the times | Saturday December 18 2021 77
Money
W
hen we bought our
house three years
ago, when we were
about to retire, we
moved “sideways”
so that we would not have to take on
another mortgage.
Since then we have started to draw
money from my husband’s pension
and took the 25 per cent tax-free
lump sum, which we have invested in
two stocks-and-shares Isas.
Between us we hold £300,000 in
these two Isas, which we built up by
putting in the maximum £20,000 a
year. We also have about £12,000 in
easy-access savings.
I am 65 and get an income of
£18,000 a year from a final-salary
pension and will soon get £8,000 a
year from my state pension. My hus-
band, 67, gets a state pension of just
under £10,000 a year. The rest of his
pot is worth approximately
£600,000.
We would now like to live in a bet-
ter house but don’t know the best way
to fund this. It’s likely that we would
spend around £650,000 on a new
home and rather than putting our
house on the market, we want to wait
to see if our ideal home comes up first
and then make an offer. We would
then sell our house, which is worth
about £450,000. If the purchase went
through before our sale, what would
be the best way to finance it? We’re
not averse to taking out a mortgage
but I presume we wouldn’t get much
based on our income. Would the
stocks-and-shares Isa and the large
pension pot be taken into account by
mortgage lenders?
Name and address supplied
Troubleshooter says
If you buy another property before
selling your current one, you will
have to pay the 3 per cent stamp duty
able to do this if you don’t sell in time.
It might be possible to use your
£450,000 equity as leverage for a
bridging loan — a short-term way of
borrowing money that you would
pay off when you sell your old house.
Daniel Yeo from SF Broker said it
might be possible to get a bridging
loan for the entire value of your new
house, but of course the bigger the
loan the more you pay in interest.
Most bridging loans require a mini-
mum 25 per cent deposit, so you
would need to stump up at least
£162,500.
Chris Sykes from the mortgage
broker Private Finance warned that
bridging finance is risky because len-
ders generally need to make their
profits in less than a year. This means
that the costs are significantly higher
than a normal mortgage. If it takes a
long time to sell your old house, you
could end up with a very large bill.
If you do opt for a bridging loan,
Sykes said it might be a good idea to
put your home on the market at a
discount to sell it quickly rather than
incurring the huge costs associated
with bridging. By far the cheapest op-
tion would be to find a seller who is
willing to wait for you to sell your
house, cutting out the need for aLumbered with a broken sofa bed
We bought a sofa bed from the
furniture company Willow &
Hall at the end of August, paying
£1,264 including £60 delivery. We
quickly realised that it was faulty
because the front two legs would
not attach. Willow & Hall agreed
to a full refund, but we can’t
seem to get it to collect the sofa
bed and it won’t refund us until it
has. We are now coming to the
end of October and we have been
unable to use our living room as
we would have done.
The latest message said there
were no available dates for
collection. I have emailed
outlining my rights and spent
countless hours on the phone,
but am now losing the will to live.
Any help would be appreciated.
David Rae
Kingston upon Thames, LondonTroubleshooter says
You were stuck with a faulty sofa
bed taking up valuable space for
almost two months.
You were right to spell out your
consumer rights: if you have
bought an item that is damaged,
broken or not fit for purpose you
are entitled to a refund, repair or
replacement. As I am sure you
know, provided that the faulty
item is returned within a month
you are entitled to a refund and it
wasn’t your fault that there was
such a delay returning it.
Within days of me getting in
touch with Willow & Hall it
finally arranged for the sofa bed
to be collected. A spokesperson
apologised for the delay, which
was caused by industry-wide
problems related to the lack of
drivers and compounded byissues the company was having
with another firm.
Willow & Hall said: “We have
since moved to a new logistics
team to improve the customer
experience.”
The sofa bed was collected and
you got your refund in mid-
November. I asked the company
if it would offer you any
compensation, pointing out that
it had used your living room as
free storage for the best part of
two months. It said: “Given the
frustration caused to David, we
will be sending him a gesture of
goodwill this week, which we
hope will leave the experience on
a more positive note.”
You were pleasantly surprised
to get a bottle of wine and some
biscuits from Fortnum & Mason,
just in time for Christmas.surcharge levied on additional prop-
erties. This would be on top of normal
rates, meaning you would need
£42,000 up front for a £650,000
house. You could claim back the sur-
charge as long as you sold your cur-
rent home within three years, which
would give you a £19,500 refund.
It sounds as though you and your
husband are in a good financial posi-
tion. Your husband has taken the
25 per cent of his pension that he is al-
lowed tax-free, so any other income
he takes from it will be taxed as in-
come. Advisers I spoke to said it
would be wise to use your pensions as
income in retirement rather than us-
ing the money to pay for a new house.
It takes decades to accumulate such a
healthy pension pot and you don’t
want to run the risk of running out of
money in retirement.
Most buyers would transfer the eq-
uity from their previous home into
their new home, but you may not beMoney Mentor
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thetimes.co.uk/money-mentorIf you would like us to investigate
a consumer problem, write to
Troubleshooter, Times Money,
1 London Bridge Street,
London SE1 9GF or
[email protected].
Please include a phone numberWe want to move home, but not sell
Katherine
Denham
Times Money
Mentor
Troubleshooter
bridging loan. Even if you did, how-
ever, there is still an expected
£200,000 difference to find.
You could consider cashing in
some of your Isa investments, but
that money is tax-free for ever, so you
may want to keep it to top up your
pension income.
Another option would be to take
out a later life mortgage. These types
of loan are designed for people aged
55 or over and include retirement in-
terest-only mortgages where you
don’t pay off the loan itself until the
house is sold when you die or go into
care. There are inheritance implica-
tions, however, so anyone with child-
ren should bear that in mind.
You considered my advice and said
that you were interested in a later life
mortgage — now you just need your
ideal home to come on to the market.