Project Description

This case study is for illustrative purposes only and does not constitute advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of pensions can fall as well as rise, you may get back less than you invested.

Why did they come to us?

Tom and Barbara are established clients. They are coming to the end of a five-year fixed rate mortgage at 3.85% in December – and so came in for a cup of coffee and a review of the mortgage.

I have worked with this couple for several years to get them into the financial position to move the whole mortgage across to a repayment basis – ensuring that all the mortgage is being paid off as they go along – and they worked out that they could afford to spend £435 on mortgage repayments each month, after revising their budget.

What did we do?

Upon reviewing the new deals available, we found that we could secure Tom and Barbara a fee-free 5-year fixed rate at 2.14%, keeping the 20-year term and still come in below their £435 monthly repayment budget.

Excellent results – happy clients! However, my job doesn’t end there.

Current Situation

  • They have an outstanding mortgage balance of £85,000
  • £71,000 is arranged on an interest only basis (interest only is not ideal, but it was right for Tom and Barbara at the time the mortgage was originally arranged)
  • The remaining £14,000 is arranged on a repayment basis (capital & interest, so the loan is reducing)
  • They make a monthly payment of £300
  • The mortgage is over a term of 20 years

The Together Solution

What we produced for Tom and Barbara.

£0
Mortgage
0%
5-Year Fixed Rate
0
Years
£0
Monthly Repayments

Adding value

I was also able to make the couple more secure, because when we arrange a mortgage, we have a responsibility to ensure that we are not leaving our clients financially vulnerable, for example, should one of them die or be unable to work (and earn) due to an illness or injury.

Alongside reviewing their mortgage, I looked at the protection plans in place for Tom and Barbara – and the areas in which they were financially exposed became very clear!

We considered a plan which would ensure that in the event of either of their deaths, the mortgage would be repaid, with additional money left to protect the remaining person financially. We then investigated plans which would protect them financially, in the event of one of them being unable to work and bring in an income. These plans were set up to match the terms of their mortgage.

How did they benefit?

Unfortunately, after setting these plans up, we had gone slightly over the monthly budget. To avoid placing them in financial difficulty, we tweaked the mortgage term by one year to bring the monthly repayments down and enabled us to bring in their revised mortgage and protection package:

  • Tom and Barbara’s mortgage is now totally arranged on a repayment basis.
  • They will be mortgage-free in 21 years (and we will continue to help them to chip away at this)
  • Their ‘debt’ is fully protected in the event of the unexpected and they have provision to ensure that they can continue with their financial liabilities (so, we have made their future as worry-free as possible)

In Summary

To round everything off, we looked at the various pension plans that Tom holds, which have not been reviewed since the Pensions Freedoms came into effect. We discussed how this affects his options.

Barbara’s parents run a local electrical company, so we have been able to tell them about the personal service offered by Together Insurance Solutions and the help and advice they can get through our partners.