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					         50 + YOU
         and your HOUSE
A guide to flexibility, choice and financial independence for the over fifties

                     by Caroline Dobson and Eileen Loughridge
    your mortgage ...
                                What a Mortgage is                             Mortgage lending is much more
                                MOST people can only buy a property          competitive now than at any time in the
                                with the help of a loan usually from a       past. If you have had your mortgage for
                                bank or building society (“the Lender”).     some time you may be able to negotiate
                                The loan is commonly called a                lower interest rates by shopping around
                                Mortgage.                                    various lenders and moving your
                                  In order to protect the repayment of the
                                loan the Lender insists on the borrower        If you have an endowment mortgage it
                                entering into a mortgage which ensures       is advisable to check periodically whether
                                that the property cannot be sold or          or not your policies are on target to
                                transferred without repayment or the         produce sufficient funds to enable
                                Lender’s permission.                         repayment of the mortgage at the end of
                                                                             the terms
                                  The mortgage also gives the Lender the
                                right to take possession and sell the
                                                                             Paying off the Mortgage
                                property if the repayments are not kept up
                                                                             BECAUSE they are for large sums of
                                or if other conditions of the mortgage are
                                                                             money most mortgages are repaid over a
                                                                             long period of time, often 25 years. So if
                                  This can only be done after the Lender     you are over 50 you may be approaching
                                has gone to Court and obtained an Order      the time when you have fully paid off
                                for Possession after following a strict      your mortgage.
                                                                               Either you or your solicitor will need to
                                  If you experience problems with            contact your lender to make sure they
                                repayment then you should contact your       will send you a financial statement
                                Lender to discuss the problem and also       showing the amount of the final payment
                                consider taking legal advice.                and to make arrangements to let you have

2                       Your mortgage
the title deeds ...
      the title deeds and the formal discharge of    Effects of Paying off your Mortgage             It would only be in exceptional
      the mortgage.                                  WHEN you have paid off your mortgage,         circumstances, perhaps where there has
                                                     it releases you from your monthly             been a radical change of fortune, when
        If you take your deeds away from the
                                                     payments to the lender and increases          you would consider paying off an Equity
      lender it is vital that you arrange for safe
                                                     your disposable income. Remember to           Release scheme on your existing property
      storage. Most solicitors will hold title
                                                     cancel the standing order or direct debit     whist still continuing to live there.
      deeds for clients without charge or for a
                                                     to the lender.
      nominal charge.                                                                                You would need to obtain full details of
                                                       You now own the whole value of your         the cost and implications of repayment
        Some lenders offer a facility whereby
                                                     property free of mortgage and in later life   before making a decision.
      they continue to hold the title deeds. In
                                                     having this valuable asset allows you
      this case the mortgage will not be fully                                                       If you have used an Equity Release
                                                     flexibility, choice and financial
      paid off and a nominal amount will                                                           scheme as a tax saving vehicle, rising
      remain outstanding.                                                                          house prices may lead you to consider
                                                                                                   repaying the existing scheme in order to
        If you do pay off your mortgage you          Paying off a Home Equity
                                                                                                   take out a larger loan. The extra cash can
      need to remember that if your buildings        Release Loan
                                                                                                   then be transferred to your family as a
      insurance was effected through your lender     HOME Equity Release Loans are different
                                                                                                   potentially exempt transfer.
      you will need to make alternative              from other types of mortgage in that it
      arrangements to insure the property.           may usually be intended that the loan is        You should always obtain specialist
                                                     repaid on death or permanently leaving        advice when considering taking out or
        One thing to bear in mind when
                                                     the property often to move into               repaying any type of Home Equity
      repaying your mortgage is that the lender
                                                     residential care.                             Release scheme.
      will actively encourage you to maintain
      buildings and contents insurance through         It is also different from other types of
      them. This may be more expensive than          mortgage in that there should be
      other options, particularly as some            provision to transfer the Equity Release
      insurance companies offer competitive          mortgage to another property should you
      rates for people over 50.                      wish to move

                                                                                                                                                50 + YOU and your HOUSE   9
    your funds ...
                             Your home as a financial asset                    A new mortgage
                             NOT only is your house the place where            YOU probably have some savings but you
                             you live it is also likely to be your most        may not wish to use these, preferring to
                             valuable single asset. This is especially true    keep them for a rainy day. You can raise a
                             if you have paid off your mortgage or owe         lump sum from the value of your house by
                             the lender a very small amount. Of course,        taking out a new mortgage. If you have not
                             you may never even have considered                fully paid off your existing mortgage you
                             moving and are quite happy to stay in your        may be able to obtain a further advance.
                             present home. Even so, it is still possible
                                                                                 The advantage of this type of mortgage
                             you may want to unlock some of the value.
                                                                               compared with the equity release
                             Living it up while you still can!                 schemes often advertised for older home
                             NOW that you are retired and may have             owners is that you repay the loan as you
                             fewer financial and family commitments it         go along. You will have a clearer idea of
                             may be the time to plan that special holiday      your financial position and, by reducing
                             you have always talked about, that dream          the amount owed, retain more of the
                             cruise or the trip to visit relatives far away.   value of your house.

                               Alternatively, you may prefer to spend            Remember if you are thinking of taking
                             your money on your home. You may want             on more borrowing there will be costs
                             to add a conservatory, new bathroom or            involved in taking out a new loan – lenders’
                             even a sauna to your existing home. Other         fee, survey fees and legal fees. Don’t
                             things you might want a lump sum for              automatically use your previous lender. It
                             include a new car, caravan or boat to help        is always worth shopping around for the
                             you enjoy your increased leisure time.            best available deal in a competitive market.

                     Releasing funds
5                    from the house
    your retreat ...
                               PEOPLE become owners of second                raise the money on your main home and
                               properties for a number of reasons –          use this to purchase the second property.
                               THESE INCLUDE:
                                 ❖ Inheriting a property from a              Procedures
                                    deceased relative                        IF you are buying in England and Wales
                                 ❖ Buying a holiday home here or abroad      the procedures and legal stages will be as
                                 ❖ Buying an investment property to          set out in Chapter 3.
                                    rent out, renovate or resell
                                                                               Procedures outside England and Wales
                                 ❖ Buying for a child starting university
                                                                             vary enormously and you should obtain
                                 ❖ Buying an elderly parent’s property
                                                                             advice from a local lawyer at an early
                                    to release funds or exercise their
                                                                             stage. There are firms specialising in
                                    right to buy
                                                                             advising British Nationals buying property
                                                                             abroad, especially in France and Spain.
                               LEGAL POINTS

                               Raising the money                             Tax
                               IF you are buying your second property        YOU should always take professional
                               you may be doing so because you have          advice on your particular circumstances.
                               capital available from savings, inheritance   For example, there are differences in the
                               or the sale of a business. If on the other    tax treatment of husbands and wives and
                               hand you are taking out a mortgage you        of unmarried couples. If you rent your
                               should be aware that the interest rates and   property out, all rental income less
                               other terms are likely to be different from   expenses may be subject to Income Tax
                               buying your main home and you need to         and again you should take advice on this
                               shop around. Another alternative is to        before going ahead.

                       Buying and owning
7                      a second property
    your right ...
                              RIGHT to buy refers to the right of certain      increase in value. This gives you
                              tenants to purchase the property they rent       flexibility and security in later life. It also
                              from the landlord, usually but not always,       comprises something you may wish to
                              a local authority or housing association.        leave to your family after your death.

                                The price paid is often considerably
                              less than the market value as there is a
                                                                               AS a home owner you will now be
                              discount calculated on the length of time
                                                                               responsible for all repairs and
                              the purchaser has rented the property.
                              The discount or part of it is usually
                              repayable if the house is sold within a            You may also miss out on future
                              specified time, often three years.               improvements planned by the local
                                                                               authority or other landlord, such as,
                              Advantages                                       double glazing or roof replacement. You
                              THE main advantage is that the use of the        will need to take into account the annual
                              discount means that immediately you              insurance cost of buildings insurance.
                              have made a gain and should you decide
                                                                                 You may find that you are liable to pay
                              to sell after three years, the sale will be at
                                                                               a contribution to maintain footpaths,
                              market value and usually significantly
                                                                               passageways and communal gardens.
                              higher than the purchase price. In other
                                                                               This is especially important to look at if
                              words, exercising your right to buy is a
                                                                               you are buying a flat or maisonette as the
                              good investment.
                                                                               maintenance charges on these cover the
                                Because you own the property you               building as well and might be more
                              have more control over what you do with          expensive than you thought. The
                              it, and can spend money on                       purchase, even at a discount, needs to be
                              improvements and decoration. You now             financed and this will either be by you
                              own a significant asset, which is likely to      committing to a mortgage or using your

9                    Right to buy