Tuesday, 12 November 2013

Who Cares?

Nursing care - We are all living longer. According to current research, 50% of babies born now could live to see the grand age of 100. Unfortunately, longer life does not always mean longer independent living. More of us could need to fund long term care, for ourselves, parents or spouses.
Nursing care may be free under the NHS – but social care, the provision of homes for old people who are frail or no longer capable of looking after themselves is not, and the bills can be frightening. Even a local authority home can easily mean bills of £1,500 a month and the costs of private care can be much higher. Care fees usually increase annually, making planning ahead difficult when it is impossible to know how long someone will live.
The state makes a contribution, but anyone with assets over a certain level currently receives no local authority funding (which varies across the UK). If you are theoretically eligible to be fully funded by the council but want to choose a care home which charges more than the council’s ‘usual rate’ you may have to make up the difference. These sometimes bear no relationship to local market prices so there may be no places in an area at the council’s usual rate. In these instances councils will ask for third party top-ups – which can be paid for by relatives or charities.
Some authorities may contribute to care fees through a secured loan and the NHS may assist with nursing care costs – but every year, thousands of people are forced to sell their homes to pay for their care. This is set to change. The 2013 Budget set out plans for a cap on lifetime care fees and a higher permitted level of assets before requiring personal contribution. The national lifetime care costs cap will be £72,000 and the assets threshold £118,000, but these will not come in until 2016. Even when the limits are in place, it may be necessary for family to cover a shortfall. Planning is difficult – but there are solutions available. One possible answer is a lump-sum purchase of an immediate care annuity to cover fees for the rest of their life. This can be costly, and the sooner you talk to your financial adviser about the possibilities the more affordable it may be.

Wednesday, 6 November 2013



Mortgage Updates - The housing market seems to be on the road to recovery, with greater consumer confidence helping push up turnover and prices. This is excellent news for anyone on the housing ladder and, with more mortgages around, first time buyers can celebrate too. In a fast-moving marketplace, expert help with finding the right mortgage is crucial.
The UK housing market, in the doldrums during the recession, is on the rise again. Key sources disagree on the exact figures; the Nationwide sees property prices up by 3.5% compared with a year ago, the Halifax suggests 4.6 % and the Land Registry just 1.3%. Nationwide chief economist Robert Gardner sets out the background: “Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures.”
The emergence of different figures from lenders and the Land Registry is unsurprising. This is a complex market and difficult to measure nationally, as homes are about as far from being a homogeneous product as you can get, but the trend is clear. Your home, depending where you live as there are regional variations, could be an appreciating asset again, so if you are not already climbing the housing ladder, it could be time to start.
Fortunately, the mortgage market is coming back to life too – a situation with something of the chicken and the egg about it, as a healthy property market is clearly dependent on a healthy mortgage market, and vice versa. The Council of Mortgage Lenders (CML) reported that loans to first-time buyers, frozen out of the market in recent years, hit 68,200 in the second quarter of 2013, the highest level since the financial crisis began in 2007.
Government initiatives, Funding for Lending and Help to Buy, are playing their part; and, with entry-level borrowing up, the rest of the market is starting to discover it is possible to move onwards and upwards once more. This new demand, which the government says will not inflate a price bubble, has brought mortgage providers back to the market, and some current deals look very attractive.
The brighter picture was reaffirmed by CML chief executive Paul Smee after a meeting with Chancellor George Osborne. Mr Smee said: “The mortgage market is open for business, and it is clear that government support has helped to create more favourable market conditions for home-buyers. Lenders, whether they choose to participate in the Help to Buy guarantee scheme or stay outside, will continue to do their utmost to meet households’ needs for mortgages, but always in a way that is responsible.”
Interest rates on home loans have recently seen all-time lows and forward guidance from the Bank of England suggests its 0.5% base rate will be around for a while yet, unless rampant inflation or financial instability loom. With an abundance of fixed rate, tracker and other variable rate products to choose from and government schemes to navigate, it pays to have an expert to guide you.
For any Mortgage related questions, please feel free to email me at: nm@sterlingnorth.co.uk