118 days to freedom might sound remarkably like the title of a best-selling book or a Hollywood blockbuster, when in fact it paraphrases most of last Tuesday’s front page headlines.
Initial reaction to the news that personal liberty will be restored by late June was quite muted, which was probably what the government hoped for, although it may also reflect a latent scepticism among people who don’t quite believe that the pandemic nightmare could be over by summer.
Yet while fireworks were conspicuous by their absence on Monday night, the seemingly subdued response to the Prime Minister’s announcement that all pandemic-related restrictions will be lifted within a few months concealed frenetic, behind-the-scenes activity across the land.
It would appear that the first thing millions of folks did was to check the availability of flights to, well, anywhere.
Airlines and holiday companies barely kept pace with demand for post-21 June foreign getaways. Leading the popularity list of preferred overseas destinations were Turkey, Greece, Cyprus and anywhere else offering the prospect of guaranteed sunshine and warmth.
In addition to those who were clearly poised to reserve their place in the sun last Monday afternoon is a sizeable number of people taking a longer-term view.
Almost all of us have, at some point over the past 12 months, made a series of post-lockdown plans and Monday’s positive announcement offered the first opportunity to implement them. Most plans involve being reunited with family and friends, of being able to do the simple, almost mundane, stuff such as sitting and having a coffee while watching the world go around. Sounds great, doesn’t it? Many folks agree and a substantial proportion of them clearly intend enjoying their coffee while people-watching, but in sunnier climes and on a semi-permanent basis.
According to research published last month by the property blether website, demand among the over-50s for a permanent overseas bolt-hole has risen markedly during lockdown.
“A considerable number of people plan to implement life-changing decisions once the pandemic has been supressed,” the report said, noting that “the over-50s in particular recognise that if they don’t execute the plans they’ve been making all year, they’re realistic enough to acknowledge they’ll never get round to it.
“We found that among people who had decided to make a post-pandemic change, spending more time abroad in warmer climes was one of their most fervent ambitions.”
It’s one thing to spend ‘more time abroad’ and another to actually acquire a place overseas, but it would appear that guides to buying overseas property have been downloaded by the lorry-load during lockdown.
Assuming you’re determined to execute your plan and buy a holiday home in your preferred destination, arranging funding for the purchase will probably rate highly on your ‘to do’ list before matters can proceed very far.
If you’re fortunate enough to have the cash with which to buy, fantastic – and good luck. Alternatively, if you’re still working, you may wish to fund the acquisition using a mortgage, although you can expect the maximum amount European banks will lend against a property purchase to vary and is highly unlikely to exceed 65-70% of the property’s value. The pandemic has resulted in a number of banks across Europe tightening their lending rules. But this is no spiteful, Brexit-related move; the rules apply equally to Brits and domestic borrowers too.
If, however, you do not have the cash and/or are retired or semi-retired, several additional funding options exist.
You could, for example, sell up and buy a smaller home, although most people would rather not sell the family home. Re-mortgaging is, however, a viable alternative, especially when you have plenty of equity within the property. The drawback for older borrowers is the requirement to repay the loan over a fixed period.
However, the wonderfully-named ‘RIO’ mortgages could offer a more affordable route to that sun-drenched overseas bolthole. ‘Retirement interest-only’ (RIO) mortgages are precisely that: interest-only mortgages targeted at older borrowers. Broadly speaking, these loans are serviced in the normal manner with the capital repaid upon the borrowers’ death when the property is sold.
Finally, an increasing number of people aged 55 and over are turning to equity release, an option which enables them to access a proportion of the value locked in their properties using what is known as a lifetime mortgage. The cash released in this manner is tax-free.
Another attractive aspect of equity release for many people is the option, should they choose, not to make any monthly loan repayments. The mortgage and interest is repaid upon the borrowers’ death or when they move into permanent residential care and the property is sold.
The clock might be ticking, but you still have more than 100 days to organise your place in the sun.
Last week’s article (“Greater fool’ theory drives cryptocurrency speculation”) will have hopefully proved timely for some readers. I re-iterated the old stock market adage, ‘there’s never a bad time to bank a profit’ and added: “People caught up in the cryptocurrency craze could do themselves a favour by listening to the same shrewd advice.”
Two days later, Bitcoin’s price hit £40,973. As I write (24 Feb), it’s dropped to £36,258, a fall of 11.5%.
THE WEEK IN NUMBERS
- 95 years – The US Copyright Act of 1976 extended copyright to 95 years which means that this year, F Scott Fitzgerald’s The Great Gatsby is out of copyright. Cue a frenzy of Gatsby-related material and publications including one in which Gatsby is portrayed as a vampire. Class.
- 17% – The drive to get away, post-21 June, appears insatiable. Car buying website Auto Trader reported a 17% increase in searches for motorhomes and caravans last Monday night.
- 3 – Scientists in Finland have found that people who do not get enough sleep during the week are three times more likely to retire from work as they underperform due to poor health.
The longer-term attraction of ‘ethical’ investing
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