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Archive for the ‘8 Money Matters’ Category

In this article David Foot addresses the issue of interest-only mortgages, and, more specifically, a shortfall of funds with which to repay them when they fall due.

This is inspired by a case that I have been dealing with recently. My client, a lady in her mid-forties, was sold an endowment mortgage; an interest-only borrowing facility with a life assurance and savings plan alongside, intended to provide the requisite life cover, and a tax-free lump sum enough to repay the borrowed amount, and, hopefully, a tidy little nest-egg over and above that.  (more…)

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A little departure from the norm this issue. A subject that has become increasingly popular of late, and will continue to do so, especially as the provision of first-rate occupational pensions is becoming less commonplace, and contributions into personal arrangements are generally somewhat inadequate. This is the thorny subject of ‘Equity Release’ or ‘Lifetime Mortgages’. Much has been said about such arrangements over the years, a fair amount of which was ill-informed, and some, pure sensationalism. I hope to shine a little light on these products, so that you may have a better idea of the realities (and fallacies) of the arrangements that are available these days. (more…)

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With the exception of the small (and much expected) rise in UK interest rates, almost nothing has changed since my last article, and that was written as a result of there not being a great deal to talk about! In the last two months since that article, there have been the usual spats between the President of the United States and Kim Jong Un. The Brexit negotiations are still grinding on, with little or no visible progress, and no signs of any joined-up thinking on the matter. (more…)

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For my piece, or the greater part of it this month, I will be taking you back to the 1680’s. Why, you may ask, and with good reason. Basically, because there is only so much one can say regarding the current economic climate; and I thought it might be interesting to have a look at something rather different. (more…)

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Greetings, Noble Readers of Whistler-shire. Firstly, an update on my column from the last issue. My friend’s Macmillan Cancer nurse (wonderful people) contacted his mortgage lender, on his behalf, and advised them of his circumstances. His mortgage was approaching the end of its term, and he had been forced to spend his savings – with which he intended to redeem the loan – on other essential expenses. They have agreed to extend his mortgage, on an interest-only basis, allowing time for his treatment, and in the fullness of time, a change to Equity Release. Should things not go as well as hoped, the value of his property is significantly higher than the outstanding debt. A great weight off his mind, he can concentrate now on getting well. (more…)

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It is funny how, sometimes, unexpected events can suddenly change one’s course of action. I wasn’t going to write this piece: I was going to write on a completely different subject, but a chance meeting changed my mind.

I was walking past an old haunt, and decided to look in, briefly, hoping to have a quick word with the manager on a business matter. Just inside the door was an old friend who I have known since arranging a mortgage for him, some 30 years ago. I greeted him warmly and enquired as to his health. “So, so,” he replied and asked if I could spare a few minutes for a chat. The Boss wasn’t available so I sat down for a word with my old pal. Commenting on his not being his usual chipper self, he told me that he had just been diagnosed with cancer, and asked if I would help him to “get all his ducks in a row.” Needless to say I agreed I would, and said how sorry I was to hear his news.

“No-one should be sad,” he said, “my life has been a great adventure. I have travelled the world; seen countless beautiful things; met many wonderful people; and seen many of my heroes playing beautiful music.” (his passion) “Millions of children are born with little or nothing to eat or drink, and die without even having had the benefit of a basic education.” It is unlike me to be lost for words, but I was, for a minute.

You may wonder what all this has to do with finance, but my friend asked specifically about Equity Release to provide some extra cash, to finance his ‘to do list’ and in these circumstances it is important to have a current will in place, to ensure that one’s estate is distributed in the desired way. Another useful thing to consider is putting some assets (principally policies) in a Trust. This will sidestep the sometimes tortuous process of probate, and ensure that these assets go straight into the hands of the beneficiaries.

End-of-life planning isn’t just for the twilight years. It is something that can start relatively early, principally when we first have financial or family liabilities. In these cases, it is an unexpected death that is protected against by way of Life Assurance policies, but as the years pass the inevitable becomes more so. Moreover, it is worth remembering that in the UK people are five times more likely to protect against death than critical illness; and critical illness policies outsell Income Protection polices, again by five-to-one. The single, most incorrect statement ever must be “It’ll never happen to me”, but that seems to be the subtitle to most people’s lives, in some way, shape, or form. However, too often ‘it’ does and, far too often, no protection is in place to help to deal with the effects. I would be amongst the first to advocate not spending so much on insurance and committing such an amount to savings and investments that you can’t afford to have a life. But it is as vital to allocate something towards protection provisions, as it is to save and invest. Life can be too short!

Sorry if I’ve been a bit low-key this time. Next issue I shall be full of the joys of Summer. Until then, seize the day!

David Foot

 

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