sarah are a retired couple, both aged 73 who have always dreamed of buying a retirement property by the sea. Andrew used to work in the civil service and is in receipt of a pension and Sarah also has some pension income. They plan to sell their current flat but in the meantime will use their savings and Premium Bonds to put down a deposit.
|
House Price |
190,000 |
|
Deposit Amount |
140,000 |
|
Loan Required |
50,000 |
|
Loan to Value (LTV) |
26.3% |
|
Joint Income |
44,000 |
|
Income Multiple |
1.14 |
|
Product Type |
Retirement Interest Only 5 Year Discounted Rate |
Due to their age, the loan falls under the later life lending category as the couple would both be 114 by the time they had finished paying off the loan. They intend to remain in the property as long as their health allows.
The applicants have owned homes previously and currently own their flat outright in a town a few hours away which they intend to sell. They can demonstrate a clean payment history and have a low debt profile, evidenced by their savings.
The Society agreed to offer our Lending in Retirement product fixed for five years, having confidence in the couple’s ability to make payment based on their current retirement income.
Although the new retirement home had relatively high ground rent and service charges associated with it, the valuer confirmed that this was to be expected and that there is good demand for these types of properties. As a lender, we also incorporated this into our affordability calculation to ensure the applicants would be in a position to afford their monthly payments based on their outgoings.
In the event that either Andrew or Sarah outlived the other, they would be in receipt of additional pension, and the couple will also be replenishing their savings due to the sale of their current property.
The Society was pleased to be able to offer this loan with a relatively low loan to value risk. Our underwriters assessed the full case and now the couple can live in their home and can continue to enjoy their retirement.
At Buckinghamshire Building Society we:
- Manually underwrite, looking at each case individually
- Assess cases on affordability not income multiples
- Use both credit scores and searches to understand the full picture
- Go above and beyond to find a solution to all cases
To find out more about our products, visit https://www.bucksbs.co.uk/intermediaries/all/
