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Help for ‘Mortgage Prisoners’

Help for ‘Mortgage Prisoners’

Good news for the estimated 140,000 homeowners trapped on high interest rate home loans with unregulated or inactive firms, who have been unable to switch to a more cost-effective loan. The Financial Conduct Authority Chief Executive has now written to the Chair of the Treasury Committee, raising concerns over the issue and detailing plans to publish a consultation paper this spring.

 

Department For Work and Pensions Report on Automatic Enrolment.

Department For Work and Pensions Report on Automatic Enrolment.

This research2 confirms that the pension message is being heard. The amount of money going into pensions through auto enrolment is up over £4bn in a year, showing that the increase in contribution rates hasn’t put people off saving for their retirement.

2DWP, Dec 2018 and 3Oct 2018

UK Dividends Set New High

UK Dividends Set New High

Whilst 2018 may not have been the best year for share prices, it was a very good year for dividends. A new report3 shows that UK dividends reached a record high of £99.8bn, the highest level since the global financial crisis. This was due to a number of factors, including soaring company profits, special dividends and a slump in the value of sterling.

3Link Asset Services, 2019

New build or period property?

New build or period property?

One of the first decisions you need to make when looking for a property is what type to buy. New properties can come with guarantees, light airy rooms, modern fitted appliances and can be energy-efficient and often cheaper to run. Older properties arguably can have more character, be more spacious, and often have larger gardens. Depending on their age, they can be more expensive to maintain, and may not be as well insulated as newer properties.

Something new

Many people are drawn to new build homes because they like the idea of being the first owners and prefer somewhere that doesn’t require renovating. However, there can be teething problems.

Thanks to the government’s Help to Buy scheme, it is much easier, particularly for first-time buyers, to get funding to buy a new home. Some developments provide a choice of fixtures and fittings, so buyers can customise their property to their own taste. If a property is registered with the National House Building Council, it will have a 10-year warranty and protection scheme.

They have the further advantage of no onward chain and can come with part-exchange deals that can speed up the moving process.

Something old

Older properties tend to come with added extras like their own ready-made community and amenities. They can be cheaper than new builds, offer the added charm of period details, and look and feel more individual. They can offer more scope for extensions and loft conversions, meaning that they can grow with the family.

Getting a survey done on both new and old properties is vital, as it will highlight any defects that could be costly to put right once you’ve moved in.

Many people are drawn to new build homes because they like the idea of being the first owners and prefer somewhere that doesn’t require renovating. However, there can be teething problems.

 

Financial mistake even the experts can make.

Financial mistake even the experts can make.

We’re all human, lead increasingly busy lives, and can be prone to making mistakes. When it comes to our money, it can be easy to lose track of the big picture; here are just a few financial mistakes we can all avoid.

Not keeping an eye on statements

Checking your bank and credit card statements regularly will help you budget better, get rid of expenditure you no longer need, and alert you to any signs of fraud.

Allowing your insurance policies to automatically renew

Although it can seem a chore, it makes sense to keep your insurance policies under regular review to ensure that you’re paying a fair price and have the cover you need.

Letting your mortgage drift

If your fixed-rate deal is nearing its end or has already ended, then it makes sense to ask us to recommend a new one. When your deal ends, you will generally find your lender moves you to their Standard Variable Rate, which could mean you’ll end up paying far more than you need to each month.

Not seeking professional advice about retirement

With many of us set to enjoy several decades in retirement, it’s important to get the right advice about saving enough money during our working lives. When it’s time to access our pension pots, we can all use professional help to make sure that our money lasts as long as we do.

Not thinking ahead

Putting a Lasting Power of Attorney in place and making a Will are important steps to safeguard family finances. They provide the valuable peace of mind of knowing that your wishes will be followed, and your family provided for when you are no longer able to.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Will writing and Lasting Powers of Attorney are not regulated by the FCA.

Putting a Lasting Power of Attorney in place and making a Will are important steps to safeguard family finances.

Women risk becoming pension poor or divorce.

Women risk becoming pension poor or divorce.

There are no hard and fast rules governing how assets should be divided when a couple divorces, although there is a broad starting point of 50:50. However, new research6 shows that women who divorce can often end up with less than half the property wealth of married couples and less than one third of the average pension wealth. The study showed that the average divorced woman over 50 has pension wealth of £131,000 compared with £454,000 for the average married couple.

Dividing pension assets

Many people think that on divorce a pension solely belongs to the party who is named on the policy, but that’s not the case. A pension has to be considered along with other financial assets owned by the couple when reaching a financial settlement. Pension assets can be apportioned in various ways:

  • offsetting the value of one spouse’s fund by transferring a lump sum, or other assets, to the other spouse
  • splitting the pension fund into two separate pensions
  • arranging that when a pension comes to be paid, a portion goes to the other spouse.

Getting the right advice at the right time

The findings underline the need to get advice when considering how marital assets should be divided on divorce. A pension pot can often represent a substantial sum of money and needs to be considered alongside other major assets such as property. Post-divorce, it makes sense to discuss your revised circumstances with us. You’ll need to reconsider your financial goals, and review your mortgage, pension and investment plans, plus remake your Will. Reorganising your finances can represent a major step in moving forward to a new life.

6Royal London, 2019

As a mortgage is secured against your home or property, it could be repossessed if you do not
keep up mortgage repayments.

Side hustles – what they are and why they work

Side hustles – what they are and why they work

A side hustle is any type of work undertaken in addition to a full-time job. It’s often freelance or piecework in nature and provides extra income. It’s not the same as a part-time job, which entails working for someone else who governs the terms of your employment and the hours you work. Side hustles often involve doing things that you’re passionate about and tend to take place in the evening or at weekends. Data shows that side hustles have risen by 32% over the last decade1.

Exploring new avenues

For those who are considering a change of career direction, a side hustle gives the opportunity to try out new ideas and ways of working. The extra cash generated is often used to bolster savings, a deposit for a home, or a cash reserve that can be used to set up a new business. Side hustles come in all shapes and sizes, from dog walking, freelance writing, teaching or tutoring, to selling things like handicrafts or clothes. They are proving increasingly popular, particularly amongst women who might want to leave a mainstream career at some point and need a Plan B.

1 CEBR, Nov 2018

The impact of humble mortgage overpayments

The impact of humble mortgage overpayments

If you’ve ever wondered whether it’s worth making overpayments on your mortgage, then new research2 could help you decide.

The data shows the benefits of a monthly £10 overpayment with interest rates at their current low level and illustrates that even modest overpayments can make a difference to the day when borrowers become mortgage free. If a borrower took out a £200,000 mortgage over a 25-year term, they could save £1,146 in interest (based on current rates) and become mortgage-free four months earlier. By making a £100 overpayment each month on a £200,000 mortgage, a borrower could save £9,948 in interest and reduce their mortgage term by three years in the process. Those with a £500,000 mortgage, making the same £100 overpayment, could save over £10,000 in interest and become mortgage-free one year and five months earlier.

Don’t forget to save too

Whilst these figures show that modest levels of overpayment can prove effective, it’s important to remember to keep some savings aside for rainy day events such as unexpected bills and expenses. 2Santander, 2018

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Spouses unnecessarily paying tax on inherited ISAs

Spouses unnecessarily paying tax on inherited ISAs

Data2 shows that six out of seven bereaved partners could be paying tax unnecessarily on ISA savings they inherit.

Since April 2015, bereaved spouses or civil partners have been entitled to an extra ISA allowance. This is achieved by what’s called an Additional Permitted Subscription (APS). If the investor died before 6 April 2018, the APS is equal to the value of the ISA on the date of death. If the investor died on or after 6 April 2018, their ISA will become a continuing ISA. In this case, the APS is equal to the higher value of the ISA on the date of the investor’s death, or the value of the ISA on the date it stops being a continuing ISA (completion of estate administration / third anniversary of date of death / all funds withdrawn). The surviving spouse therefore has the option of having the higher APS value.

Using your APS

You can use the allowance in one go or as separate lump sums.  However, time limits do apply.

2HMRC data obtained by Zurich, Jan 2019

First-time buyers help to prop up the property market

First-time buyers help to prop up the property market

Although the housing market has slowed, due in part to the widespread uncertainties surrounding Brexit, there is some good news. The number of first-time property purchases made in 2018 reached 372,100, up by 3% on the 2017 figure. This means that for the first time since 1995, those making their first property purchase represents a bigger share of the market numerically than those making a second or subsequent move (51% to 49%)1.

Stamp Duty cuts First-time buyers found their property-owning plans boosted by the Chancellor’s cut in Stamp Duty announced in November 2017. This means that if they spend £300,000 or less on a property, they won’t pay Stamp Duty. If they buy a more expensive property, the first £300,000 will be free of Stamp Duty, provided that the property’s price is £500,000 or less. In Scotland, first-time buyers enjoy Land and Buildings Transaction Tax relief that saves them up to £600, whilst in Wales they get no special Land Transaction Tax concessions.

Help to Buy set to continue The Government’s Help to Buy scheme is playing a major role in helping first-timers realise their property goals. Under the scheme, first-time buyers and second steppers are offered a loan of up to 20% of the price to buy a new-build property of up to £600,000. A London-only version of the scheme provides 40% equity loans. The 2018 Budget contained details of how the Help to Buy scheme is to operate in the future. Until 2021, anyone taking advantage of a Help to Buy equity loan to boost their purchasing power, can buy a property worth up to £600,000. Thereafter, and for a maximum of two years, only first-time buyers will be eligible to buy through the scheme, and the maximum property values will be restricted, with differing figures in lace around the country to reflect regional house price variations.

Time to make your move? If you’re thinking of making 2019 the year you buy your first home, it makes sense to get in touch. We can help you make your dream a reality.

1Lloyds, 2019