OVERVIEW
Experience
We have been advising clients since 1994, and have a wealth of experience for which there is no substitute. As an appointed representative of the Sesame Network, we provide advice in all financial planning areas, and have access to specialist advice, and technical support through the team at Sesame Gateway. A rigorous programme of ongoing professional development is maintained to ensure that knowledge and skills remain relevant and up to date.
Advice & Service
When important decisions have to be made, nothing beats good quality independent financial advice, and dedicated personal service. We represent your best interests by providing investment, pension, annuity, and mortgage advice from the whole of the market. We bring information to you, carefully explain all your options, and make life easier for you when you need to make decisions about your future. We like to treat customers well, and our testimonials page will give you an idea of what our existing clients think about our service.
Scope & Type of Advice
We recommend a full financial review to ensure that we get to know your circumstances well enough to provide the best advice possible. Sometimes, looking at one aspect of your finances in isolation may not truly reflect the bigger picture. However if you are looking for information or advice on a specific topic, please click on the topic you are most interested in. There are also consumer guides that may be downloaded.
Our Aim
We aim to help you protect what is valuable to you, and create a plan for building wealth over time. Creating wealth is seldom done by accident. By identifying your goals and priorities, we can help you to make real progress towards them. Financial independence would be the ultimate result. No need to work into your seventies, if that can be achieved.
Mortgage & Equity Release Guide
The mortgage market changes rapidly, therefore this guide is of a general nature, but we hope it will be of some value in helping you to understand your options.
MORTGAGES:
For a residential mortgage, how much can you borrow?
For residential mortgages, this will usually be 90% of the property value, or possibly 95% if you have a guarantor, depending on your particular circumstances. This will be subject to your gross earnings, employment situation, credit score, other secured or unsecured credit, and a number of other factors that lenders will take into consideration. Lenders will take the lower of the valuation or purchase price on which to base the loan amount. How much can be borrowed on a Buy To Let Mortgage? For buy to let mortgages, the limit will be 75% usually, with some lenders willing to consider 80%. Buy to let lenders have their own criteria that need to be met in terms of rental income and your employment status, and income etc. The loan amount will be based on the lower of the purchase price, or the valuation. What is the best type of mortgage, fixed or tracker? This will depend on how you feel about interest rates, and if you are concerned about them rising. Fixed rates are generally a little more expensive than tracker or discounted rates, but during the fixed rate period, you are protected against interest rate rises. Of course, a tracker rate can go down if the base rate it tracks goes down. If bank base rates are already low, the chances of this happening may be slim. What other considerations are there?
Apart from the interest rate, and the type of deal, it is important to take arrangement or booking fees into account. Flexibility in terms of overpayments may be important, and the early repayment charges that apply if you redeem the mortgage early. Deeds release fees can vary when you do pay the mortgage off, and it is worthwhile considering how long you want any special rate to last. The more often you re‐mortgage to get a better deal, the more arrangement fees, deeds release fees, and possibly conveyancing fees you will have to pay.
What about offset mortgages?
Usually the interest rates are higher than for fixed or tracker rate mortgages, therefore the benefits of offsetting savings against your mortgage are maximised when the level of savings is substantial, and ideally near to the level of the mortgage itself. Offset mortgages do provide an additional level of flexibility, in that you can benefit from a faster reduction of your mortgage balance due to interest earned on your savings being paid into the mortgage and still have funds available in your savings account. The rate of interest paid on your savings is usually the same as the rate charged on your mortgage, and no tax is payable on that interest, since it not treated as earned income. By what age should a mortgage be repaid? Ideally as soon as possible within the constraints of your budget, however most lenders will want to see the mortgage end by age 65, unless you can prove your income will be sufficient to cover mortgage repayments in retirement. 5 years is usually the minimum term, and 35 years the maximum. How should the mortgage be repaid? If no investment risk is required, then a repayment mortgage would be the way to go. Which lender is most suitable?
This will depend on the lenders underwriting criteria, and whether they offer products that suit your requirements and circumstances. It will also depend on how competitive their deals are when everything is taken into account.
Debt consolidation & capital raising
Where additional capital is needed to consolidate debts, pay for home improvements, or for many other purposes, this can either be raised through a re‐mortgage, a further advance or a second charge loan. We would recommend that professional independent advice is sought prior to taking any decision. This should ensure that you achieve your goals in the most cost effective way.By consolidating debts you pay more over the longer term.
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Mortgage & Equity Release Guide
Equity Release Not everyone has been able to save enough for retirement, and although there may be money locked up in your home, making ends meet may be your biggest priority. Finding the capital to upgrade or maintain your home may also be difficult if your own savings are limited. One way of generating income or a lump sum can be through a Lifetime Mortgage. This is usually for people who are at least 55 or over, and who have either retired, have little savings, or are on low income. Unlike a conventional mortgage, an equity release mortgage can be set up with no monthly repayments. This means that interest is rolled up, and your mortgage balance increases over time. Obviously the value of your estate would also be reduced in these circumstances. There are many different options when considering an arrangement of this type, including various styles of Lifetime Mortgages, and there are also Home Reversion plans. A Home Reversion plan is not a mortgage, but it allows capital to be raised through the sale of your home which is then rented back on a lifetime lease.Usually, it is possible to borrow more through an arrangement of this type, than through a lifetime mortgage, but it will always be significantly less than the market value of your home. The effect on your estate is therefore likely to be more profound, and immediate. Safeguards may be built in to some extent to protect the value of your estate if death occurred in the early years, or if the home were vacated due to the need for permanent long term care in a residential home.
The potential effect of either arrangement on your estate has to be considered, together with potential effects on your future financial and personal circumstances. For example, your entitlement to state benefits may also be affected. Therefore it is important to seek qualified independent advice. At Edward Wilson Financial Services, we recognise that many clients will need carefully considered whole of market advice in the years ahead. We not only advise in terms of a Lifetime Mortgage, but also help you to assess the overall impact of different courses of action, and judge whether an equity release arrangement has more advantages than drawbacks. Equity release refers to Home reversion plans and Lifetime mortgages. To understand the features and risks ask for a personalised illustration. For Equity release we can be paid a fee, usually £500 or by commission. Equity release schemes may work out more expensive than alternatives such as downsizing to a smaller property.
Summary
If you would like help with your mortgage, please call us on 01224 784 626, or email [email protected]. We will ask you a number of questions first of all, to get to know your circumstances and requirements, and then conduct whole of market research on your behalf. We will then advise on the most suitable course of action, and the most suitable product from all those that lenders make available to us. We will also advise and assist with the entire house buying, or re‐mortgage process to ensure everything goes as smoothly as possible.
