The Daily Telegraph - Saturday - Money
‘My last battle – how do I buy my forever home’
A veteran who wants to settle down faces a new enemy in the cladding crisis. Harry Brennan calls for reinforcements
After 30 years of service in Bosnia, Sierra Leone, Iraq, Afghanistan, Yemen, Northern Ireland, Cyprus, Germany and Bangladesh, Lieutenant Colonel Stuart Cattermull, 56, is returning home.
With the wish finally to settle down, he and his wife, Jane, had planned to raise money from the sale of a flat in London and a second house in Shrewsbury, Shropshire, and buy their “forever family home” for £700,000.
But despite strong demand from buyers, they cannot sell either.
“The Putney flat is currently unsellable because of the cladding crisis following the Grenfell fire. And because of the pandemic we are unable to ask the tenant in our Shropshire rental property to leave for at least another six months,” Lt Col Cattermull said.
“We would have sorted it out earlier, but we were told to hold off selling to wait for a better price after the Brexit market slowdown. “Meanwhile we are spending £1,600 a month on rent while we look for a way to fund our purchase without massively eating into our invested savings. We just want to be somewhere we can finally call home,” he added.
Lt Col Cattermull is on a fixed contract with the Army Reserve after he left regular service. He earns close to £90,000 a year, r, but this is due to fall to less than £40,000 ,000 once he retires in four years’ time at the age of 60.
He has £ 600,000 0,000 in surplus savings but wants ants to keep it untouched as much as possible as most is invested. vested.
Before the cladding adding crisis his London flat t was valued at around £600,000. ,000. There is still a £140,000 mortgage left to pay and the flat is currently vacant. cant. It should provide vide rental income e of around £ 1,750 0a a month if let.
The Shrewsbury property is worth around £ 180,000, with no mortgage left to pay, and is currently let for £550 a month.
So what are the solutions?
Lieutenant Colonel Stuart Cattermull in Iraq in 2003, right; with his wife, Jane, below
Jane King
A mortgage specialist at Ash-Ridge, the financial adviser This is quite a conundrum. Lt Col Cattermull has significant assets; however, not all are readily available to him and age is not on his side when it comes to secured borrowing to help him fund the purchase of his dream home. Most lenders will not consider a mortgage past the age of 70 or 75, which means that any standard mortgage he took on would have to be repaid within 14 years. Borrowing four to five times his current salary over that period would mean repayments not far off £5,000 a month. Even borrowing this amount would be expensive and still leave him with a shortfall of several hundred thousand pounds. I would recommend that he consider taking this from his investments, which he could replenish once his properties have sold. He could also raise extra funds by remortgaging his currently unsellable properties. Alternatively, as he has been in the Forces, he may have built up a significant pension fund and he could consider releasing any tax- free cash available to fund the purchase. Again, this could be replaced when the properties were sold by making contributions into a new private pension. The rules allow savers over the age of 55 to take a 25pc tax-free lump sum from th their pots. If he takes this option he sh should get specialist financial advice to ens ensure that this route makes sense for him from a tax perspective and for his retirement plans. I would consider mo mortgages with no early repayment rep charges. Once his pro properties are finally sold th the funds raised could b be used to reduce h his debts to a comf comfortable level or pa pay them off entire entirely. Any surplus could c be used to top up hi his s de deple ted investm investments. As th the colonel is o over the age of 55 he could al also consider a retirement ret i n t e re s t o n ly (“Rio”) mortg mortgage.
An adviser at Alexander Hall, the mortgage broker Based on his projected pension income of £40,000, the colonel should be able to borrow up to £ 200,000 to put towards the £700,000 purchase, using a Rio mortgage, which would keep costs lower than a standard mortgage. This would be on the basis that he intended to let out the London flat.
He should be able to qualify for a twoyear tracker rate available at 1.39pc that has no early repayment penalties and would cost around £235 a month.
This still leaves him with a large shortfall. He cannot sell his other properties to raise more cash but he could remortgage to free up money without selling them outright.
He could release 60pc of the value of his Shrewsbury property – £108,000 – with a 1.79pc loan, for example. This would cost £170 a month in repayments and could be paid for with the income from the property itself.
Fixing the mortgage for two or five years could allow him to release even more. The colonel may be able to release up to 75pc of the property’s value – £135,000. Monthly payments for this would be about £230 a month at an interest rate of 1.99pc.
Again there would be no penalty for paying off this debt once more cash hopefully became available from his property sales in the coming years.
The combined mortgages would give him £308,000. Remortgaging his London flat along similar lines could raise an extra £220,000. However, securing lending would come down to the property’s cladding situation and at present looks as if it would be impossible. Most lenders require a EWS1 form or a managing agent’s letter to confirm that an up-to- date fire safety report is available and there are no cladding concerns.
It looks like the best option will be to fund the £700,000 purchase with £308,000 through a mortgage on the new house in addition to remortgaging the Shrewsbury property, while existing investments can be used to fund the remainder of the purchase price and other upfront costs.