Category : Mortgage Adviser

fixed rate mortgage

Thinking of fixing your mortgage?

Thinking of fixing your mortgage?

If you think an increase in your mortgage repayments could have a negative impact on your lifestyle or financial wellbeing, you may want to consider fixing your mortgage.

With a fixed rate mortgage, your payments are set at a certain level for an agreed period, regardless of whether your lender changes its Standard Variable Rate (SVR). Such an increase typically occurs when the Bank of England Base Rate starts to climb.

Fixed rate mortgages can offer protection from rate rises for an agreed period, but there are several considerations you’ll need to think about before making your decision.

Predictable repayments – but you won’t benefit from rate cuts
With a tracker mortgage, your monthly payment fluctuates in line with a rate that’s equal to, higher, or lower than a chosen Base Rate (usually the Bank of England Base Rate). The rate charged on the mortgage ‘tracks’ that rate, usually for a set period of two to three years.

Tracker rates might be more appealing if you don’t have a fixed budget and can tolerate higher mortgage payments if rates rise, whilst being able to benefit from reduced monthly mortgage payments if rates go down.

But with a fixed rate mortgage, the rate (and therefore your repayments) will stay the same for an agreed period. A fixed rate mortgage makes budgeting much easier because your payments will not change – even if interest rates go up. However, it also means you won’t benefit if rates go down.

Longer fixed terms will be more expensive

If you choose a fixed rate mortgage, you’ll need to decide how long you want your fixed rate to last. Two-year fixed rate mortgages typically offer the lowest initial interest rate. If you want to fix your interest rate for longer, you will probably pay more
for that longer-term security. This may be worthwhile in return for predictable repayments, or you might choose to take the lower rate for a shorter timeframe if you expect that your financial position will improve by the time the deal ends.

A change in circumstances could cost you
Do you have any known changes on the horizon that will have an impact on your mortgage?

With a fixed rate mortgage, you could face an early repayment charge if you repay all or a certain percentage of the mortgage during the fixed rate period.

If you have no known changes and want to benefit from a longer period of security, then a longer term fixed rate of five years may appeal. It might cost more initially, but you’ll benefit from knowing that your budget is fixed for that period.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

Don’t be drawn into trying to second guess what will happen with interest rates over the coming years. We can help you come to the most appropriate decision for your next mortgage.

Mortgages

The ninth largest lender

The ninth largest lender

34% of first-time buyers relied on their parents for financial help, making the bank of mum and dad’, the equivalent of the UK’s ninth largest lender in 2017.

If you’re trying to get on the housing ladder, you’ll know how hard it can be
• The average price of a first home is over £200,000 in the UK (and £400,000 in London)
• The average first-time buyer deposit has more than doubled over the past decade from £15,168 in 2006 to £32,321 in 2016
• Only 29% of all first-time buyer purchases in 2016 were below the £125,000 Stamp Duty threshold.
• 28% of all first-time buyers with a mortgage opted for a 30 to 35 year mortgage term (in 2016)

With numbers like those left it’s little wonder that so many first-time buyers turned to their parents for financial support in helping them buy their first home. In fact, according to a recent report from Legal and General, the bank of mum and dad could lend more than £6.5bn in 2017, a massive 30% increase on 2016.

The money will help to buy £75bn worth of property and puts parents on a par with the UK’s ninth largest mortgage lender, the Yorkshire Building Society.

Is parental support sustainable?
The bank of mum and dad makes an average financial contribution of £21,600 for each property. And of the buyers who received support from their family, 57% received it in the form of a gift while just 5% were given the money as a loan with interest.

According to Legal and General a loan by the bank of mum and dad could wipe out just over half of a family’s available net wealth, raising the question of whether this type of support is sustainable over the longer term.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

If you’re looking to buy your first house with help from your family, we can help you find an appropriate mortgage deal for you.

If you’re still in the process of saving your deposit (typically 16% of the value of an average first home), we can help you explore the different ways to invest for your near, mid and long-term plans.

downsizing your home

The downside of downsizing

The downside of downsizing

The decision to sell up and move to a smaller property could come as a result of children flying the nest, the need to free up cash, or both. Whatever the reason, there are costs to downsizing that are important to know about before you make the move.

The ‘hidden’ fees
Research from online estate agent OwnerSellers.com suggests it costs an average of £17,843 to downsize, thanks to estate agency fees, stamp duty, conveyancing fees, surveys and removal costs. These add up to a sizeable chunk that can eat into
any equity released from the sale of the house.

The figure is based on downsizing from a detached family home in England worth £381,211 to an average two-bedroom apartment costing £268,174. In principle the move would free up £113,037, but when you take into account the additional costs this drops to £95,194.

Reducing the cost of downsizing
If you’re thinking of downsizing, there are ways to reduce the fees you’ll incur. For instance, if you’re looking to relocate, you might be moving to a cheaper area where properties don’t attract as much stamp duty. Estate agency fees can vary so it pays to shop
around for offers; like free valuations, or no up-front fees, or perhaps choose an agent who’ll sell your property for a fixed fee.
If you still require a mortgage after downsizing, we can help you find the right mortgage rate for your circumstances, particularly as we have access to some exclusive deals that you may not be able to get on the high street.

Researching all the costs up front, from stamp duty and estate agency fees to conveyancing and finding the right mortgage can help make downsizing work out for you financially.

Please talk to us if you’d like any help or advice on your next property move

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

piggy bank

Teaching kids about money

Teaching kids about money

As parents we teach our children a lot: to count, read, say please and thank you and, hopefully, be an example to others.

Research shows that parents also pass on their approach to finances. So exactly how are we teaching our children to be financially astute from a young age?

Pocket money
Compared to some of their European counterparts, British parents with children under 10 are more generous when it comes to paying pocket money. That changes from 10 upwards when they end up paying well below the European average.

Teaching the value of money
Your child’s financial education can begin as soon as they learn to count and a great time to start talking about spending and saving is birthdays or Christmas (if they‘re likely to receive a cash gift).

If your child asks for something expensive: an iPhone 7 for £599, or an Xbox One for £199, try to explain to them the time it would take to earn that amount of money. The minimum wage for a person under 18 is £4 per hour, which means it would take 150 hours or nearly three weeks working full-time, to save for that new iPhone.

How to budget
An important lesson to instil from a young age is not to spend more than you have. Dividing money into different pots is a great way to demonstrate this as it really helps your child to visualise where their money is going. They can also see that when it’s gone, it’s gone.

Try using two jam jars. Label one ‘Spend now’ and one ‘Save for later’. Talk to your child about how they would like to divide their pocket money or any cash gifts they receive between the two jars. If they keep their savings jar topped up, they can see that they have rainy day money if they need it when their ‘spend now’ jar is empty.

You could also add in a third jar ‘Donate to others’ to show your child that they can afford to help children who may not be lucky enough to receive pocket money for their own jars.

Talk to us about investing for yourself or your children

downsizing your home

Parent landlords

Parent landlords

With house prices rising faster than salaries, the younger generation face having to find a much bigger multiple of their income to buy a home, compared to their baby-boomer parents.

Couple this with rising rent payments that stifle the ability to raise a deposit and you can see why ‘Generation Rent’ is a growing population and more kids are looking to their parents for help.

Parent landlords
In the UK, 730,000 parents rent properties to their children and a further 1.4m landlords have said they would be willing to take their children as tenants.

As both the cost of renting and buying a property increases, renting from a parent should help prospective first-time buyers get on the property ladder sooner rather than later. Especially given that just 5% of parents charge the market rate, 30% allow their children to pay whatever they can afford and 12% even go so far as to pay the bills for the property.

Buy to Let
If you have a property you’re considering renting to your children, or you’re thinking of Buying to Let to help out your kids, make sure you consider all the costs involved before you take the leap.

Solicitors, valuers and surveyors are not regulated by the Financial Conduct Authority.

[gem_quote style=”5″]If you need mortgage advice, or you’re looking to help your children onto the property ladder, please talk to us.[/gem_quote]
Savings

Achieving your financial goals

Achieving your financial goals

We lead complex lives in an increasingly complex world. As your financial adviser we can help you better understand your financial challenges, goals and needs, and help you find appropriate ways to meet them.

Even a seemingly straightforward financial goal can involve numerous decisions and a lot of time and effort getting it right. Whether it’s buying a home, investing for the future or protecting the people and things you cherish, we’re here to help you make the right choices for your needs. Here are some of the services we provide, which our clients have told us they value the most.

Mortgages
With so many mortgage lenders offering products on the high street and online, it can be tempting to cut out the middle man. But when you’re making such a huge financial commitment, professional guidance can be invaluable, particularly if your needs are out of the ordinary. As well as arranging your mortgage we can also recommend specialist professional services that can help with other elements of your home-buying process, including solicitors and surveyors.

Protection
When using comparison sites and direct insurers, how can you be sure their “off-the-peg” solutions meet your specific needs? Using our expert product knowledge we can help you find the right solution for you. Whatever your particular need – be it income, family, mortgage or business protection – we can access high quality products from a range of handpicked providers; providers we have selected because they are proud to stand behind claims when it matters the most.

Investment planning
As well as your pension, you may have opportunities to invest lump sums – such as an inheritance or bonus – but are unsure about what strategy is best. As with all areas of financial planning, it pays to have a clear objective or vision. We can talk you through the important things to consider and help you create a balanced and diversified portfolio, taking into account your financial goals, attitude to risk, and any appropriate tax planning.

Retirement planning
The onus to create a comfortable retirement is falling increasingly on the individual, and the new pension regulations, whilst bringing welcome freedoms, introduce additional complexity to your at-retirement choices.

The right financial plan could help secure a more comfortable retirement – not just for you, but also for your loved ones and heirs. We can help you navigate the complexities of the new rules. Knowing what can be achieved and establishing the right strategy as early as possible can help you prepare for the future.

Inheritance planning
Passing our hard-earned wealth to loved ones often forms a big part of our ambitions. The right forward planning can help you maximise your heirs’ inheritance by minimising tax liabilities. We can help you put the right structures in place.

Of course, your needs in any and all of these areas will change over time, and regulatory changes can impact the effectiveness of any structures already in place, so we recommend a regular review to ensure that your plans remain on track and relevant.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

[gem_quote style=”5″]To find out more about how we can help you, please get in touch.[/gem_quote]

Your home/property may be repossessed if you do not keep up repayments on your mortgage

Financial Advice

Are you considering remortgaging?

Are you considering remortgaging?

With continuing low interest rates, you may be considering remortgaging to save money.

Even if your mortgage provider has recently reduced its Standard Variable Rate (SVR), moving to a new mortgage deal could save you money. But before you’re tempted by an attractive introductory rate, it’s worth considering the bigger picture.

Should I stay or should I go?

It’s true that moving to a new deal could save you money, just remember to check that you won’t incur an Early repayment Charge (ERC) if you change your mortgage before the end of your current deal. It’s also worth factoring in any potential legal, valuation and administration costs that may be associated with signing up to a new mortgage deal.

Tougher lending rules

Mortgage regulation may also have changed since you took out your current deal. The EU Mortgage Credit Directive of 2015 introduced stricter lending criteria which has led to mortgage lenders having to take greater steps to check affordability – including on remortgages.

You can expect to be asked to show evidence of your income, such as payslips and bank statements, and your outgoings, including other debt repayments, household bills and living costs such as travel, clothing, entertainment and childcare.

Changing the type of deal

When looking at new deals, you may want to consider a different type of mortgage arrangement to your current deal.
For instance, you may decide you would benefit from the option of payment holidays, or a more flexible repayment arrangement.

If you have significant savings, you may want to switch to an offset or current account mortgage, where you use your
savings to reduce the proportion of the loan on which you pay interest.

Are you still covered?

If you’re thinking of changing your mortgage, remember to review your protection arrangements at the same time – especially if you don’t already have cover in place, or your circumstances have changed since you last reviewed your cover.

The value of personal, family, or income protection should not be underestimated if it means keeping the roof over your heads when you need it most.

With so many areas to consider, it makes sense to seek professional mortgage advice. We can help you weigh up the financial benefits of remortgaging, choose the most appropriate deal, handle your mortgage application and ensure your loan is properly protected.

[gem_quote style=”5″]If you’d like help choosing the right mortgage, please get in touch.[/gem_quote]

Your home/property may be repossessed if you do not keep up repayments on your mortgage

mortgage advice

Help to Buy schemes proving successful

Help to Buy schemes proving successful

Over 160,000 people have been able to achieve home-ownership thanks to the government’s Help to Buy housing schemes.

Of those, 118,000 were first time buyers, the average house price was £189,795 (significantly under the national average of £292,000), more than half were for new build homes and all but 5% of completions took place outside of London.

Supporting first time buyers

The Help to Buy schemes were primarily designed to support first time buyers and began with the Help to Buy: equity loan launched in April 2013. This was designed to support purchases of new build properties up to the value of £600,000, with a maximum equity of 20% (40% in Greater London). To date, 81,014properties have been purchased with the help of a Help to Buy: equity loan. Then followed the Help to Buy: mortgage guarantee scheme in October 2013, offering lenders the option to purchase a guarantee on mortgage loans where the borrower has a deposit of between 5% and 20%. 78,749 mortgages have been completed with the support of this scheme and 79% of those are first time buyers.

First time buyers got a further boost in December 2015, with the launch of the Help to Buy: ISA. Since then, more than 500,000 people saving for their first home will benefit from a government bonus of up to £3,000.

Helping people across the UK

Help to Buy is helping people throughout the UK to achieve their dream of owning a new or bigger home. It also appears to be contributing to a potential turnaround in the housing market decline: recent figures from the latest English housing survey show the number of people owning their own home has stopped reducing for the first time since 2003.

With the majority of completions outside of London, the highest number of homes completed through both the Help to Buy: ISA and mortgage guarantee schemes has been in the North West region. The equity loan is particularly popular in the South East region.

City-based first time buyers and second-steppers have been supported further by the London Help to Buy scheme launched in February 2016. The scheme supports purchases of new build homes in the capital by offering a 5% deposit backed by an equity loan of up to 40% from the government. There were 256 completions in London between 1 February 2016 and 31 March 2016 using the equity loan.

Right to Buy

In total, more than 309,000 households have been helped to purchase a home through a government backed Right to Buy scheme in the last six years – that’s 141 new homeowners a day and around 4,350 a month.

Contains public sector information licensed under the Open Government Licence v3.0.

[gem_quote style=”5″]If you’re dreaming of getting onto the housing ladder, or you need more space, please get in touch. We can help you find the perfect mortgage for your new home[/gem_quote]

Your home/property may be repossessed if you do not keep up repayments on your mortgage

conveyancing

What’s your repayment plan?

What’s your repayment plan?

Thousands of people with interest-only mortgages expiring this year do not have a repayment plan, putting their homes at serious risk of repossession.

40,000 interest-only mortgages are set to mature in 2016, but experts suggest that only half of these homeowners have the capital in place to repay the loan. And according to the charity Citizen’s Advice Bureau, this is just the tip of the iceberg, with 934,000 interest-only borrowers without a plan to pay off their mortgage.

The ins and outs of interest-only

Unlike a repayment mortgage, where the borrower pays off the capital and interest on their loan each month until the debt is cleared, an interest-only loan offers a cheaper monthly premium but requires a single repayment of the capital at the end of the term. Normally this is cleared using the proceeds from a separate investment vehicle.

For example, a £150,000 mortgage at 5% over 25 years would cost £877 per month on a repayment basis, but only £625 per month interest-only. However, the latter leaves the original £150,000 capital debt to be repaid.

Since 2012, anyone taking out an interest-only loan must have a repayment plan in place which has led to a drop in the number being sold.

Don’t get trapped
If you have an interest-only mortgage but no repayment vehicle in place, it is critical you review your finances as a matter of urgency. Depending on the term left on the mortgage you could set up a repayment plan now, or look at switching to a repayment mortgage. This may mean higher monthly repayments, but there are a lot of competitive deals in this current low-interest rate environment. Another option could be to sell your home and downsize – something that may be possible if older children have flown the nest but nevertheless a difficult decision if you don’t want to lose a cherished family home.

[gem_quote style=”5″]If you are concerned about your mortgage, or you need advice on a suitable investment vehicle, please get in touch.[/gem_quote]

Your home/property may be repossessed if you do not keep up repayments on your mortgage