Mortgage should be available in UK regardless of age

Consumer adviser answers questions on mortgages, employment rights, medical insurance and tax status.

My wife and I are 64 and we will be leaving the UAE in the next year or so to return to the UK because I will be retiring from my current job. I expect to continue with some consultancy work once we return, but with a significantly reduced level of income. We have considerable savings and will have a regular pension income of quite a large annual amount, but we do not want to tie up all our cash. We do not own a house in the UK, but we would like to buy somewhere with a small mortgage. The problem we are having is that we have approached a couple of lenders, but they have both told us that there is no possibility of us borrowing due to our ages. With people living longer, there must be some banks who would consider us. STAl Ain

The problem here is actually twofold: firstly, your ages and, secondly, the fact that your current income will cease. Your age will not necessarily be a barrier to obtaining a mortgage and there are certain lenders who are happy to lend to individuals who are currently retired. These banks would assess your application in the same way as they would for a full-time employee, but they will treat your pension income as your salary. I understand that you are not yet drawing pension incomes, so that cannot yet be taken into consideration. One further issue is that you are currently overseas and not all lenders are prepared to lend to people who are not residing in the UK. You will have more success obtaining a mortgage once you can demonstrate a regular pension income. The fact that you will be looking for a small mortgage in relation to the purchase price will make matters easier, but either way you may need to contact a good UK-based mortgage broker to obtain the best deals in these circumstances.

I have been a UAE resident for the past two years. Following an employment offer from a leading company in the UAE, I resigned from my job, submitted a no-objection certificate to the new company and waited for the visa transfer. The new company's human resources department told me to wait, but at the end of three months they sent me an e-mail stating: "Your offer has been the responsibility of our CEO. He left the company, so we will not proceed with the offer. Sorry." Do I have any rights against them? Can I file a complaint for all my losses? GCDubai

GC signed an employment contract with this company in early August of this year and was then told that the job would not proceed in October. The UAE's Labour Law is vague about this issue and I doubt she would have any joy from the Ministry of Labour because she had not actually started work with them. However, the legal situation is that this is a breach of contract. Employing a lawyer to assist would be expensive and it is a tricky matter to enforce. GC might get some recompense if she employs a lawyer to send a letter to the company setting out the legal position, but if they do not respond it is questionable if it would be worth her while pursuing a case, bearing in mind the difficulties, the relatively small sums involved and the cost of legal action.

I have recently moved to the UAE and am looking into taking out medical insurance for myself and my family because my employer does not provide this. I have a couple of minor ongoing medical problems, but I have not been able to find a company that will include cover for these. Could you give me some guidance? KFDubai

It is standard practice that all personal medical insurance policies that are set up for UAE residents exclude what are known as pre-existing conditions for a period of 24 months. This means that for conditions to be covered, you must not have suffered from them, nor had treatment for them, for a period of 24 months. This is because applications are not medically underwritten and costs would increase significantly for ongoing conditions to be insured. There can sometimes be an exception if applicants have an existing personal medical insurance policy as certain companies will underwrite based on medical and claims history, although it is likely that premiums would increase. Employer-sponsored policies are set up quite differently and larger schemes can be set up on the basis that previous medical history is disregarded. This is subject to the employer requesting it and being prepared to pay extra.

I am an American and moved to Abu Dhabi a few months ago. I thought income in the UAE was tax-free, but have now found out that I apparently have to pay US taxes even though I am not planning to go back. Can you give me any information about what I have to pay? AYAbu Dhabi

If you are resident abroad for a full calendar year, or live overseas for 330 days in any consecutive 12-month period, you can exclude up to US$91,500 (Dh336,061) of earned income from US Income Taxation for 2010. This is known as the Foreign Earned Income Exclusion. If you are married and both of you earn income and reside abroad, you can also exclude up to another $91,500 of your spouse's income from taxation. These exclusions can only be claimed by filing a tax return and are not automatic. You must file Form 1040 for the applicable year, as well as the appropriate forms claiming this exclusion. Earned income is deemed to be income you earn for your work or services and does not include rental income, dividend or interest income, or other types of income that are not paid for your own personal efforts. You can also claim an additional exclusion or deduction for your foreign housing expenses exceeding a standard amount established by the federal government.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Write to her at [e-mail] with queries for this column or for advice on any other financial planning matter.

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