Q. My mother, who is 78, needs to raise some money for a new central heating boiler. She has only her state pension with a small savings account, but she owns her own home which is worth £200,000, with no mortgage outstanding. What options does she have?
A. The first thing to check is whether your mother is eligible for any subsidies to upgrade her boiler for a more energy efficient one. Contact the Energy Saving Advice Service on 0300 123 1234. She would need to be eligible for, and claiming, Pension Credit, which many people do not realise they can claim. If she is not claiming it but is eligible, you should contact the Department for Work and Pensions on 0800 99 1234. You can call on her behalf, but she must be with you when you call. Failing that, there are some ways to raise money against the value of your house. The first option is to downsize to a smaller house. Alternatively you could sell your home to a home reversion company, where your mother gives up ownership but retains the right to live in the house for life, or until she needs to go into care. The third alternative is a lifetime mortgage, which allows people to borrow against the value of the house, but unlike a normal mortgage, no interest or repayments need to be made on a monthly basis. Instead the interest rolls up until the mortgage is eventually repaid, either on death or going into residential care. A flexible lifetime mortgage has the further advantage that only a small amount needs to be borrowed up front, with a facility to borrow more in future, meaning interest is only rolling up against what has been borrowed. You should take advice from a chartered financial planner with specialist knowledge in this area.
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Q. I realise I made a huge mistake the other day. Having received yet another letter from my Building Society advising me that they were reducing the interest rate on my Cash ISA(NISA) I marched into the local branch office to close the account and I got a cheque for just over £43,000. I then walked up the street to a Bank that had a better Cash NISA rate thinking I could then just open an account with them, to be told I could only put £15.000 into a Cash ISA this year, with the balance going into a taxable deposit account. I am told there is no way to rectify this situation. Can you advise if there is?
A. I am afraid not, you should have gone to the Bank that you wanted to move to first. They would have asked you to sign a form and deal with the transfer of all your Cash NISA from the Building Society into a Cash NISA with them. I have over the years come across a number of people who have done the same as you. If you close your old NISA those savings lose the NISA tax status. If in doubt talk to an Independent Financial Adviser.
Q. I usually leave my NISA investment until the end of the tax year. However, this year I am in the position to invest early if I want to. Do you think there is any advantage in doing so?
A. Generally speaking the simple answer to this question is YES. If you are investing in a Cash NISA then your money will be earning interest tax free from an earlier date and therefore this can only be to your advantage (even though cash returns are low at the moment). For Stocks & Shares NISAs the answer is not quite so straightforward. This is because the real return is dependent upon how the investments grow over time. It is impossible to time the market i.e. choose the best time to invest, so in general I would recommend that you do take advantage sooner rather than later and to bear in mind that as an investor you are in for the long haul. Advice from a Chartered Financial Planner can help you, especially with Stocks and Shares NISA’s.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
0191 217 3340
