How can I ensure my house purchase completes in time?

I have just had an offer accepted on a vacant house in London following a previous transaction falling through. My mortgage offer is only valid for another six weeks. I lost thousands of pounds in legal fees on the previous property. I cannot afford another deal to fall through due to legal costs and losing the mortgage rate that I secured in May. What can I do to help ensure that I complete in time?

Joe Da Silva, residential property partner in the London office of JMW Solicitors, says there are several steps that can be taken to help ensure you hit the deadline for completion.

First, all parties should be informed of, and agree to, the required timescale. Any confirmation of dates or timings will not be legally binding at this stage, but it is sensible for all parties to know the pressure involved and the need for proactivity to be shown throughout the transaction.

Your solicitor has anti-money laundering obligations to adhere to, so ensure that you have supplied them with all information about the source of your funds to avoid any holds-ups when deposit monies need to be sent. Your solicitor will be able to give you guidance as to what is required here — although I appreciate this may already have been done on your previous transaction.

I note that your mortgage offer is already in place, although assuming this was agreed for the previous property, you will need to liaise with your lender to update the details for the new property being purchased. A new mortgage valuation will need to take place, so coordinate with your lender to ensure this gets booked in as soon as possible, as the offer for the new property is unlikely to be issued until this has been completed. 

A survey is always advisable and it is prudent to instruct this as soon as possible to identify any potential structural concerns or general maintenance points.

The draft contract pack, once received, will need to be reviewed by your solicitor, who will then raise any enquiries they deem necessary. Once questions have been sent, it would be helpful to encourage the seller to contact their solicitor and begin to compile satisfactory replies as quickly as they can.

Searches would also need to be instructed. Although lawyers will often do this once the draft contract pack arrives, in your circumstances it is worth instructing these as soon as possible: the local authority search result, which tends to be the last to come back, can typically take anything from two to six weeks to arrive depending on the relevant local authority. Once ordered, it may be possible to expedite the searches, so do enquire about this.

Once the replies to enquiries, search results and mortgage offer are in place, you need to sign the contract documents and lodge deposit funds with your solicitor. The lender is likely to want a week’s notice to send mortgage funds, so this will need to be factored in, but hopefully by following the above steps this will put you in good stead to meet your required timescales.  

Should my husband buy an annuity?

My husband has an adequate pension fund invested in very low-risk equities. He is 73, very healthy, and has no immediate plans to retire.  He has not drawn on his self-invested pension plan (Sipp) to date. I am 64 and still working.  I have an equivalent (or slightly larger) Sipp of my own.

I have asked our financial adviser if it would be worth my husband buying an annuity with some of his invested Sipp given its mediocre performance and the high annuity rates currently available.  The adviser wants my husband to consider drawdown from the Sipp as an alternative.

If my husband can get a guaranteed income with an annuity at 7 per cent versus a Sipp that is barely growing at the moment would it not make sense for him to do this? 

Estella Bogira, managing associate at Stephenson Harwood, says you are right to interrogate the financial adviser’s advice. The annuity market has been low enough for long enough that many people have come to disregard annuities and to think of lump sums or drawdown as the only reasonable options where there is a choice over the shape of pension benefit withdrawal.

As you say, though, the annuity market has improved recently and so it is sensible for anyone approaching retirement, or even those who have started to draw benefits, to give the purchase of an annuity full consideration.

Since 2015 it has been possible, providing your pension scheme is “fully flexible”, to receive pension benefits by way of lump sums; pension income (meaning a pre-determined, regular income often payable for life, whether provided by way of scheme pension or annuity); or flexible drawdown. Flexible drawdown allows withdrawals at such intervals and of such amounts as the individual chooses. It is possible to combine more than one of these options.

Before 2015, individuals with a defined contribution pension benefit usually had either to take a scheme pension at retirement or purchase an annuity. The subsequent introduction of pension freedoms has been hugely popular.

Flexibility gives individuals a sense of control, it eliminates the concern of securing an income stream that will not be fully utilised if the individual dies earlier than anticipated, and it allows individuals to “front load” their retirement spending by freeing up cash at a time when they may want to help aging parents or young adult children.

The other advantage of flexible benefits is the increased likelihood that unused pension savings can be passed tax-efficiently on death to a surviving spouse or other beneficiary. As you rightly point out, this is not so easily done when benefits are secured by way of scheme pension or annuity.

As we know, though, every silver lining has a cloud. Pension freedoms introduced a significant element of risk into retirement. When an annuity is purchased or a scheme pension secured, the retirement pot is converted into a guaranteed income stream. The provider of the pension or annuity assumes responsibility for making the income payments.

Compare this with flexible drawdown, where the “pot” remains invested and the individual carries the investment risk. A significant downturn in the investment market can very easily turn a healthy-looking retirement into a financially weak and unstable retirement.

As to whether it makes sense for your husband to purchase an annuity, this will depend heavily upon your personal circumstances, including health, family and financial commitments, and your priorities as a couple. Seeking further financial and tax advice would be a sensible next step.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.