Retired Couple Seeking Equity Release to Fund Home Improvements

• Client: Retired couple with significant property and investment assets but no regular employment income
• Property: Large detached residential property valued at £475,000
• Challenge: Required equity release despite having no regular income, with investment income and asset-based security forming an important part of the application
• Finance: £261,250 interest-only mortgage at 55% LTV over five years

Homeowners who have retired can sometimes face challenges when looking to raise finance, particularly where they have significant assets but limited regular income. Enness was approached by a retired couple looking to release equity from their residential property to fund a programme of home improvements.

The couple owned a large detached property valued at approximately £475,000 and were looking to raise around £260,000. The proposed borrowing represented approximately 55% loan to value (LTV), providing substantial equity in the property.

The main challenge was that the couple had no regular employment income. Instead, they relied on investment income and periodic investment redemptions to meet their living expenses. While they had significant investments and other assets, not all mortgage lenders are prepared to treat investment income in the same way as conventional earned income when assessing affordability.

The clients were also looking for an interest-only mortgage. This would help keep their monthly payments lower while allowing them to use their available investment resources to meet their ongoing expenses. The proposed borrowing was intended to fund improvements to the property, with the expectation that the works would enhance its long-term value.

As part of the assessment of the couple’s wider financial position, Enness identified two valuable classic cars within their asset portfolio. Although these would not ordinarily form part of a conventional mortgage affordability assessment, certain specialist lenders may be prepared to consider valuable assets as additional security.

Enness therefore approached specialist lenders with experience of considering more complex asset-backed arrangements. The objective was to find a lender willing to assess the couple’s overall wealth and consider the classic cars as secondary security alongside the residential property.

Following negotiations, a specialist lender agreed to provide £261,250 of mortgage finance against the £475,000 property, representing 55% LTV. The mortgage was structured on an interest-only basis over a five-year term at a rate of 4.89% at the time.

The residential property provided the primary security, while the two classic cars were accepted as secondary security and formed part of the proposed repayment structure.

The resulting arrangement gave the retired couple access to the capital required for their home improvements without relying on conventional employment income. It also demonstrated how a broader assessment of a borrower’s assets can sometimes provide a route to finance where standard affordability criteria may be more restrictive.

The case demonstrates how equity release can be structured around a homeowner’s wider financial circumstances. For borrowers with substantial property equity, investments and other valuable assets, specialist lenders may be able to consider bespoke arrangements that take a broader view of affordability and security.

For clients seeking an interest-only mortgage where income is derived primarily from investments or other assets, specialist lender access can be particularly important. Each application remains subject to individual circumstances, affordability, valuation and lender criteria.

Read the UK version of this case study.