Cash for the trip of a lifetime

Mark Anthony continues our series on how to raise cash in an emergency. This week: the sick woman who longed for a holiday

Raising money when terminally ill can be an impossible task. Such a borrower is, by definition, a "bad risk", unless he or she can show that they have the means to repay the loan after their death. In this particular instance, however, a solution to an elderly lady's financial problems was found, and her dream was fulfilled.

Meg Campbell was initially shattered when her illness was diagnosed as critical. In her late sixties, she was advised that she had only a limited time to live. Instead of waiting for the inevitable to happen, she decided to fulfil one of her remaining ambitions: to visit Victoria Falls in Zimbabwe and Zambia.

Because of the spray thrown upwards - which from a distance looks like smoke - before it roars hundreds of feet to the Zambezi below, the locals call this natural wonder The Smoke that Thunders. When Dr Livingstone stumbled across the Falls in 1855, he was more poetic: "On sights as beautiful as this, angels in their flight must have gazed".

Meg had the determination to make the journey, and the blessing of her doctor. What she did not have was the means to pay for the trip. She telephoned a local independent financial adviser (IFA) and asked him to visit, so that she could discuss her problem.

During the conversation he learnt that Meg had no living relatives. She had made her will some time before. Apart from small bequests to friends, the main beneficiaries were a couple of charities Meg supported. Her house was valued at pounds 130,000. She wanted to borrow pounds 12,000.

The IFA's immediate solution was for Meg to borrow against her home. A building society was approached. It agreed to advance a minimum of pounds 15,000 on fixed interest only, over a 25-year term. However, Meg felt uncomfortable with this solution, as she would have been hard pressed to pay the monthly interest.

The IFA then suggested a Bank of Scotland loan. The way the bank's shared appreciation mortgage works is that in return for the borrower agreeing to share any future increase in the value of his or her home, the bank offers the mortgage free of interest. The shared appreciation percentage is three times the amount of the loan, divided by the value of the property, known as the "loan to value" (LTV) percentage. The valuation is made by an independent valuer and there is an appeal scheme in case of dispute about the property's value.

If a home is valued at pounds 100,000 and the loan is for pounds 20,000, the LTV is 20 per cent and the bank will share 60 per cent of any increase in value. When the borrower decides to leave, or leaves the scheme, the bank will instruct a valuer to determine an exit value. The borrower will then repay the amount borrowed, and any percentage increase in the value of the property. Should the property's value remain static, or fall, there will be no shared appreciation to pay.

The only costs in these circumstances are the valuation fees (pounds 150 for a pounds 100,000 property, up to pounds 500 for one valued at pounds 500,000), plus a pounds 500 arrangement fee; the legal costs of taking a first mortgage; a pounds 300 fee when exiting the scheme and an early repayment fee, equivalent to 1.5 per cent of the initial loan if the mortgage is repaid within three years.

Loans are not considered on leasehold property, or, currently, on homes in Northern Ireland. The maximum loan is 25 per cent of the valuation, subject to a minimum of pounds 15,000. Loans above pounds 125,000 are considered individually.

The scheme may not appeal to those who wish to retain the entire value of their property, but may be attractive to those who need more capital at their disposal. One would certainly be able to achieve one airline's old advertising slogan: "Travel first class, or your heirs will."

Meg borrowed pounds 22,000 and received pounds 21,000 after the bank's arrangement fee and legal costs. The IFA waived his fee. She flew business class to Victoria Falls to stay in a top-class hotel. Some of the remaining funds will be used to ensure that she is financially comfortable in her remaining months.

Details of shared appreciation mortgages from Teviot House, 41 South Gyle Crescent, Edinburgh EH12 9DR.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Customer Relations Officer

    £13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Jemma Gent: Project Coordinator

    £12 - £15 Hourly Rate: Jemma Gent: In this role you will report to the Head of...

    Recruitment Genius: Evening Administrator

    £8 per hour: Recruitment Genius: This Pension Specialist was established early...

    Day In a Page

    Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

    Homeless Veterans campaign

    Donations hit record-breaking £1m target after huge gift from Lloyds Bank
    Flight MH370 a year on: Lost without a trace – but the search goes on

    Lost without a trace

    But, a year on, the search continues for Flight MH370
    Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

    Germany's spy HQ springs a leak

    Thieves break into new €1.5bn complex... to steal taps
    International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

    Whirlwind wit of Simone de Beauvoir

    Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
    Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

    Confessions of a planespotter

    With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
    Russia's gulag museum 'makes no mention' of Stalin's atrocities

    Russia's gulag museum

    Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
    The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

    The big fresh food con

    Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
    Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

    Virginia Ironside was my landlady

    Tim Willis reveals what it's like to live with an agony aunt on call 24/7
    Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

    Paris Fashion Week 2015

    The wit and wisdom of Manish Arora's exercise in high camp
    8 best workout DVDs

    8 best workout DVDs

    If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
    Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

    Paul Scholes column

    I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
    Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

    From the Azteca to Vicarage Road with a million followers

    Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
    Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

    Khan ready to meet winner of Mayweather v Pacquiao

    The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable