Friday, 18 January 2019

The benefits of a new home in a retirement community

Over 55 couple in retirement village
‘Retirement villages’, ‘retirement communities’ or ‘age exclusive developments’ are a relatively new idea in the UK. Ten years ago you would have struggled to find one (OK – maybe ten years you weren’t looking for one – just take our word for it!).

But maybe you are looking for one now. If not for yourself, then for family members.

In our experience (and we’ve researched this topic pretty thoroughly) it is often the children of retirement village residents who first suggest the idea to them. When your parents are starting to ‘get on a bit’ and are rattling around in the old family home which is far too big for their needs, it’s maybe time to think of making a move. Especially a move that brings them nearer to you.

And there are lots of good reasons for making the move to a retirement village.

Typically, these are communities of from 50 homes up to 200. They may be apartments, bungalows or small houses. All are designed and built to require minimum maintenance and there are usually some shared services – such as a cleaner or gardener, for example, to look after communal areas.

What retirement villages are not is ‘care homes’. Residents live active and independent lives in their own homes. They are not ‘elderly’. That’s why the age limit for these developments is sometimes as low as 50 years. But 55 or 60 is more typical.

They are designed to appeal to healthy and active people – whether retired or still working – who are ‘downsizing’.

There can be a strong financial incentive to make a move to one of these communities. Some people can sell their current home for considerably more than the cost of a new one in a retirement village, allowing them to bank a tidy sum of money.

But it is the community aspects of these developments which are their key benefit. Residents make their home among a group of like-minded neighbours. Strong new friendships are often formed.

And research shows that this has all sorts of benefits. A report from the Joseph Rowntree Foundation called ‘Making the case for retirement villages’ found that:

Retirement villages promote health and well-being. Increased opportunities for social interaction and engagement can reduce the experience of social isolation, with consequent benefits to health, well-being, and quality of life.
There is often a wide range of different resident-led interest groups in retirement villages and there is a pool of people from which to draw friends and companions.
The villages show ‘solidarity in ageing’, with people making organised responses to difficulties being experienced by individuals. For example, neighbours collectively organise assistance with shopping, meal preparation, visiting and so forth for people coming out of hospital. And the community as a whole gets engaged in things such as neighbourhood watch schemes.
Living in a purpose-built, barrier-free, efficiently-heated environment removes many of the difficulties and dangers of living in inappropriate accommodation, in particular the risk of falls.

The report also shows that residents see retirement villages as a positive choice. They are particularly attracted by the combination of independence and security, as well as opportunities for social engagement and an active life.

So, if it is time for Mum and Dad (or you) to start thinking about a home better suited to their needs, why not consider somewhere like The Croft at Baston?

Thursday, 17 January 2019

Bungalows for family living

An Allison Homes bungalow
The British have a bit of a love affair with bungalows. But bungalows also have an image problem. They are are seen as good housing for people who are, perhaps, getting on in years.

We think that’s all wrong and it’s time for a ‘bungalow revival’. Bungalows can be great places to bring up a family.

Here are a few things worth thinking about:

It is stating the obvious – but there are no stairs! So, if you have young children you don’t need to worry about stair gates to stop them falling down the steps. And when you trip over the toys they’ve left strewn around, you’re not going to fall down the stairs either!
Everyone is closer to hand. When the kids are playing in their bedrooms, they somehow seem nearer than when they are a floor above you. And if you need to make several trips to their room in a morning to get them out of bed or in an evening to drag them in to dinner, the closeness can have advantages. You won’t need to shout up the stairs any more (but maybe you just text them anyway, if you’re in a really big house!).
It may be a mixed blessing – but you won’t be constantly going up and down stairs to visit the loo, get the washing from the bedrooms, etc. But if that is the only exercise you get all day, maybe stairs are a good thing!
However, the fact that moving items such as furniture around the home is easier in a bungalow is definitely an advantage. If you’ve ever tried to get a wardrobe up a flight of stairs, you’ll know what we mean!
Bungalows can be easier to keep clean and tidy, inside and out. Apart from the fact that there are no stairs to keep clean, all your windows are on one level – so you don’t need to employ a window cleaner. If you have the time, you can clean all the windows yourself with no more specialist equipment than a step ladder.
Exterior maintenance of a bungalow can be easier than a house as well. If your window frames need repainting, they are all within easy reach of the ground. And a step ladder is all you will need to reach the gutters for clearing or painting.
If you’re surrounded by other bungalows, you won’t have anyone overlooking your garden.
Planning ahead, it’s a fact that most of us get less mobile as we get older. Having all your rooms on one floor may mean that, even if your mobility declines to the stage where you need a wheelchair or walking frame, you won’t need to move home.

But there are some downsides you may want to think about as well:

Some people are not happy sleeping on the ground floor, feeling that they are somehow more vulnerable. We’ve not seen any evidence that this is the case. But sometimes evidence isn’t what matters - it’s how you feel!
Some people feel that living on one level means that there’s not as much separation between living and bedroom areas. There is also a perception that there will be more problem with noise – eg, the TV in the living area keeping children awake – but again there’s no evidence to support this. Modern bungalows are built to high standards. You will probably have as much trouble with noise in a house traveling through ceilings as with noise in a bungalow traveling through the walls.
You may also feel there is less privacy when bathrooms are on the same level as other living areas. Again, it’s a ‘perception thing’. How do you feel about it?
Pound for pound, you will probably get more living space with a house than you will with a bungalow. In other words, a bungalow is likely to have a higher cost per square foot (or square metre – we really should ‘go metric’ in the property business).

A recent survey carried out by Tepilo, Sarah Beeny’s estate agency, found that people living in bungalows are the nation’s happiest homeowners. They were the most likely to say they are very happy with their property, with 51 per cent agreeing. This was followed by those living in detached properties (41 per cent), semi-detached homes (37 per cent) and flats (34 per cent).

Put all the evidence together and you can see that living in a bungalow has many advantages. So, while they are extremely popular with older homeowners, younger buyers are also realising the many benefits that these properties offer.

If you are interested in bungalow living, take a look at the Allison Homes developments at Pinchbeck Fields and Nettleham Chase.

And if you are over 55 and thinking about a bungalow in a ‘retirement community’, you could take a look at our development at The Croft in Baston.

Wednesday, 16 January 2019

Getting a mortgage – without a deposit

Mortgage calculator
Yes, you read that headline correctly. You can get a mortgage, even as a first-time buyer, without having a deposit.

Sounds too good to be true? Sadly, for most people it probably is. But read on to see if you could be one of the lucky few.

Some lenders (and there aren’t many of them, to be honest) will give a mortgage to cover 100 per cent of the purchase price of your new home. But only if someone else is willing to guarantee that you will keep up the payments.

You will no doubt have noticed that every mortgage advert you see contains the words “Your home may be repossessed if you do not keep up repayments on your mortgage” – or something similar.

Repossession is the mortgage lender’s final trump card. If you don’t keep up your mortgage payments, the lender will eventually kick you out of the house and sell it. That’s the way it can be sure it will get its money back.

But – you will be pleased to know – lenders really don’t like to do that. Just on a practical level, it’s messy and complicated from the lender’s perspective. So, what if the lender could be sure of getting its money back from someone else, not you?

That’s the basis on which you may be able to get a 100 per cent mortgage – a loan for the full cost of the house.

It’s called a guarantor mortgage, where a friend (it would have to be a really good friend) or a family member takes on some of the risk of your loan by offering their own home or their savings as ‘security’ for the lender. Whoever it is becomes what is known as a ‘guarantor’. If you don't make your mortgage repayments, the lender then gets the money from your guarantor instead.

So, you can get a mortgage without a deposit if you have a guarantor who the lender thinks will be certain to come up with the cash if you can’t.

And that’s why only a few people are able to get a 100 per cent guarantor mortgage. You have to have a guarantor. Who do you know who trusts you enough to put their own home or savings at risk to help you take that first step on the ‘property ladder’? It’s a ‘big ask’ that you’ll be making.

But it can be done. The Bank of Mum and Dad may come up with the guarantee.

Of course, you don’t need to go for a 100 per cent loan to take out a guarantor mortgage. You could borrow less than the full purchase price of your new home and still use a guarantor mortgage.

So, why would you want to do that?

Well, for a start, you may be able to get a better interest rate because the lender will see you as less of a ‘risk’. This particularly applies if you have a poor ‘credit history’ such as regularly going overdrawn at the bank or missing payments on your credit cards.

If you decide to go down the guarantor mortgage route, both you and your guarantor are responsible for the mortgage repayments. And, just as you will (if it all goes wrong) have your home repossessed if you cannot afford to repay the loan, your guarantor could (in the worst of all circumstances) lose their home as well.

For example, if you owed your lender £250,000 but it was only able to recover £200,000 by repossessing your property and selling it (which could well happen if property prices go down), your guarantor would be liable for the remaining £50,000.

If your guarantor couldn't find the money, their home could be repossessed as well. Usually, though, they would be able to take out a second mortgage on their home to repay the debt. But that still saddles them with a potentially large additional monthly payment they have to find as a consequence of their generosity in guaranteeing your mortgage.

There are a number of variations on the basic guarantor mortgage, with greater or lesser risks for the guarantor.

For example, under a so-called ‘family offset mortgage’, parents or grandparents put their savings into an account linked to your mortgage. The amount in the account is deducted from the amount of the loan that you pay interest on, which is good news for you. The bad news for the family is that they don’t get any interest on their savings. And if you stop making your mortgage payments, they could lose all the money in the account. If all goes well, however, eventually they do get their money back.

Some lenders offer a similar mortgage scheme where the family’s money is put into a special account and is held as security against the mortgage. They still get interest paid on their savings (although the rate will not be as good as they'd get with other investments). And if you meet all your repayments, it won't cost your guarantor a penny.

If you don’t make all your repayments, though, the lender can take the money from the guarantor’s account.

It can all get a bit complicated. So, we’d strongly recommend that you (and your guarantor) get some good independent financial and legal advice. Everyone needs to know exactly where they stand and what the risks are.

There is real danger of families being torn apart if things go wrong. You and your guarantor may have every confidence now that the lender will never need to call on the guarantee. But you do need to think seriously about what happens if you cannot keep up your payments.

That said, a guarantor mortgage can be a great idea. And it could allow you to get a mortgage without a deposit.

It has to be worth looking at, surely?

For advice on finding an independent financial adviser and a quick estimate of what your monthly mortgage repayments might be, take a look at our mortgage calculator.

Tuesday, 15 January 2019

50-plus and in need of a mortgage?

Mortgage application
If you are 50 or 60 years old (or more) and thinking of moving home, you are probably thinking of ‘down-sizing’ – moving to a smaller property. If so, you probably have a house to sell that is worth more than the one you want to buy. So, you won’t need a mortgage.

But you may want to do the exact opposite. Maybe you want to ‘up-size’ and move to a bigger property. In which case, you may well need to take out a new mortgage.

So, where do you stand with getting a loan?

The normal mortgage term – the number of years you will be paying off the loan – in the UK is 25 years. And with rising house prices making property purchase increasingly difficult, 30-year terms are becoming common.

If you are 50 years old or more already, 25 or 30 years will probably take you well into retirement (although many of us, from choice or necessity, are working well beyond the age at which previous generations retired). Will a lender be willing to give you a mortgage if you may not have a salary with which to repay it?

Lenders see offering you a mortgage becoming riskier as you get older. They need to be sure they will get their money back – without taking drastic steps such as repossessing your house. They must also follow the Mortgage Market Review (MMR) rules, which mean they have to make sure you can keep up with repayments over the full term of the mortgage.

As we all know, what you earn is one of the key factors in deciding how big a mortgage you can obtain. So how do lenders view people who may not be earning a salary at all during the period of the loan?

The good news is that an increasing number of lenders are willing to look at mortgages that will take you well into your 80s – or even your 90s. We are all (if we’re lucky) living longer nowadays and the financial services industry is adapting to the changes.

Some lenders, though, still have lower age limits. They may well insist that if you want to take out a mortgage aged 50 or more, you take it out over a short term – say 15 years – so that the majority (if not all) of the repayment period is while you are still earning.

Of course, a shorter term on your mortgage means more expensive monthly repayments, so this may not be ideal. Especially if you will be paying from a pension.

On the other hand, taking on a 25 or 30-year mortgage later in life is not necessarily a good option either. Financial planners usually recommend that you eliminate as much of your debt as possible before retirement. By reducing debt, or ideally becoming debt-free, you will have an easier time managing daily expenses once you are living with less income.

If you can afford the higher monthly payments of a 15-year mortgage, you will ultimately save money by paying less interest over the life of the loan. And by paying off the mortgage more quickly, you could eliminate mortgage debt early in your retirement years, or even before you retire.

Whether you are going for 15 years, 30 years or some other term, it is often easiest to do a deal with your existing mortgage provider rather than seek a new lender. They will usually be willing to forget about things like early repayment fees (what you need to pay if you want to end a mortgage early) if you are taking out a new mortgage with them.

But if their rules prevent them from offering you a new mortgage because of your age, you may have a problem.

One way to increase your chances of getting a mortgage in later life is to have a clear plan of how you will pay the loan back. This will not only help you to budget for making payments when you retire, to provide you with the assurance that you can afford the loan, it will give the lender that same assurance.

You will need to prove to the lender that you will have enough income to cover the repayments after you retire. If you want the lender to take account of your pension income you will have to show evidence that you are paying into a pension (or are receiving one). If you are still a few years away from retirement, you will need to show some evidence of what your pension and any other income will be once you’ve stopped working.

The lender will also want to know how you plan to cope with some of the consequences of old age. If you are one half of a couple, for example, and one of you dies, how will the surviving partner pay off the loan? What happens if one of you needs to go into a nursing home? It all may sound a bit ‘morbid’ but it is actually sensible long-term planning.

Getting some good professional advice at an early stage is well worthwhile. If you are buying a new home from a builder such as Larkfleet Homes or Allison Homes they will be able to recommend an advisor who can help you. He or she will have experience of the available options and know which banks and building societies are willing to take on older borrowers – and at what costs.

Wednesday, 9 January 2019

Women in charge when searching for new homes

Taking the keys to a new house
This may not come as a total surprise. Research we have carried out has proven that when it comes to finding a new family home, if there is one person ‘in charge’, it is women who take the lead.

A survey we ran with a number of media partners has revealed that, in the majority of households, there is shared responsibility for the search for a new home. Even the children play a role in some cases (why not? they will be living there too).

In fact, in almost 70 per cent of households thinking about moving to a new house, there is no clear leader in the property search.

However, where there is one individual leading the search it is likely to be a woman. This is the case in more than 30 per cent of households. In only a very small number of mixed gender households is it a man taking the lead.

The research also identified a strong role for ‘extended families’ in both searching and decision-making by first-time buyers. Parents in particular are heavily involved – perhaps not surprising when the research also shows that the ‘Bank of Mum and Dad’ is the most common source of financial help for house buyers.

Not everyone gets financial help, however. The survey shows although many (28 per cent) current house-hunters expect to receive some help with putting together the deposit needed to secure a mortgage, most of them (64 per cent) say they will have no assistance.

And when it comes to the point of purchase it appears that not all the promised assistance materialises. Among those who have actually completed a purchase only 22 per cent say they received help with the deposit.

Those who did receive help with putting together a deposit usually (58 per cent) obtained it from their parents – and grandparents assisted a further 8 per cent of respondents.

A slight majority (51 per cent) of those who received help are expected to pay the money back – but 46 per cent are not and 3 per cent are unsure.

About the research: 

1. The research was conducted in two phases:
a) An online survey in which people were asked a number of questions about their house-buying preferences and experience. 
b) A telephone interview in which people were asked more probing questions about a number of topics. 
2. The survey was promoted online and in print through a number of channels to obtain a representative cross-section of respondents who were either currently searching for a new home or had bought one within the past 12 months. 
3. What Mortgage and First Time Buyer Magazine were media partners and helped to promote the survey to their readers.
4. 418 people took part in the online survey and 30 then went on to participate in the telephone research.

Tuesday, 8 January 2019

Selling your home when buying a new one

House for sale
As we’ve seen on our blog before, selling your existing house so that you can buy your new dream home can be a bit of a problem. If you cannot find a buyer for your current home – or you thought you had a buyer and then it all went wrong when the buyer pulled out – you may not be able to buy your new house.

In the property industry they call it a ‘chain’. And you really don’t want to be there if you can avoid it.

Probably worst of all is to be in the middle of the chain. You have to sell your house before you can get the cash to buy your new one. But the people who are buying your house need to sell their house before they can pay you. And the people buying their house need to sell …. etc, etc.

There can be many links in the chain above you. And if any one of them ‘breaks’, everyone in the chain (including you) may have to start again.

And there may be a chain ‘beneath’ you as well. If you are buying a second-hand home, the people who are selling it to you need to move out before you can move in. They may need to wait for the people selling their planned new home to complete their purchase. And they may need to wait …. etc, etc, all over again.  And if the chain breaks, you’re all ‘back to square one’.

It can be a complete nightmare. But there are ways to solve the problem without losing too much sleep – or money.

One way is simply (well, it sounds simple) to sell before you buy. Sell your existing home, put the money in the bank, and then go shopping for your new home.

As a ‘cash buyer’ you can be in a position to negotiate a good deal and vendors (the people selling the home you want to buy) may prefer to take a lower offer from you than a higher offer from someone who hasn’t yet sold their own home.

Of course, there are downsides.

One is that you’ll probably have to move out of your existing house and take a short-term rental somewhere else (or move in with family or friends) while you shop around for your new home.

That’s not always the case, though. You may (if you’re lucky) be able to agree a short-term rental with the people buying your existing home, so you can stay there for a few weeks while you are house-hunting. Don’t count on this as an option, though – it’s rare that your desire to stay for a while will match your buyer’s plans. They are much more likely to want to move in straight away.

If you do need to move out before you have a new home to move into, you’ll have two sets of moving costs (from your existing home to your rental home, and then from there to your new home) rather than just one. And if you’ve put your furniture into storage while you stay with family, you’ll have storage costs to pay as well. Compared with all the other costs involved in buying and selling a house, though, it’s not a big deal.

But don’t forget that you won’t be getting much interest on money you put into the bank – and house prices will probably be rising all the time you’re shopping around. Again, it’s probably not a big deal at this time of relatively slow house price increases, but you don’t want to leave it too long before you ‘get back on the property ladder’.

Of course, there are other ways of avoiding getting caught up in chains.

If you are buying a brand-new home from a builder, you clearly don’t have a problem waiting for someone to move out before you can move in. So, there’s no chain ‘beneath’ you.

And the builder may be able to cut the chain ‘above’ you as well. Many developers – such as Larkfleet Homes and Allison Homes – offer schemes such as part exchange, assisted sale or guaranteed sale to help you get rid of your existing home at a good price.

With part exchange, the builder will take your existing home as part-payment for the home you want to buy. You then only need to find the money to pay the difference between the sale price of your existing home and the purchase price of your new one. And the builder can probably introduce you to a financial adviser to help you find a good mortgage deal (we can certainly do that at Larkfleet) if you need to borrow the money to do this.

In an assisted sale scheme, the builder will help you to sell your existing home – and while you are waiting for the sale to be completed, will reserve the home you want to buy for you. It takes some of the pressure off when it comes to selling your existing house. You know that you cannot ‘lose’ the home you want because the vendor decides to take a better (or quicker) offer from another purchaser.

And sometimes there are other benefits too – at Larkfleet, for example, we will pay your estate agent’s fees when the sale completes.

With a guaranteed sale scheme (at Larkfleet we call it Secure Home Purchase) the builder buys your home – and then, one you’ve moved out, sells it again. There is a small commission to pay but it can be well worth the money for all the hassle it saves!

Finally – well, as far as today’s blog is concerned – you can escape your chains by using a bridging loan. Basically, this is some short-term finance which puts cash in your bank while you’re waiting for your existing home to sell. It makes you a ‘cash buyer’ in the same way as if you had sold your existing home.

But bridging loans are not cheap. If you are planning ahead, most of the ideas above (selling before you buy or doing a deal with a builder) are probably going to be better value.

Where bridging loans can be really useful is to ‘repair a broken chain’. It is possible to get a bridging loan arranged within a few days. So, if the buyer of your existing home has pulled out, and because of this you are at risk of losing the option of buying your new home, a bridging loan can be a stop-gap solution. We’ll come back to this topic in a future blog post. At this stage, all we’ll say is – get some good financial advice before you go down this route!

In the meantime, you can read our advice on selling your existing home – because at some stage, the solution to all the problems is to find a buyer willing to pay a good price for the home where you currently live!

Friday, 4 January 2019

Maybe Mum and Dad should move home?

Enjoying retirement in a new home
When we were young we all desperately wanted to be older – as teenagers we longed to be adult. It would, we thought, give us all sorts of things that we just didn’t have as kids. A home of our own being one of them.

Now that we’re older and that home is either a reality or coming within reach, is being adult all that we dreamed it would be? Do we sometimes wish we were younger again?

And surely by the time we reach our 60s and 70s we would like to turn the clock back, for all sorts of reasons?

Well, apparently not. Research shows that we are at our happiest once we’ve turned 65. So, if you’ve not yet reached that age, you have something to look forward to!

But when we reach our sixties we need to start thinking of what the future will bring. Retirement and all that comes with it can be a ‘watershed’ moment, opening up new opportunities – not least in our choice of home.

And if that is not yet you, maybe it is something your parents are experiencing?

For most of history, people spent their whole lives in small communities. Few people moved away from the village where they were born. Several generations of the same family would share a home. Those who moved out were usually living just around the corner in a home shared with several generations of the family of a husband or wife.

That’s not the way of things in Britain today. Children grow up and leave home in pursuit of education or jobs. They often end up living miles from their parents. Which is fine for them and their parents – until the parents pass a milestone age (60? 65? 70?) at which some rethinking may be needed.

Maybe it would be better if the family were closer together again? Would that make life easier – if not now, perhaps in the future?

But, let’s face it, you probably don’t want Mum and Dad moving into the spare bedroom. Perhaps somewhere a little closer to hand than where they live at present, though?

Now, they may be nowhere near ready to move into a care home. They are still fit and well and enjoying retired life with the freedoms it brings. But maybe thinking ahead would be good. In fact, the right choice of housing in retirement could (research shows) postpone the time when people do need a care home, perhaps by several years.

That’s why there is an increasing interest in age-exclusive developments that are designed for those who have retired or are planning to do so in the next few years.

These communities are built to meet the housing needs of people of a certain age – some are for people ‘over 55’, others ‘over 60’. The idea is the same, regardless of the exact age limit.

They provide the over-55s or over-60s (whether retired or still working) with independence based on owning and living in their own homes combined with the health and social benefits of being part of a community.

Research by The Joseph Rowntree Foundation shows that communities such as the ones that Larkfleet creates under The Croft brand – with their opportunities for social interaction and engagement – can reduce social isolation, with consequent benefits to health, well-being and quality of life.

Communities such as The Croft can provide a wide range of different resident-led interest groups and a wide pool of people from which to draw friends and companions.

Studies have also found real community support for residents in developments such as The Croft. For example, neighbours will often help with activities such as shopping. The community will provide support for everyone through formal or informal ‘neighbourhood watch schemes’ and similar arrangements.

That’s a benefit not just for the residents but for their wider families, knowing that someone is keeping an eye on Mum and Dad. And also knowing that the older generation is not feeling lonely and isolated but actively enjoying a good social life.

If that is happening just a short distance from home, rather than on the far side of the country, it makes the whole notion of family support so much easier.

The research which shows we are happiest in our retirement years suggests that one of the reasons we are not so happy in the years leading up to our retirement may be that we not only have to look after our own kids, but we are under pressure to invest time in looking after parents too.

So, a move to The Croft could be a ‘win:win’ – good for everyone.