Curchods Mortgage services have been providing financial advice to our clients, including mortgages, pensions and investments for nearly 30 years.
Getting the right financial advice for your individual circumstances is more valuable than ever, so we thought it a good opportunity to speak with Simon Labrow, our Senior Mortgage & Protection Consultant, to address some financial aspects of the current Coronavirus pandemic and answer some questions pertinent to anyone approaching retirement.
I still have a mortgage, should I take a payment holiday if this is offered by my lender?
You should only request this option if you do not have sufficient income or pension to cover your repayments. Your lender will be able to provide information on how to apply by phone or on their website.
It is worth noting that if you are granted a mortgage payment holiday, your mortgage payments will not be waived, but added to your mortgage so you will have a larger balance to pay and it will incur additional interest.
You could consider using savings, but it is important that you retain a fund for emergencies, particularly as we don’t know exactly how long the current lockdown situation will last.
I’m approaching retirement and have been furloughed, should I use my savings?
If you are currently employed you may have been Furloughed, which means the government will subsidise 80% of your income subject to a maximum of £2,500 per month before tax, which is equivalent to a maximum of £30,000 a year. This will be arranged by your employer.
If you own your home and have made some provision for retirement, you may be able to use a formal pension plan, investments or cash savings to get though the current situation, without this becoming a set-back to your retirement plans.
As well as or in the absence of a pension plan, investments and cash savings to fund your retirement, there are now specific mortgage schemes that allow you to draw down equity from your home to supplement your other income know as Equity Release Mortgages, for many their property is their most valuable asset.
Alternatively, you could also consider downsizing in the future and living off the equity you’ve accumulated in your property in your retirement.
I’m over 50 and self-employed, but my work has stopped?
If you are self employed the process is more complicated. It partly depends on the structure of your business and how much salary you received prior to the current situation. Our advice would be to speak to your accountant as they could be a good person to advise you on your personal situation. The Government website also has lots of information for the self employed.
For a short term solution speak to your bank. Many are now offering 0% overdrafts and other financial assistance for the self employed.
If you cant keep up repayments on a mortgage or loan speak to the lender as soon as possible, they are likely to be keen to assist you.
If you are in a really difficult short term financial position there may be a local group who can guide you on the availability of food banks and other support. Your local Citizens Advice Bureau or Town Council is a good place to start.
I am fine financially but really worried about the financial situation of my children and their families.
You may be able to gift some surplus cash to your children or pay off some or all of their mortgage for them. This may also reduce your potential future inheritance tax bill, but it’s worth consulting with a specialist for clarification.
If you have equity in your home you may decide to release capital to help your children via a Retirement Mortgage or Equity Release Mortgage.
Retirement Mortgages provide a one off lump sum. Lending is based on your provable formal pension and investment income and last for a specific period of time before they must be repaid. Interest or capital and interest is payable throughout the term of the mortgage.
Equity Release mortgages are long term schemes that allow you to release an initial lump sum and pre-arrange a facility to borrow more money in the future in stages as you need it.
They are similar to traditional mortgages, although lending is based on your age and the value of your home rather than your income. The mortgage must offer you the opportunity to add interest to the mortgage, although many now allow you to pay some or all of it.
There is a wide choice of lenders and options so it is important to speak to a specialist to understand what is best for you. I would be delighted to provide you with some initial advice.
What can you do today?
The financial uncertainties created by the Coronavirus pandemic are unsettling for us all. If you are over 50 and approaching or already in retirement, you may be particularly concerned as your retirement plans could be affected financially.
Simon Labrow, Senior Mortgage Consultant and Later Life Lending Specialist at Curchods Mortgage Services, can help you addresses any financial questions you may have, providing answers tailored to your unique financial situation. Call us to find out more.
Senior Mortgage Advisor | FPC, CeMap