Repaying An Interest Only Mortgage

The client

• Margaret Springfield* / Widowed / Aged 65 / Retired

• Current house value: £325,000

• Requires: £80,000

• Maximum loan-to-value: 31%, releases 24.62% on a single application, lump sum.

Margaret's Story

Margaret has an interest-only mortgage still outstanding on her property. She would like to retire early but is unable to afford the payments on her retirement income. Her Financial Adviser identified that she wouldn’t qualify for either a Retirement Interest Only (RIO) mortgage or a residential mortgage due to affordability assessments based on her age and income. 

She doesn't see downsizing as a viable option as she lives close to family and friends.

Optional Repayment Possibilities

Margaret's adviser uses the repayment calculator on Pure Retirement's website to demonstrate how Margaret can make up to 12 ERC-free optional repayments per year, up to 10% of the total amount borrowed, to help reduce interest roll-up. As the payments are optional there is no need for Margaret to prove affordability unlike a RIO or standard mortgage. Therefore, Margaret can make a repayment in months where she has surplus cash and forgo making payments in other months.

Free Energy Performance Certificate EPC

Margaret receives a free Energy Performance Certificate after completing her Classic lifetime mortgage with Pure Retirement. An EPC provides an indication of how much it will cost to improve the energy rating of the property with indicative costs for changes.

Managing Her Lifetime Mortgage with MyPure

Margaret can manage her lifetime mortgage online through the account management platform, MyPure. She can view her account balance, make one-off optional repayments, and access a bank of FAQs to support her along the lifetime mortgage journey.

Margaret is advised to take a Pure Retirement Classic lifetime mortgage.

• She receives a loan-to-value of 24.62%.

• She releases £80,000, and pays off her residential mortgage.

*Client names have been changed to provide anonymity. We cannot give any assurances that applications outside our lending criteria will be approved.