Are you in financial agony? Ask Paul Lewis, broadcaster and our new financial agony uncle. Is there something you’ve always wanted to know but don’t understand? Do you need to know your rights in a situation? Have you been in a situation where you think you’ve been ripped off?
Paul can help. He can’t take on individual cases or try to force firms or the Government to be reasonable. But you can send all those questions about things that puzzle you involving money to Paul at [email protected] and he will answer some of them in this column. Remember, it’s your column so get those questions coming in.
Bob from East Anglia writes: I am in my early seventies, semi-retired and live in my own bungalow. However, it’s in poor condition and needs complete refurbishment. It is a solid pre-war build but has old electrics, no double glazing and an old oil-fired boiler. I have no capital and low income. My wife is a care worker. I’ve seen adverts saying you can ‘sell your house and live there till you die’ to get money for repairs. Are these okay or what other method is better?
Paul replies: Hi Bob, worries like yours are very common as we get older. But beware any financial advert on daytime TV. Any major financial deal should only be considered with a firm that is regulated.
A few firms that offer what is called “home reversion” are regulated. If you are over 60 they buy a part of your home and let you continue to live there until you die when your home is sold and proceeds shared between them and your estate.
But the ones that advertise to buy your home for cash are generally not. These deals can leave you at their whim for the rest of your life – not a good thing at any age.
To a keen gardener like you I would say don’t touch them with a long-handled hoe.
Instead, there are two solutions you should consider. You own your home outright and from what I can see it is standard build and, as you say, solid. So my first suggestion is called equity release. All that means is that you set free (release) some of the equity (value) of your home as cash which you are then free to spend on whatever you choose.
You do this by taking out what is called a lifetime mortgage. In other words, you borrow money against the value of your home. But unlike a normal mortgage you do not repay it while you are alive. Instead, the interest of around 6.5 per cent a year is added on to the debt and then the whole lot is repaid from your estate after you have died.
At 72, you could borrow around 35 per cent of the value of your home. With its large garden it is worth around £400,000. So you could borrow up to £140,000 which should be enough to rewire, double glaze, buy a new boiler, fit proper radiators and have some left over for repairing the damage done and redecorating. Not to mention a holiday to recover!
You told me you live with your wife, Mrs Bob. Normally, equity release would be taken out jointly and the debt would only be repaid once you have both died or gone into a care home. You tell me Mrs Bob is younger than you. If she were at least 55 that would not matter, though the amount you could borrow would be less. But in fact Mrs Bob is younger than that. Normally, that would rule out equity release. So I looked for a solution!
I went to a top equity release broker, recently retired, who I have known for many years. Few people know more about it than him. Over the years, he told me from Spain, he has dealt with this scenario and explained the solution.
First, two questions:
Then, find a top equity release broker who covers the whole of the market and who is a member of the Equity Release Council. The two biggest – both of whom I have dealt with – are Age Partnership www.agepartnership.co.uk and Key www.keyadvice.co.uk. Beware googling as you will get adverts for firms that may not be suitable.
The broker you choose will contact lenders they use and ask who would do a deal on those terms. My expert contact told me: “We’ve definitely done deals with a waiver to exclude a spouse from the terms of the loan”. It may seem complicated and risky for Mrs Bob. But with your age difference it is a possible solution. Of course only you and she, as a couple, can decide if you want to do it.
Most married readers will be closer in age than you. If both are over 55, equity release can be the ideal way to fund important repairs and home improvements.
If you decide against it, see if you can get help from a local care and repair charity. Ones that are part of the Home Improvement Agency can help people on limited incomes with vital repairs. I know from the detail you kindly shared with me that your home does need serious work to provide a warm, healthy environment. So look one up – there are several in your county – and see if they will help you.
Bob, neither may be a perfect solution. But either of them is far, far better than relying on an unregulated firm which advertises on afternoon TV. That is where the real problems lie.
Good luck with it!
Comments
Leave a Comment