Protection: do you know what it means?

Life insurance and critical illness cover, do you understand the jargon or are you confused by the industry terms?

Research by Legal & General has revealed that most customers are confused about the language used for protection products. Legal & General surveyed 2,000 people, and found that many consumers didn’t know what was meant by protection.

The survey found that only around one in 10 people associated the term ‘protection’ with life or critical illness cover, whereas some 40% assumed it related to protection against physical harm or protective clothing, while 19% of people did not associate the word with anything at all.

Protection is a term used when talking about critical illness cover and life insurance in the sense that it can financially protect you and your loved ones in case the worst were to happen. This type of protection can be invaluable.

If you’re diagnosed with a critical illness and can’t work, do you know what you’re entitled to from the state? How will you keep up your mortgage payments? If the worst were to happen, would your family be financially stable? These are the questions you must ask yourself!

Just over half of those surveyed by Legal & General did not have any life insurance or critical illness cover in place yet two thirds said they would be willing to pay between £10 and £20 a month for cover.

Seeking professional advice when looking for protection is important; your adviser will be able to find the cover that is best for you and your individual circumstances, as well as talk you through the industry jargon!

If you’d like to discuss your protection needs, contact one of our advisers today.

Mortgage Administrator Apprentice

We are looking for a Mortgage Administrator apprentice to join our small busy team, learning all aspects of working in an office environment whilst studying towards your Business Admin Qualification.

You will be working towards your L2 Business Admin apprenticeship by assisting in a range of duties relevant to your studies. You will also be set aside time to complete your learning.

Duties include:
Answering phone calls, email enquiries and greeting any clients that have appointments in the office or are dropping of documents that need to be photocopied.
Checking various documents, then packaging the documents to upload to mortgage lenders and email solicitors.
Upload documents to our back-office system to complete mortgage files.
Phone solicitors and mortgage lenders to check the progress of cases.
Enter messages and queries on diary system to update mortgage advisers and clients.

Will pay minimum of minimum wage based on age, not the apprentice rates – this will be reviewed after 2 months.

Working Week:
Monday to Friday- 9AM to 5PM
40 hours per week including 1 hour for lunch- we have small staff room.

Possible permanent position upon completion of apprenticeship. Please send CV and covering letter to julie@warrenifa.co.uk.

Most first-time buyers don’t know when the Help to Buy ISA ends

First-time buyers are living in a time when it appears to be much harder to get that first step onto the property ladder than ever before. House prices have increased by a massive 554% in the last 30 years and the time it now takes so save for a deposit has also substantially increased.

According to Nationwide, a decade ago it would take the average first-time buyer in the UK less than five years to save a 10% deposit of £14,080. Contrast that with today when it takes on average six and a half years to save a 10% deposit of £18,480.

This is why many first-time buyers have turned to the government Help to Buy ISA – launched over three years ago, the Help to Buy: ISA offers first-time buyers the opportunity to save up to £200 a month with the government topping up their contributions by 25%, up to a maximum of £3,000.

But… many first-time buyers aren’t aware of the scheme’s details. Almost two thirds of prospective first-time buyers are unaware of the cut-off date for the Help to Buy ISA, research by specialist bank Aldermore has found.

The deadline to open a government Help to Buy ISA is 30 November this year but contributions can still be made until November 2029, and the cut-off date to claim the bonus is 1st December 2030 – so there’s still time for your loved ones to open an account and start claiming their 25% bonus for their first home.

Over four fifths of potential first-time buyers don’t know what the minimum government bonus is either, while 80% don’t know what the maximum is. There is also a lack of understanding about the scheme from parents too.

Almost nine in 10 parents of first-time buyers are unsure what the minimum government bonus is, while a similar proportion are unsure what the maximum bonus is. But, when the parents were given an explanation of what the Help to Buy ISA is, 86% said they would encourage their child to save into a Help to Buy ISA.

So, with only six months to go, if you or your loved ones would like to discuss the Help to Buy ISA so that they can start boosting their savings for when they’re looking to buy a home in the next three, five or even ten years, you should seek professional advice today.

MPs rally support for mortgage prisoners

Mortgage prisoners are predominantly those borrowers who took out a mortgage before the financial crisis but are now blocked from switching to better rates due to changes in lending practices.

There are now an estimated 200,000 homeowners that are trapped on high interest-rate loans with unregulated or inactive firms, and are unable to switch to a cheaper deal.

Mortgage prisoners are often told by lenders that they will be unable to afford a new deal under current lending rules despite a new product offering cheaper monthly payments than their existing one.

This can be even more frustrating for those who are trapped if they have continually paid off their high monthly bills and not let their account fall into arrears. However, there may be some good news for mortgage prisoners.

So, what’s being done to help those who are trapped on high interest-rate mortgages?
An all parliamentary group was launched in May to rally support for mortgage prisoners trapped by changes to lending rules and government loan selling. The group consists of MPs from all political parties and will give support in an effort to create tangible change for people who are trapped by their mortgage.

This issue prompted MP Charlie Elphicke to present a motion in the House of Commons to force lenders to treat such borrowers as “grandfathered” as a first step towards freeing the UKs mortgage prisoners.

This exemption would allow mortgage prisoners to switch lenders without meeting the affordability assessment brought in by new regulations. The mortgage would also be permitted without any regulatory penalty for the lender.

It’s not only MPs that have acknowledged that change is needed though. The FCA stated earlier this year that it is considering a change to affordability checks, which could allow people to switch to deals that are easier to pay.

So, if any of your friends and family are some of the 200,000 mortgage prisoners in the UK there could be some positive changes on the horizon with the backing of MPs and the FCA and we will continue to keep you updated.

If you or your loved ones would like to talk through your options, contact one of our advisers today.

How to help the self-employed!

Data released by the Office for National Statistics last month revealed the number of self-employed workers in the UK has surged to a new record high. There are now a massive 4.9 million workers across the nation who are their own boss.

Being self-employed can bring with it many benefits. You can work around your lifestyle, you’ll have greater flexibility and if you’re successful it can become a very lucrative venture. So, there’s no wonder why so many of us are becoming our own bosses.

But, what should you consider?
Lenders don’t have a separate category for self-employed mortgages. You are able to access the same products and the same rates as your employed counterparts even if you’re your own boss. However, your earnings may be viewed as more complex to some lenders and you must be able to prove them to the lender.

Ultimately, when applying for a mortgage, you will be assessed on how much you are earning, how likely is it you will sustain that level of earnings, how you take your earnings, how long you’ve been trading for, your accounts history and a number of other things. Then, once all the relevant documents have been submitted, the lender will assess the application and make a judgement based on their lending criteria – so you can appreciate how complex the application process can be on your own.

A good mortgage broker will be able to help answer all of your questions, will be able to provide invaluable advice and be able to move the application forward as quickly and as smoothly as possible based on your current and future circumstances. They will be able to point you in the direction of a lender that is not only willing to lend but also those most likely to provide you with the best deal.

If you’re thinking of becoming self-employed and want to talk through your options, contact one of our advisers today .

Brits abroad: expat landlords

How many Brits are living abroad is up for debate depending on which source you listen to. But one thing we do know for sure is that there are a lot of expats living right the way across the globe.

For working people, you may be lured away by an exciting new opportunity whereas for those of you at the end of your career, the desire to up sticks may be driven by the want for a change of pace and lifestyle in retirement.

Whatever the reason, you global adventurers often choose to keep a foothold in the UK property market – whether that’s renting out their former UK residence or purchasing a property to let. But, if you’re thinking of becoming an expat landlord there are a number of things you must consider:

The right mortgage
If you plan to move abroad and rent out your former home in the UK, it’s essential that you speak to your existing mortgage adviser and check if this is allowed under the conditions of your mortgage.

Your lender may specify a time limit for your return if you wish to retain your current mortgage, apply additional fees, a higher interest rate or request that you convert the mortgage to a consumer or regulated buy-to-let mortgage product. Landlords who are already abroad and want to buy additional property will need to look for an expat buy-to-let mortgage from the outset.

Landlord insurance
Although there is no legal requirement for landlords to take out insurance, your lender may require you to take out specialist insurance before you can let out your property. Make sure to speak with your mortgage adviser for further advice.

Managing your property
Dealing with tenants and maintenance issues can be a time-consuming and stressful process, let alone trying to deal with these problems from another continent in a different time zone. This is why it is important to ask yourself whether you’d be in a position to manage your property from abroad or would it be easier to use the services of a suitably qualified lettings agent?

Currency and foreign exchange
For you potential expat landlords you’ll need to consider foreign exchange rates and the potential risk of those rates changing if you plan to use the rental income to cover your living expenses. Rent will be paid into a UK bank in pounds sterling so it has the potential to be impacted by foreign exchange rates.

During 2018, for example, landlords who converted pounds to US dollars at the lowest point suffered a 12% reduction in spending power compared to those who converted at the annual high.

While this is just a brief overview of some of the things you might need to consider there are a number of other things to think about too. This is why seeking professional advice before becoming an expat landlord is important.

If you’re thinking about joining the many brits abroad and becoming an expat landlord contact one of our advisers today.

More lenders are offering 95% loan-to-value mortgages

Since the financial crisis in 2008 lenders have been reluctant to offer high loan-to-value mortgages which has resulted in many of us being unable to afford our dream homes or take our first step onto the property ladder.

Without the help of high loan-to-value mortgages some will have spent years saving for a deposit, are still living with parents, or are stuck in the rental cycle. The dream of owning our own homes seems somewhat in the distance.

But are times changing?
The number of mortgage providers that include a maximum 95 per cent loan-to-value product in their range now stands at 60*, up from 53 a year ago and 13 more than five years ago, according to Moneyfacts. This is great news for potential first-time buyers and home movers.

A decade ago a borrower with a five per cent deposit had just three products from three mortgage providers to choose from. Today, you have a choice of a massive 405 products, including 67 variable deals, from a huge total of 60 providers*.

More than four fifths of mortgages available at a maximum 95% loan-to-value are fixed rate mortgages, accounting for 338 products of the 405 available.

These deals enable you borrowers to have the certainty of knowing what your monthly repayment amount will be. This is perhaps of particular importance to those you who are taking their first steps onto the property ladder.

With the number of high loan-to-value options now available it’s important to seek professional advice. Your adviser will be able to find the right mortgage for you, or your loved one’s specific circumstances should they want to take that first step onto the property ladder, which can be invaluable.

If you, or someone you know, would like to take advantage of the high loan-to-value mortgages available, please contact your adviser today.

* Number of products correct as of 16/04/2019

UK life insurance is the cheapest in the world

In the UK we’re largely underprepared for the worst-case scenario. If the worst were to happen to you, without suitable protection, it could leave your family under a lot of financial pressure and despite life cover being the most popular type of protection the majority of us still aren’t covered!

According to Legal and General only 15 million adults have a life insurance policy which is just under a quarter of the UK population. This figure is quite scary, especially considering the price of life insurance in Britain is the cheapest in the world according to CIExpert.

Reducing Premiums
Surprisingly, premiums have actually reduced over time and it may be cheaper to cover yourself now than 10, and even 18 years ago.

For a £123,000 decreasing term plan on a 32-year-old non-smoking male and a 28-year-old smoking female in 2001 the cheapest premium available was £42.47 per month with Norwich Union, who are now Aviva. Today the standard Aviva plan would cost you £41.81. The reduction for a standard Zurich plan is far wider too – £58.21 per month down substantially to £39.93.

A November 2012 plan reflects a similar trend. A £92,000 decreasing term plan for a 24-year-old female non-smoker cost £26.67 pm with Zurich, which today would want £25.24 pm. L&G, which charged £34.58 pm, has reduced to £26.17 pm. But the price is always dependant on your individual circumstances.

Whether this downward trend is set to continue or not, now seems like the perfect time to protect you and your loved ones in case the worst were to happen.

If you would like to discuss your protection needs, or just explore your options, contact one of our advisers today.

 

Government tightens up electrical safety rules for landlords

The government has sparked up a new idea so that everyone can feel safe and secure in their homes. The idea gives landlords greater responsibility to ensure that their rental properties are fit to live in for their tenants.

The new rule, that was announced in January, means that landlords must ensure mandatory electrical inspections are carried out in their private rental accommodation by competent and qualified inspectors, as part of the government’s commitment to drive up standards in the sector. Failing to comply could result in tough financial penalties.

There will be a transitional period in the first two years, whereby the new rule will only affect new private tenancies in the first year and then extend to all existing private tenancies in the second year.

Properties with an existing electrical installation condition report (EICR) will not be required to replace it for five years from its start date. And for new, fully rewired properties, an Electrical Installation Certificate can be presented in place of an EICR, provided the date of the next inspection mentioned on the certificate has not elapsed.

New guidance which sets out the minimum level of competence and qualifications necessary for those carrying out the inspections is to be published. It will provide clear accountability at each stage of the inspection process without excessive cost and time burdens on landlords.

Alongside the new guidance, existing “competent person scheme operators” will be invited to set up an electrical inspection and testing scheme which inspectors and testers can choose to join.

Councils will also have the authority to impose fines of up to £30,000 on rogue landlords who rent out poor quality properties from 1st June 2019.

If you want to discuss your options contact one of our advisers today.

Five tax rules landlords need to know

Landlord tax rules have seen some significant changes over the last few years. From stamp duty to capital gains tax, there are a number of different rules and reliefs that apply at every stage of the property life cycle.

As landlords it’s incredibly important to keep on top of your tax issues, so here we take a look at some of the major aspects of landlord tax and make sure that you’re up to date.

Stamp duty on second properties
From April 2016, stamp duty land tax (SDLT) on second properties, including rental properties, was increased to include an additional 3% surcharge over and above standard rates.

Anyone purchasing a rental property now pays 3% SDLT for the first £125,000; 5% instead of 2% on the portion between £125,001 and £250,000, and 8% on any amount above £250,001 – increasing the amount of up-front cash landlords need to buy a new property.

Tax on rental income
Until recently, landlords could deduct all finance costs from their rental income and profits were taxed at their marginal rate. However, starting from April 2017 and phased in over a four-year period, tax relief for finance costs is being restricted to a basic rate tax credit.

How these rules will impact you as a landlord will depend on your individual circumstances. However, there are a range of strategies to mitigate the affects of these changes, from resizing your portfolio to moving properties into a limited company – this is where seeking professional advice can be so invaluable.

Wear and tear allowance
Landlords with furnished properties can take advantage of a ‘wear and tear’ allowance to reflect the fact that furnishings need to be replaced regularly. Until recently, the allowance was set at 10% of gross rent but, following a change to the rules, landlords can only deduct the cost of new items against their rental income now.

Insurance premium tax
Landlords can expect to pay 12% insurance premium tax on any insurance they arrange associated with their rental property. While there is no legal requirement for landlords to take out insurance, mortgage lenders usually require specialist building insurance to cover the costs of rebuilding or repairing the structure of the rental property if it is damaged or destroyed by events like fire, storm, flood or vandalism.

Capital gains tax
Landlords are subject to capital gains tax on property sales. The size of the gain is usually the difference between the amount paid for the property and the amount achieved when the property is sold. Landlords can deduct costs associated with buying, selling and improving their property to reduce the gain so it’s important to keep receipts for all these items.

This article is only a brief overview of some taxes that may be applicable to landlords and should not be considered as an exact guide. Before investing in property or looking to restructure an existing portfolio, individuals should always seek expert advice from a qualified tax specialist. If you’re a landlord and would like to discuss your buying options, contact us today.