Steve and Cathy have three children. Steve had been used to receiving large bonuses from his company but that has recently changed. Cathy works part-time.
In addition to their family home, the couple have four flats which they rent out; all have outstanding mortgages.
The couple had done little pension planning at the time of them coming to us for advice but in recent years had seen the value of all five of their properties increase considerably, which they consider a valuable asset to their retirement income.
Steve and Cathy’s main concerns were:
- That their investment properties were all on interest-only mortgages and on standard variable rates
- With an increasing population and difficulties in building new properties they wanted to buy another flat to rent out. Ordinarily, they would have paid for the deposit from Steve’s bonus but there was little likelihood of one this year.
What we did for Steve and Cathy:
- Compared their current residential rate and switched rates with their current lender
- Taking into account rental yields, we worked out which properties were most suitable to raise additional funds for another property
- We switched two of the properties to lower rates and converted them to 100% repayment
- We arranged the mortgage for the new property they wanted to acquire
- Put life cover and a suitable trust in place for the couple
Benefits for Steve and Cathy:
- The amount of mortgage interest has decreased
- Their mortgage debt is reducing
- They have acquired another property to add to their portfolio
- In the event of death, the proceeds of the life cover could be used to repay the mortgages so that the remaining spouse would not have to sell a property
- Steve and Cathy will continue to benefit financially from the properties well into retirement