BRIDGE THE GAP




WITH DEMAND FROM HOMEBUYERS CONTINUING TO FALL, A BRIDGING LOAN FROM WEATHERBYS COULD PROVIDE THE ANSWER TO A DREAM HOME IN RETIREMENT

‘Life is what happens to you while you are busy making other plans,’ said John Lennon, and soaring house prices during recent decades have left many happy homeowners with a tantalising problem.

After working a lifetime building a business or concentrating on their career, many people approach or enter retirement with too much of their wealth locked up in bricks and mortar. Adult children may have flown the nest, leaving the family home somewhat short of family, while parents rattle around like peas on a drum.

Unfortunately, it can be difficult to sell your home for an acceptable price at present because the housing market has stalled after decades of accelerating valuations. This has left many older homeowners sitting on substantial, but unrealised, gains – unable to buy more appropriate accommodation unless they are willing to accept a knock-down price.


Now there is a new way to cut the cost of ‘downsizing’ – or buying a home that better suits your requirements in retirement – while ensuring that any wealth released this way will be managed to minimise risks and maximise rewards.

A ‘bridging loan’ can enable you to buy the home of your dreams before you have sold your existing property. But this is only a temporary solution – usually lasting less than 12 months – and the interest rates charged by many lenders are high. For example, rates of 1.5% per month or more can rapidly run up into double-digit annual costs.

Now older homeowners, including those aged over 70, can obtain a bridging loan with interest charged at 2.69% per annum plus Bank of England base rate – giving a current cost of 3.19% per annum – with a 1% arrangement fee. The loan from Weatherbys Private Bank is conditional on borrowers also signing up for its Investment and Wealth Advice service and paying at least one year’s minimum fee for this advice, which is £2,500.

Clearly this deal will not suit everyone, but it could prove advantageous for owners of valuable homes who intend to release substantial sums – and where professional investment and wealth advice will be needed in any event. The bank also offers other loans, including bridging loans, that are not linked to receiving investment and wealth advice.

Weatherbys Private Bank is owned by the same family that has been providing financial services to the horse-racing sector since 1770. Although the bank was more recently incorporated in 1994, it adheres to the same principles of capital preservation, impartial advice and a simple investment philosophy. This boils down to keeping costs low, diminishing risk by diversifying assets and avoiding the mistakes made by many investors who buy high and sell low.

Quentin Marshall, Head of Weatherbys Private Bank, says: ‘We offer impartial financial advice. We are not selling investment products, so you will get unbiased advice. Our Investment and Wealth Advice service will help you get your affairs in order, taking into account your risk profile. We will then constantly monitor your investments and take a long-term view.’

For many older homeowners wishing to move, the immediate problem is how to unlock the wealth they have accumulated in bricks and mortar at a fair price – rather than the distressed valuation that a forced seller might accept. Marshall says: ‘Weatherbys can offer older homeowners sensible lending terms. We see the person, not their age.

‘The financial system is in danger of failing older borrowers. We can work with our clients to tailor the loan that’s right for them, without imposing punitive and unfair terms.’

The total value of residential property in the United Kingdom increased by 48% or £1.94 trillion to a mindboggling total of £6 trillion during the last decade, according to Britain’s biggest mortgage lender Halifax. The Office for National Statistics calculates that people aged 55 or above own 63% of the net wealth built up in bricks and mortar.

While residential property has been a wonderful way to accumulate wealth for many decades, there are problems with property as an asset class, here and now. Political uncertainty about Brexit plus speculation about rising interest rates and who might form the next government have tended to depress buyers’ confidence.

No wonder the Royal Institution of Chartered Surveyors reported that demand from homebuyers in March fell for the 11th month in a row, as a gap widened between what sellers asked and what buyers were willing to pay.

Bridging loans can help older homeowners span that gap and buy the property they want to enjoy in retirement. In the past, these loans have often been an expensive solution to a tantalising problem. Now costs are coming down and service standards are rising, with Weatherbys Private Bank combining convenient credit and impartial wealth advice.
 

BECOME A WEATHERBYS CLIENT

To find out more about Weatherbys Private Bank and our services, please contact the Private Bank team

Calls may be monitored or recorded.

Representative Example: an interest only mortgage of £500,000 for a period of 5 years at a variable rate of 3.25% over Bank of England Base Rate with a minimum of 3.5%. You will be required to agree a repayment strategy with the Bank. There will be 60 monthly interest instalments of £1,458.33 which does not include the cost of any repayment vehicle. The total cost would be £588,613.80 made up of the loan amount plus interest payable over 5 years of £87,500; product fee of £999; final repayment charge of £80; and completion fee of £35. The overall cost for comparison is 3.6% APRC representative.

Any property used as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage or loan. Possible fluctuations of the exchange rate could affect the amount payable. You must be over 18 years old to apply for a mortgage or other loans secured on it. Terms and conditions apply.

Weatherbys Private Bank is a trading name of Weatherbys Bank Ltd. Weatherbys Bank Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number: 204571. Weatherbys Bank Ltd is registered in England. Registered number: 2943300. Registered Office: Sanders Road Wellingborough, Northamptonshire NN8 4BX.