Laura Howard Time to remortgage?
Q: The mortgage against our home amounts to half of its current value, which I know puts us in line for some of the cheapest mortgage deals. But my husband is about to turn 60 – are we too old to remortgage?
A: Most lenders will want to see that the oldest of any joint mortgage applicants can clear the debt before retirement age, which is typically viewed as 65. However, a mortgage doesn’t have to be taken over 25 years – the typical minimum is five years, so if you are in a position to clear the debt over this timeframe, there won’t be a problem. It is still possible to take the debt beyond retirement age so long as sufficient income can be proved to meet the lender’s affordability criteria.
Income from a private pension will be acceptable for this purpose. If you are not yet claiming a pension, however, this will mean the lender relying on projected figures which, especially in today’s economic climate, can prove a little trickier. Finally, bear in mind that the majority of lenders these days will want to see the mortgage cleared by the time the oldest applicant hits 75 – regardless.
Helping the kids
Q: We are downsizing to a smaller home and would like to divide some of the equity from our house sale between our two sons to help them pay off their mortgages. We are thinking of giving them £30,000 each. What is the law regarding making a gift like this to our children? Would we have to pay it in stages over a long period of time or can it be given to them immediately as a lump sum?
A: There is no law that states how much money you can give to people – family or otherwise. However, there could be tax implications. While you are free to transfer the full £30,000 to each son as a lump sum, if you both died within seven years of making the gift, it would still form part of your estate when it comes to Inheritance Tax. IHT is currently payable at £325,000 or £650,000 for couples – a threshold which the Government says it will freeze until 2015. You can give up to £3,000 each year without being subject to IHT, though this would mean 10 years of payments to each son, by which time they could well have paid off their mortgages anyway.
Where there’s a will
Q: Our step-grandmother, who we have helped for years, died recently without leaving us a cent. We feel that something may have gone wrong or that perhaps other relatives got the money. Is there a simple, cheap way to find out?
A: Yes, there are things you can do. First find out whether the deceased had a will and what was in it. You can do this by writing to the Probate Registry (1st Floor, Castle Chambers, 5 Clifford Street, York, North Yorkshire YO1 9RG). You will need to provide her full name, date of death and last-known address, and you should enclose a cheque for £5 made payable to Her Majesty’s Court Service (HMCS).
If your step-grandmother died intestate (without a will), in the absence of a spouse the law states that assets are passed to blood or half-blood relatives and then to the Crown. Rightly or wrongly, as step relatives, I’m afraid you will not be in line for any inheritance.
Savings at a standstill
Q: The interest on my savings has dwindled to almost nothing. I want a better return but the best-paying accounts seem to be five-year fixed rate bonds. Should I tie up my money for that long?
A: It’s unlikely that interest rates will stay at their current 0.5% for the next five years, so consider a compromise – eg, putting your savings in a two or three-year bond, or putting half of them in a five-year bond and keeping back the remainder until interest rate movements are clearer.
If you do only one thing this month...
Check your tax code. You can find this on the Coding Notice sent to you before the start of each tax year. Check that the numbers and letters are right using guidance on the HMRC website (hmrc.gov.uk). If they look wrong, phone your local tax office immediately. You can find the number online by typing in your postcode. See Paul Lewis on page 147 of the November 2010 edition of Saga Magazine.
The Way We Are
According to a recent survey, 12% of women and 11% of men over 40 say they know nothing about their spouse or partner’s finances – most say they are simply ‘not interested’. If that’s you, perhaps it’s time to get serious...
Nearly a third (30%) of adult children expect to rely on financial help from retired parents, another report reveals.
Written by Laura Howard, this article was first published in the November 2010 issue of Saga Magazine. Laura's opinions are her own and for general information only. Always seek independent, professional, financial advice.