General finances - thoughts welcome!

noclaf

Hi All,

My father passed away a few months back and the probate process is ongoing.

Once probate is concluded I will inherit half of a property (I live in the property already). My mother owns the other half and I am her carer and manage her finances via deputyship.
 My intention is to buy her half share at it's market valuation (valued by an estate agent recently), the valuation is 3.4x my annual salary (gross) and I will be able to get the deposit together so it's financially viable but will depend on whether the CoP/Opg will allow me to do this and then, if a lender is willing to give me a mortgage. I believe it's in my mother's interest and certainly not against as the proceeds from the sale would fund a nursing home when she needs this level of care (progressive condition).  I am then free to improve the property as it needs a fair bit of work to modernise and extend it potentially. A lot of that work is actually to help with my mother's care should her mobility suffer.

Here is a snapshot of my finances:

Age: 39, married, no kids (that may change)

Salary (gross)- £55-60k

Cash savings - £40k split across a few current accounts

S&S ISA - £2000 (£150 p/m into a VLS 100)

S&S LISA - £15K (planning to invest this in a ETF or fund and suplement my pensions)

Total pensions value: £90k across two pensions. The current employer pension is salary sacrifice and I contribute/receive the maximum employer matching available.

On completion of probate, the 'cash savings' figure above will be closer to £100-£110k, a slightly conservative estimate that takes into account probate expenses (Inheritance tax has already been covered too).

Based on the property valuation I would need to provision £25-30k for a deposit or thereabouts subject to lending criteria 

I also need to think about the following:
- house renovations - I know this can be very expensive without proper research and esp if there is 'scope/budget creep' where things get changed further down the line. There is a threshold beyond which it's doesn't make sense to throw more money at the house so trying to strike a balance.its likely a rear extension, double glazing, front driveway and a porch will need to be included but the porch and driveway are not priority

-pension - it's a bit low right now Vs my age but wary of locking away funds now, how do I strike a balance here between present needs Vs building the pension pot?

- emergency/cash buffer..this will need to increase if I take on a mortgage..what's the general consensus..6-12 months expenses?
I am in a perm job but don't like to use the term 'stable or very secure' as you just don't know 100% esp under the current situation.

In my position what would you suggest doing/approaching anything differently and what else should I be considering?
Does my plan to buy out the property seem ok, anyone think it's risky taking on a mortgage at 39 years old?  I don't see any other option if my mum goes into care, either sell the house or I buy her share out.
In terms of funding the property improvements would people use their own cash or 0% Cc or loans and then hold onto the cash you would of spent or even invest it?

If I buy the property outright and end up ploughing another £50k in for rennovations is this a good use of money or should I be looking to spend less on the property and bulk up the S&S ISA and/or pensions first?

Sorry for the long post and lot of questions, just trying to get all the facts and numbers in so you have a full picture.
Thanks!

Notepad_Phil

Firstly if you were me then I'd talk to someone like AgeUK to see whether the idea of taking on a mortgage is a runner or not - then if it was a sensible option:

Do your figures include your partner's position? If they do, then to me you do look to be on the lowish side of the sums needed for a comfortable retirement, though you've not said when you want to retire or what income you'd want, and that doesn't mean that taking the mortgage out is a bad idea as renting whilst retired is not something that I'd want to do.

I don't see that taking on a mortgage as 39 as particularly risky provided you have sufficient income to allow you to pay the mortgage and all the other bits and pieces that owning a house entails. That obviously depends on your lifestyle, now and future, and how much you currently could save from your income(s).

Are the £50k in renovations really necessary and do they need to be done immediately? If they don't then perhaps use the cash to reduce the mortgage and then save up and do them at various points in the future - i.e. use the savings from the reduced mortgage to help pay for them. The £40k savings seems to me to be more than adequate for any emergencies that might crop up so I'd probably look to use any spare cash to reduce the mortgage - again you could perhaps use the savings from the reduced mortgage to build up your retirement savings.

eskbanker

noclaf said:

Does my plan to buy out the property seem ok

Just an opinion but it comes across as if you're keen to do this now because of concerns about raising a mortgage rather than for your mother's benefit as such - even though she'll have a pot of cash instead (albeit potentially losing value to inflation, while the value of the property itself could easily be beating it), she'll no longer own the roof above her head and so to me it's debatable whether it's the right thing to do now, rather than waiting until it becomes apparent that she'll need to move out, if indeed that happens.  Putting to one side the home improvements from which she'd benefit in the event of reduced mobility, is she definitely keen on all the rest?  It just seems there's a bit of a potential conflict of interest between your preferences as a property owner (and resident, to be fair) versus your responsibility to deploy her assets in her best interests....

noclaf

Notepad_Phil said:

Firstly if you were me then I'd talk to someone like AgeUK to see whether the idea of taking on a mortgage is a runner or not - then if it was a sensible option:

Do your figures include your partner's position? If they do, then to me you do look to be on the lowish side of the sums needed for a comfortable retirement, though you've not said when you want to retire or what income you'd want, and that doesn't mean that taking the mortgage out is a bad idea as renting whilst retired is not something that I'd want to do.

I don't see that taking on a mortgage as 39 as particularly risky provided you have sufficient income to allow you to pay the mortgage and all the other bits and pieces that owning a house entails. That obviously depends on your lifestyle, now and future, and how much you currently could save from your income(s).

Are the £50k in renovations really necessary and do they need to be done immediately? If they don't then perhaps use the cash to reduce the mortgage and then save up and do them at various points in the future - i.e. use the savings from the reduced mortgage to help pay for them. The £40k savings seems to me to be more than adequate for any emergencies that might crop up so I'd probably look to use any spare cash to reduce the mortgage - again you could perhaps use the savings from the reduced mortgage to build up your retirement savings.

Thanks for your input.
The figures are just for my finances, my wife's are not included as if I was to buy out the other half it will be just me and my responsibility to cover the costs etc That's my decision but I should add but my wife does contribute to other living costs in the household(and works and has pensions of her own etc). The rennovations are not an absolute must at this stage and certainly its not a case of me getting carried away with home improvements and not considering the best interests of my mother
My mother is gradually deteriorating and I am simply forward-planning/trying to be pro-active in optimising the environment for her at home rather than waiting till things get bad and then trying to be reactive to the situation. Given the pandemic+restrictions we are under now I won't be rushing into any decisions and not before consulting on the matter including our family (mother's siblings) and doctors etc. I may speak to AgeUk as they have been very helpful in the past so will see what they say.
Aside from the cash savings I mentioned, between my wife and I we have another £10k (getting 0 interest in a joint account!)that I haven't included so in a absolutely worst case scenario it's an additional fall-back/emergency fund though wasn't really meant as one etc

I am saving anywhere from £1-1.2/1.3k per month at present, with a mortgage that number will be reduced.
For full transparency I also have just over £2k on a 0% cc so that's my total 'debt' as far as that goes.
*I should probably add, there is no mortgage on the house currently (it was paid off quite a few years back) so I am proposing to take out a mortgage against 50%/half of the total property value.

noclaf

eskbanker said:

noclaf said:

Does my plan to buy out the property seem ok

Just an opinion but it comes across as if you're keen to do this now because of concerns about raising a mortgage rather than for your mother's benefit as such - even though she'll have a pot of cash instead (albeit potentially losing value to inflation, while the value of the property itself could easily be beating it), she'll no longer own the roof above her head and so to me it's debatable whether it's the right thing to do now, rather than waiting until it becomes apparent that she'll need to move out, if indeed that happens.  Putting to one side the home improvements from which she'd benefit in the event of reduced mobility, is she definitely keen on all the rest?  It just seems there's a bit of a potential conflict of interest between your preferences as a property owner (and resident, to be fair) versus your responsibility to deploy her assets in her best interests....

Hi,
You raise a fair point re conflict of interests but that's wide of the mark ref to 'getting the mortgage in asap'.
The reality is whilst some will be posting here trying to get tips on how to dodge potential care costs and go down the route of 'deprivation of assets' to avoid contributing to care fees at all costs I am actually being honest/transparent and saying I will buy out my mum's half and that can be used to fund her care..should her condition get us to the point where home carers visiting is not sufficient to meet her care needs and beyond my abilities too. My father was in care so I have a fairly good grasp of care/nursing fees..it's not cheap and my mother's pension would not cover it where as her share in this property could realistically cover a few years of nursing care should we get to that stage.
I should also add some further context, I work long hours each week .when it's busy could be looking at 14 hour days in highly stressfull role..it's really not easy to balance that with caring duties. We have carers who visit but it's not the carer who is here day/night 24/7. I do it as I feel it's the least I owe to my mother even though I was told years back that a nursing home should be considered including by family. So I've taken a more challenging route but am trying to do what is in her best interests etc.
Regarding whether my mother would want the changes..she lacks capacity so she might say yes or no but could change her mind overnight  
On a serious note I'm wary that it may cause too much disruption to my mother as she might need to go into temporary care whilst any work is undertaken. So the extension/improvements work..I will need to think it.over and maybe do the smaller jobs first that will bring maximum value e.g: double glazing and put the bigger items on hold till they are really needed etc