- Retirement Interest-Only mortgage enables clients aged 55 and over to borrow against their home for an indefinite term
- Loans of up to £2 million are available, with typical maximum loan to value (LTV) of 50%
- Aimed at clients who are managing their inheritance tax liabilities or raising funds to support family or lifestyle in retirement
- Hampden & Co is a specialist in supporting clients with complex finances who typically fall outside the algorithm-driven lending approach of the mainstream banks
UK private bank Hampden & Co has launched a retirement interest-only mortgage aimed at people managing their inheritance tax liabilities or who want to raise a lump sum without disturbing other assets.
The mortgage is for those aged over 55 and allows them to borrow against their home for an indefinite term. Loans of up to £2 million are available, with typical maximum loan to value (LTV) of 50%.
The loan amount is repayable on the sale of the property or when the last borrower passes away or moves into long-term residential care. Until that time, interest payments are charged and paid monthly. This differs from ‘lifetime mortgages’ offered by other lenders, where the interest or capital repayments are accrued and compounded until the loan is paid.
Research by the Office of National Statistics indicates that retirees account for around 18% of the UK’s 65.6 million population, nearly 12 million people, while the FCA is encouraging lenders to provide greater flexibility to retirees seeking mortgages.
Hampden & Co assesses a client’s ability to afford the monthly interest payments based on their actual and projected income and expenditure both going into and in retirement. According to Hampden & Co, many people in their later years or with complex financial situations fall outside the algorithm-driven lending approach of the mainstream banks. Unlike many other providers, Hampden & Co also considers a client’s other income sources, for example from investment assets or property rental.
Samantha Dunne, Banking Director, Hampden & Co said: “We know from our existing clients that the flexibility offered by this new service is something they’ve been looking for. Many people in their later years have a need to manage their estate planning, particularly in relation to inheritance tax liabilities. Others may simply want to realise a lump sum without disturbing other assets and investments. In both cases, the solution may be to raise funds against the value of their principal property.”
Samantha Dunne added: “Another key feature of our retirement mortgage is that we take a bespoke approach to calculating affordability that takes into account a client’s full financial picture, rather than merely offering a ‘tick box’ off-the-shelf product that those with more complicated finances may not qualify for.”