HNW Couple in their mid-sixties. Live in Grade 2 listed Georgian Terrace House, currently valued at £4m, that has seen better days. They have 3 children in their 30s, all
successful professionals, living abroad in
rented accommodation.
The couple’s main concern is that any financial help they give to their children now will negatively affect their own income and lifestyle. Conversely if the children wait for their inheritance then they are likely to be well into their 50s, already be financially well established and see much of the inheritance disappear in IHT payments on the death of their parents.
They decide to raise £1m through a Lifetime Mortgage secured on their property at a fixed rate of 4% for the lifetime of the mortgage. They are not intending to pay interest or capital and will allow the debt to accumulate. It will double in 18 years. They have lived in the family property for 50 years and are not intending to move or downsize.
They gave each of their children £250k which they used to buy their own million pound properties in Singapore, Paris and Toronto respectively. The remaining £250k was used to fully refurbish their Georgian Terrace which is now valued at £6m as a result.
Whilst the IHT is not lower, the net Inheritance is based on a much higher value. Succession wise an “Early Inheritance” has been provided to the children to help establish them on the property ladder now, rather than waiting several decades for a tax diminished Inheritance. And, without negatively affecting the parents lifestyle.
Getting a Tailored quote is the best way to see how much you can borrow and how much it will cost you.