Covid-19: why bolthole buyers are ready to pounce
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Post pandemic, many people intend buying a place in the sun, says Peter Sharkey.
Multiplication is vexation,
Division is as bad.
The rule of six doth puzzle me,
And practice drives me mad.
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Excuse the artistic licence applied to this anonymous Elizabethan ditty (from 1570) – the rhyme’s rule originally applied to three, not six – but it seemed somehow appropriate, even if those of us puzzled by today’s ‘rule of six’ are more likely to be frustrated by life’s restrictions, not exasperated at having to learn simple arithmetic rules.
The introduction of emergency powers in response to the coronavirus has resulted in a gradual, but often significant loss of liberty. At what point will it all end? Whenever that might be, those emergency powers need to be revoked at the earliest opportunity lest we sleepwalk into an Orwellian nightmare where diktat replaces democracy.
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Political power aside, most people are frustrated at the degree to which life has been placed on hold, their simple pleasures suspended or denied altogether.
One consolation has been the weather: other than a period often laughingly referred to as ‘high summer’, when it rained a lot, since mid-March we’ve been treated to a disproportionate quantity of sunshine. Not only has this proved beneficial to our health, I imagine the fact that a large proportion of adults have enjoyed generous volumes of vitamin D throughout lockdown will influence future household spending decisions once the virus has been defeated.
Anecdotal evidence suggests that post-pandemic, large numbers of folk intend buying a bolthole overseas, ideally located where the weather is entirely predictable, where, between May and September, you can expect plenty of sunshine and can plan to enjoy life’s simple pleasures.
While millions of younger people have rapidly grown used to working from home and are keen to avoid returning to a daily commute, now perceived as wasted time, so there is an almost perceptible determination among many older folks to get away and enjoy virtually guaranteed sunshine in the Mediterranean and beyond while they’re in decent enough shape to do so.
Regular visitors to this area of the newspaper (or website if you’re reading online) may recall that last year, my wife and I grabbed a week’s holiday in Mojacar on Spain’s Costa Blanca where we met a retired couple (Carol & Dave) who were renting the apartment next door. The pair were clearly ahead of the bolthole-buying curve.
The four of us got on famously from the moment our preliminary early evening holiday drink slipped down far too easily and our neighbours revealed that they were on their third visit of the year.
“We haven’t won the Lottery,” advised Carol, adding: “we just decided we wanted to have our own place here. We’re over this week to finalise the legal bits and pieces. Ideally, we’ll be owners of a duplex apartment (she loved saying that) within a few weeks.”
An iPad was produced and we got to view the apartment a few miles away in full glorious colour; it was immediately evident you get plenty for your money. The generously-sized, two-bedroom apartment was about five years old, boasted a roof terrace, underground parking, community pool and was less than two kilometres from the beach. It was on the market at €95,000.
A month or so later the pair emailed to say they had finalised their purchase and kindly invited us to stay “in the new year”. Well, you know what’s happened since, don’t you? Frustratingly, the virus has made it impossible to take up Carol & Dave’s invitation.
Nevertheless, it seems that not only were the couple ahead of the bolthole-buying curve, their use of equity release to pay for it is a method thousands of prospective sun-seekers are currently exploring.
Last year, when I asked, as diplomatically as possible, whether there had been any problem financing the property purchase, given that he was retired, Dave’s response was unequivocal. “None at all,” he said. “Considering our age, we probably would have had to jump through hoops to get a mortgage from the bank, so instead we released equity from our home. Every penny of the purchase price.” This effectively made them cash buyers, a significant bargaining advantage.
Moreover, not only did our new friends acquire their duplex apartment with tax-free funds released from their UK home, they never have to make a monthly payment on the sum they released. Their only regular outgoings are utilities and property taxes. That’s the sort of arithmetic which isn’t exactly puzzling; nor is it designed to drive you mad – quite the opposite in fact.
How much could you release from your home? The figure is determined primarily by your age, health and the value of your home, which must be worth at least £70,000. These are the principle requirements, although alternative options exist based upon personal circumstances. You can get a very good idea of how much equity you can release by visiting the Moneymapp.com website and filling out the equity release calculator.
It’s worth noting that equity release isn’t a panacea. It’s not suitable for everyone and it may compromise your eligibility for means-tested state benefits. Nevertheless, during these unusual times, exploring how loved ones may be helped or a meagre retirement income avoided makes enormous sense.
As many readers have already discovered, there’s a wealth of information to be discovered at: https://www.moneymapp.com/equity-release . In addition, there are hundreds of blogs and articles dealing with the subject on the Moneymapp website, including Peter Sharkey’s weekly blog, rated among the UK’s very best. Read more at: https://www.moneymapp.com/blog
You may still email any queries or questions regarding equity release to: firstname.lastname@example.org
Please note that Moneymapp.com cannot advise readers on whether equity release is suitable for them. However, Moneymapp.com can introduce readers to professional advisers who will explain the process and its implications for your estate and entitlement to means-tested state benefits.
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