Anderson Harris are seeing a significant rise in the number of silver borrowers or older borrowers coming to them for property funding. These mature borrowers tend to be mainly in their late sixties or seventies and considered too old by the vast majority of banks. They also don’t have the income requirements needed to qualify for funding, yet they often have a substantial asset i.e. their home, including other investments, such as a significant property portfolio or maybe an art collection, but can’t get a mortgage from their own bank.
There has been plenty written about these mature borrowers downsizing and freeing up cash to buy a smaller property – some are doing this, but many older borrowers are looking to stay where they are and raise money that will give them an income, or time to sell up and downsize (for one client this meant extricating a property held in a trust, before it could be sold).
So the main older borrower options are equity release (expensive and tends to upset the relatives) or a private bank facility. The latter tends to work out more cost-effective, providing a five-year facility in which borrowers can wind down a trust in order to sell a property, or secure a smaller property to move to and give them time to sell without rushing things.
Getting a Private Bank Mortgage – Case Study
A retired client living in a substantial property in Knightsbridge, which is valued at £10m, with no mortgage, but has substantial other assets. This older borrower wished to downsize to a smaller property but needs time (3- 4 years) to make the transition and manage his tax position. Suddenly he finds the ideal property (£2m purchase price) to retire to but needs to buy immediately as there is fierce competition. This older borrower needs to borrow £2m quickly, without liquidating any of his existing investments (not tax efficient). His incumbent bank of 45 years will not assist due to age.
Anderson Harris arranges a private bank mortgage within 2 weeks at 2.25 per cent over LIBOR. Bank takes custody of his pension fund to satisfy their AUM requirement but the client retains the exact same investment structure and manager. The fees for custodianship of the pension fund are the same as his existing administrator.
Mortgages for older borrowers – Best Buys – two-year fixes –correct at 11.9.13
1.89% with £1,499 fee. Up to 60% LTV [maximum age at end of term: 75]
1.94% with £1,845 fee plus £130 processing fee. Up to 65% LTV [all loans must be repaid by age 75 of oldest applicant]
2.14% with £995 fee. Up to 60% LTV [won’t lend beyond retirement age. Maximum age 75]
2.19% with £1,499 fee. Up to 60% LTV [Maximum age at end of mortgage term 75]
2.39% with £199 fee. Up to 65% LTV [for borrowers up to 75]
4.49% with £199 fee. Up to 70% LTV [for borrowers aged 75 to 80]
Source: Anderson Harris (www.andersonharris.co.uk)
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