Articles
Financial advice after cancer
Through speaking to many ovarian cancer patients I have learnt that many of you have concerns about seeking financial advice regarding mortgages, etc., after suffering with cancer. I have therefore sought advice from Mandy Evans, a financial advisor for Martin Hale & Co at 130 Fore Street, Hertford SG14 1AJ, telephone 01992 553611.
Mortgages
Two types of mortgages are available through all lenders, whether banks, building societies or specialist lenders:
- Repayment
- Interest-only
All mortgages are based on your financial circumstances and ability to repay the loan. General requirements are that applicants have been in their current job for at least six months, that the job is considered permanent by their employer and that they have no history of bad debts. Lenders also prefer to lend to people who have a minimum deposit of 5% of the purchase price, i.e. a £50,000 purchase price would require a deposit of 5% or £2,500.
With both types of mortgage come a variety of interest rate structures:
- Variable interest rate
- Fixed interest rate
- Discounted interest rate
- Capped interest rate
A mortgage in itself does not require any evidence of health
Repayment mortgage
This type of mortgage is designed to pay back capital and interest to the lender over an agreed term. Over the term the amount originally borrowed for house purchase will decrease and at the end of the term (normally 25 years) you will end up with a nil balance and a property you can confidently say is your own.
This type of mortgage can be flexible, in that if you were to receive a windfall you could make a capital repayment, which would reduce your total mortgage and either reduce the term or the monthly repayment to the lender, which ever suits your needs.
With this type of mortgage it is not a condition to effect any life cover, although it is always recommended that you do so to protect your family/dependants. If you decided to put into effect life cover, evidence of health would be required but not to the lender.
Interest-only mortgage
This type is self-explanatory, as you pay only interest to the lender. The outstanding balance remains the same throughout the term of the mortgage. With this type of mortgage it is a requirement to arrange a repayment vehicle, usually an endowment, a personal pension or a personal equity plan (PEP).
Life cover
Most lenders (except some banks) will offer mortgages without the security of a life assurance policy in the knowledge that if a borrower dies before the mortgage is repaid they have a lien on the property.
Life assurance for mortgages is usually offered in three forms:
- Decreasing term assurance (mortgage protection), to cover the outstanding balance of a repayment mortgage
- Level term assurance, to cover the sum of an interest-only mortgage for the whole term
- Endowment assurance (usually in a low-cost form), which combines increasing investment with decreasing term cover to ensure repayment of the capital sum not only at maturity but also in the event of death before maturity
In all cases full evidence of health would be required and an adverse health history would be likely to result in either increased premiums or the application being declined by the insurer.
Investment
Endowment assurance is still the most popular way of repaying an interest-only loan because it provides the dual benefit of protection and investment.
Personal pensions and PEPs do not have any element of life assurance and therefore no medical underwriting.
A PEP (to be superseded by an ISA, or Individual Savings Account, in April 1999) is a tax-efficient savings plan usually invested predominantly in UK Equity Unit Trusts.
A personal pension plan is primarily a retirement investment vehicle, only 25% of which can be used at retirement to pay back the mortgage. Although there is tax relief on premiums, because the fund has to be at least four times the value of the mortgage the personal pension method is usually more expensive than the PEP (and may have to run for longer if retirement is more than 25 years away).
In Remembrance
Valerie Teague
We met, it wasn’t long ago, our children were to wed.
I soon began to like her, and the things she said.
By her manner and her words, she showed just how she cared
And chose to make it clear to all, that friendship should be shared.
Beauteous, gentle and so kind, her charms to name but three
Grace of manner and of speech, and elegance had she.
Norman was the world to Val, it was for him she’d try,
Their life together spanned the years, their love will never die.
How proud she was of her two boys and their chosen wives.
She gave her love so freely, enriching both their lives.
Grandchildren came they called her Gammy, Val took them to her heart.
She cared for them and, as a Nan, she really played her part.
Then she did not stop at this, she gave me friendship too,
And I felt so privileged, my feelings for her grew.
But sickness struck and though she tried to tame the savage beast,
Her light grew dim, she faded fast, her movements few at least.
A twilight world encompassed the vibrant Val beneath.
All of those who loved her now, were filled so full of grief
But when we gently called her name, she opened ice-blue eyes,
A smile it lit her face, and from her lips came sighs.
Some words of thanks to those who came to show her love
And just these, oh so gentle words, from her rose above.
I know not, Jesus, why it was, that this had come to pass,
Oh please, oh please, dear Lord of love, grant her peace at last.
Cecilia Skudder
November 1997
