Part one of our special series for people with HIV

As a financial adviser who works mostly within the gay community it's not uncommon for me to meet people living with HIV. In fact, the number of positive people approaching me have increased recently. Many have realised that with changes to medication and lifestyle, some form of financial planning has again become necessary. There are individuals who sold their life assurance plans, cashed investments and traded down their property, who are now feeling the need to build resources for the future.

I am often asked to advise these clients on pensions, mortgages, investments and general financial positions. These experiences have prompted me to tailor solutions for a section of the community with very different financial needs. Over the next three months, I'll point out various considerations and give advice on some of the most obvious problems and options available for your future planning.

Property

Buying a property is a big step, but can provide a valuable way of creating wealth for your future. All profit that is made on your primary residence is tax free. Property is rated as a lower risk investment than stocks and shares, but a higher risk than opening a deposit account. Most of us cannot afford to buy a property outright and therefore need to raise finance. Banks and Building Societies offer loans secured on property, known as a mortgage.

The thought of taking a mortgage is a daunting prospect for people who are positive. It's been a widely sold concept by certain Financial Advisers that you cannot obtain a mortgage without taking an HIV test. This is simply not true! Lenders look at financial criteria such as your employment status, income, existing debts and any deposit you may have. There are no questions on mortgage applications relating to health. You will only be asked questions relating to your HIV status on application forms for Life Assurance, Illness and Critical Illness cover.

This means that a mortgage should be obtained that does not have these products as a condition of the package. Most lenders will expect you to have a deposit of at least 5%-10% of the property value and are likely to lend between 3 and 4 times a person's salary. It's normal for a first mortgage to be taken for a term of between 20 and 25 years, dependent on the affordability of the monthly repayments. 

Savings

Many people want to save but just do not know where to start. You should work out your monthly budget after you set bills. Take out any rent or mortgage, utility bills and food. You should find out how much of your income you take choices with. Once this been established decide on the monthly amount you can commit. This should be an amount that you can commit consistently. It's better to aim low and be successful, than to over commit and fail. Make your initial amount something that you won't miss.

Deposit Accounts

These are a good place to start saving. They provide a safe and secure home for your readies. The Interest rates are not high, but will help to establish a savings habit. You could even set up a regular standing order to deduct cash from your current account. The fact that a Deposit account offers an accessible home for your money could be an advantage or disadvantage to people with HIV depending on how disciplined you are. It's not normally a good idea to have a cash point card for a savings account as temptation is then that bit further away.

ISA

Individual Savings Accounts offer a flexible place to invest your money. They allow you to invest either into cash savings or stocks and shares without incurring tax on your returns. You could take a Mini ISA with a £3,000 limit into each (total £6,000 limit) or a Maxi that allows £7,000 into just stocks and shares. The cash option would allow you to save without paying tax on interest you earn. If you withdraw funds you will loose that part of your annual limit. This could be a good incentive for people looking for discipline.

The stocks and shares option is not so straight forward. You would be advised to invest for a period of at least 5 to 10 years in case of fluctuations within the market. The most common way of buying a Stocks and Shares ISA is to invest into a Managed Fund. This would spread any risk by investing in a broad range of shares, bonds, property and cash deposits. Managed ISA's would offer more flexibility than pension planning (discussed below), and invest in similar assets. For PWHIV, a medium term of 5 or 10 years may be less of a problem than committing to a pension plan designed for the long term. 

Pensions

Pensions are the traditional route for planning for later life. Personal Pensions and Schemes that may be offered by your employer will offer tax incentives for your monthly contributions. A basic rate tax payer that commits £100 will see the government add £28.20 to the contribution. This would seem a bargain in normal circumstances, but there are rules that PWHIV should be aware of. These restrictions could prove unattractive, especially if your outlook is uncertain. You will not be able to draw the benefits until between the ages of 50 and 75.

With schemes offered through your employer there could be some potential benefits for PWHIV. For example, some of these offer a long-term disability pension after you've served a minimum length of service. More about this in next month's piece.

Where to get Advice

If you're taking a deposit account you need to find out the best rate for your cash. If you have Internet access then go to www.pinkfinance.com personal finance section and you'll find information on the best deals. If you don't, then take a look at the money sections in the quality Sunday press for their rates tables.

Your bank or building society would probably be happy to advise you on any of the areas above. However, they are likely to only offer advice on their own products. If you're looking for advice on Mortgages, Pensions or ISA accounts then you would be wise to seek independent financial advice. Most advisers will offer their first hour free of charge with further meetings paid for via charging a fee or receiving a commission from product providers. Many gay financial advisers are very used to dealing with HIV issues and would be a good place to start. 

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