Are you considering remortgaging?
With continuing uncertainty over the future of interest rates, you may be considering remortgaging to a lower rate of interest to save money.
But before you’re tempted to a new lender offering an attractive introductory rate, it’s worth considering the bigger picture.
Should I stay or should I go?
Moving to a new deal could save you money. However, if you change your mortgage before the end of your current deal, you may have to pay an early repayment charge. It’s also worth factoring in legal, valuation and administration costs that may be associated with signing up to a new mortgage deal.
In some circumstances, you may find that over the long term, the costs of switching outweigh the costs of taking on what looks like a better deal.
Tougher lending rules
As part of the Mortgage Market Review (MMR) in April 2014, the Financial Conduct Authority introduced new rules around mortgage lending. For instance, the lender must now take greater steps to ensure you can afford your mortgage not only now, but in the future if interest rates were to rise.
That means if you took out your current mortgage a few years ago, you may be asked for more information this time around.
This may include details of how much you typically spend on things like 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 that 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 your loan on which you pay interest.
Updating your protection
When changing your mortgage, remember to review your protection arrangements as part of the process. This could protect you financially if you become unable to meet your monthly repayments, should the unexpected happen.
Reviewing your protection needs is all the more important if you don’t have cover in place already, or if your circumstances have changed since you last reviewed your cover.
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 from start to finish, and ensure your loan is properly protected.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
03 Exp. 14/09/16
If you’d like help choosing the right mortgage, please get in touch.
Issue 14 Winter 2016
Your latest newsletter from Stirling Mortgage Shop
Viewpoint
The Bank of England (BoE) last
increased the base rate in July 2007 and interest rates hit rock bottom in March 2009. This has meant over 1.75 million UK homeowners have never faced a rise in the BoE base rate.
Mortgage payments around 18% of income
During 2014 these first time buyers were spending, on average, 18.4% of their income on their mortgage.
If the base rate is increased many homeowners may be in for an unexpected financial shock.
If you have a £100,000 repayment tracker mortgage over 25 years, even a small rise of just 0.5% in the base rate would mean your repayments would increase by £300 a year.
Take control
There is still uncertainty around when the rates will rise but while rates remain low it’s a good idea to get ahead of the game by reviewing your spending habits and budget.
Filling out an income and expenditure form will help you identify where you can easily make savings if you have to. Charities like The Money Charity offer a free online form, or you can easily search online for templates. Simply gather together all of your bank statements and bills. Work out your total income and outgoings. Don’t forget to add in things such as Christmas or your car MOT. Once you know how much you have left over at the end of the month you'll be better prepared for any future surprises.
Fixed rate
Whilst reviewing your finances you may also want to think about reviewing your mortgage.
With a fixed rate mortgage, the rate (and therefore your repayments) will stay the same for an agreed period. This makes budgeting much easier because your payments won't change - even if interest rates go up.
1.75m homeowners unprepared for
mortgage increase
Whether reviewing your personal budget or your mortgage we can help. Get in touch to find out how we can help you.
PEN1162 Exp. 10/06/16
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
For this service a fee of £500 or 1% of the loan amount if greater is payable on completion. Typically this will be £495.
If you use social media, you may have posted a picture by the pool or a selfie from the slopes. Even if you haven’t, you probably know someone who has.
Did you know that sharing your current location or travel plans could void your home insurance?
A quick swipe through your timeline will probably reveal the recent holiday details of friends and family – right down to the travel dates, departure airport and hotel location.
But have you ever stopped to think that posting this sensitive information on Instagram, Facebook or Twitter could be advertising your vacated property to criminals?
Should your social media take a holiday too?
Maybe your break could be the perfect time to take a holiday from social media too.
If you suffer a break-in whilst on holiday, and had announced your travel plans on social media, it might lead to your home insurance claim being rejected. This is because the insurer might consider the homeowner has not done enough to guard against the theft by posting such information online.
Showing off your latest holiday on social media is tempting, but is it worth jeopardising your home's security for?
Protect your possessions
The same advice should also be applied to your possessions – particularly those of high value. Showing off your latest expensive purchase online could also be seen as increasing your risk - and would at the very least leave you feeling foolish if you lost or had it stolen as a result.
Staying safe
Insurers are reportedly considering asking home owners if they use social media when assessing their applications, as the risk of over-sharing becomes more and more common. If you do use social media, consider taking the following steps to reduce your risk:
1. Turn off location-based services on the social media accounts you use
2. Never share your home address on social media 3. Make your posts private so that only your friends
and connections can see them
Over-sharing could invalidate your home insurance
If you would like to discuss how you can protect your home and possessions, please get in touch.
64 Exp. 10/12/16
There have been several shake ups announced in the Buy to Let market recently that affect both landlords and tenants.
Tax relief
Landlords can currently deduct mortgage interest from their rental income before calculating how much tax they should pay.
From April 2017, tax relief on Buy to Let mortgage interest will gradually be reduced. The restrictions will be phased in over four years, resulting in tax relief only being available at the basic rate of income tax (currently 20%) from April 2020.
Landlords can also claim 10% of their rent as tax relief for wear and tear. From April 2016 the allowance is being replaced by a system that only allows them to claim tax relief when they replace furnishings.
If you are in the Buy to Let market, you may want to consider setting up a company to take ownership of the properties, as homes owned within a company structure are not affected by these changes.
However, the transfer will be treated as a market sale meaning it may incur capital gains tax and stamp duty.
Safeguarding tenants
The Deregulation Bill looks to prevent ‘revenge eviction’ by prohibiting landlords from serving a no-fault ‘section 21’ eviction notice for six months following the issue of a local authority improvement notice.
The bill also requires all rented properties to have a working smoke alarm and, in some cases, carbon monoxide detectors. Failure to meet these requirements can result in a fine of up to £5,000.
Right to rent
From 1 February 2016 all landlords will need to check their tenants have the right to rent a property in the UK. Those who let property to someone without the right to rent can be fined up to £3,000.
Buy to Let mortgages are not regulated by the Financial Conduct Authority.
Buy to Let tax revamp
PEN1165 Exp. 10/06/16
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
For this service a fee of £500 or 1% of the loan amount if greater is payable on completion. Typically this will be £495.
The government-backed Help to Buy scheme comprises three elements:
• an ‘equity loan’ – for brand new homes in England & Wales
• a ‘mortgage guarantee’ – for new-build or existing homes anywhere in the UK
• NEW: a ‘Help to Buy ISA’ – to help first-time buyers save for a deposit
Help to Buy equity loans
With a Help to Buy equity loan you only need a 5%
deposit and a 75% mortgage – the government will lend you up to 20% to fill the gap. Help to Buy equity loans are open to both first-time buyers and homemovers. They can be used towards new-build homes worth up to £600,000.
The scheme is not available for those wishing to purchase a second home or a Buy to Let property.
The equity loan must be repaid after 25 years – or earlier if you sell your home.
You must repay the same percentage of the proceeds of the sale as the initial equity loan (ie. if you received an equity loan for 20% of the purchase price of your home, you must repay 20% of the proceeds of the sale).
The equity loan is interest free for the first five years. After that, you will pay a fee of 1.75%, rising annually by the increase (if any) in the Retail Price Index (RPI) plus 1%.
Help to Buy mortgage guarantee
The Help to Buy mortgage guarantee scheme works by offering lenders the option to purchase a guarantee on mortgages where a borrower has a deposit of between 5% and 20%. Help to Buy mortgage guarantees are open to both first-time buyers and homemovers. They can be used towards new-build homes or existing properties worth up to £600,000.
The guarantee protects the lender rather than the borrower against losses. Borrowers remain fully responsible for their mortgage payments and any shortfall in the normal way.
Help to Buy ISA
The new tax-free Help to Buy ISA will be available to first-time buyers from 1 December 2015. Under the new scheme you can save up to £200 every month and the government will then add a 25% top-up.
If you save the maximum every month, the government will add in £50 up to a maximum of £3,000. You will also be able to save an additional £1,000 when you first open the ISA. This means you can save £1,200 in the first month and it will be topped up by £300.
Accounts are limited to one per person, but if you are saving as a couple you could qualify for a £6,000 bonus.
This could make all the difference if you are looking to buy your first home together.
Tax concessions are not guaranteed and may change in the future.
£10k
£190k
Buyer's 5% deposit
95% mortgage term from commercial lender Lenders covered on the next £30k by Government guarantee
£200k
Example house value
Help to Buy
Providing support to homebuyers
£10k
£40k
£150k
Buyer's 5% deposit
75% mortgage term from commercial lender Government's 20% loan
£200k
Example house value
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
If you’re looking for help stepping onto or moving up the property ladder, please get in touch.
15 Exp. 15/03/16
10 tips to help you sell your home
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It’s often said that
moving home is one of life’s most stressful events - but the hard work starts well before the day of the move.
Careful planning and preparation can make a difference when it comes to impressing potential buyers. If you’re planning on selling your home, here are ‘10 top tips’ that might help you sell your property faster.
Gardens
Spend some time tidying up any outside areas. Clear drives and pathways, mow the lawn, clean any garden furniture and make sure any outdoor lighting works.
The approach to your property will be your first chance to wow – or worry – your potential buyers.
Front door
First impressions count, so make sure the front door is clean and the glass is sparkling. If your front door is wooden, you may want to give it a fresh coat of paint – but remember to cover up or remove any metalwork before you start.
Clear some space
Creating a sense of space is a real winner so make sure you have a good clear out.
You could even think about moving some of your larger items into storage for a period before you put your property on the market. Watch out for over-stuffed wardrobes - buyers often check the amount of storage space.
Clean, clean, clean
Clean everything until it sparkles.
Pay special attention to the kitchen and bathroom: get rid of any limescale, clean tile grouting and hang fresh towels. Hiring professional cleaners could be money well spent.
Odd jobs
Make sure you’re up to date with your to-do list of small jobs around the house that you’ve been meaning to get around to. Replace any broken light bulbs, fix the bathroom locks, replace washers on any leaky taps and oil squeaky hinges.
Freshen up
A fresh lick of paint in a light neutral colour creates a perfect blank canvas and makes your home seem lighter and bigger. If you have any marks on painted walls that you can’t wipe off, dig out the paint and freshen it up.
Kitchen
The kitchen is the most valuable room in a house so make sure it’s spotless.
De-clutter surfaces of appliances, jars, pots and chopping boards and replace any tired old tea towels.
Aroma
Clear drains, wash bins and open windows throughout the house. If you’re a smoker, make sure you do it outside in the days leading up to a viewing.
Strategically place plants or freshly-cut flowers and, if you can bake fresh bread, cakes or brownies, do so just before a viewing. Where this is not possible, try brewing some fresh coffee.
Pets
If you have pets, consider leaving them with a friend for any viewings. Make sure you have one last vacuum to remove any pet hair, especially if you have a cat, as many people are allergic to their fur.
Go out
Agents know their job so let them show your property. They will be best placed to answer tricky questions, highlight the great features of your home and know what to downplay.
By following some or all of these tips, you’ll be sure to present your property in its best possible light.
If you’re thinking about moving on or remortgaging, we can help you find the right mortgage deal.
PEN1044 Exp. 17/06/16
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
For this service a fee of £500 or 1% of the loan amount if greater is payable on completion. Typically this will be £495.
Time for an upgrade?
Have you upgraded your mobile phone in the past two years?
If you have, your choice of upgrade may have been driven by a
change in your needs.
Perhaps you opted for a better deal, a different contract, or a handset with new features that weren’t available with your previous model.
When it comes to updating your phone, or other ‘tangible’ goods, this behaviour may feel natural.
We all want to feel like we’re getting a good deal.
The question is: why don’t more of us do this with intangible items, like the financial products we pay for every month?
Are you paying for an outdated product?
Take critical illness insurance as an example. If you have a critical illness policy:
• When did you last update it?
• Does it still provide the cover you need?
• Are you missing out on product features that were once
considered ‘innovative’, but are now considered ‘standard’?
When your needs change, it makes sense to update things
Life may have changed since you last bought or reviewed your critical illness insurance cover.
You may have had children, moved house, or your income may have changed.
This means that even though you have a critical illness policy in place, it might not offer you the level of cover you’d need if the unexpected happened.
Insurance innovation
It’s not just mobile phone companies that compete to offer the most innovative products - insurance companies are
constantly updating their products to reflect customers’ changing needs too.
Given that more of us are surviving serious illnesses like cancer1, and living longer2, it’s perhaps unsurprising that products like critical illness insurance have changed in recent years.
For instance, many insurers offer greater flexibility or cover a wider range of illnesses. Some have introduced completely new products to allow you to claim for non-critical illnesses and injuries, or even make a partial claim.
Changing your current critical illness cover may mean you are not covered for certain conditions or may lose the benefits from your current policy.
Protect yourself with an up-to-date policy
Critical illness insurance can help you cover mortgage or rent payments, treatment, or any home alterations you may need to make as a result of an unexpected critical illness – so it’s important your cover remains up-to-date.
We can review your needs and make sure you have the right cover in place. To arrange your review, please get in touch.
38 Exp. 17/06/16
Stirling Mortgage Shop 36-40 Cowane Street Stirling
FK8 1JR
01786449969
[email protected] www.stirlingmortgageshop.co.uk
Taking out a life insurance policy gives you valuable peace of mind: you know you’ve protected your family against financial hardship, should the worst happen.
But how can you make sure your policy will pay out quickly, to those who’ll need it most, should you die? The answer might be to write your policy in trust.
What is a ‘trust’?
A trust is a legal document that allows you to specify what will happen to your money after your death. If your life insurance policy is written in trust, any payout will go to the trustees you’ve chosen, who will then ensure the funds are distributed to the people you’d like to benefit from the policy (the beneficiaries).
Why is a trust so important?
Putting your life insurance policy in trust gives you control over who the beneficiaries are, helps them avoid Inheritance Tax penalties and helps ensure they receive the money quickly.
Control
Every year, many people die without having put their life insurance policy in trust. As a consequence, the payouts become subject to the delays caused by the processing of a Will and, where there is no Will, the complex laws of intestacy come into play. This could mean the benefits of the policy will form part of your estate, and may not go to the people of your choosing. With your life insurance in trust, you can specify who you want the beneficiaries to be especially important if you are unmarried or in a civil partnership.
Inheritance Tax
A life insurance policy that has been written in trust does not form part of your legal estate and is not subject to Inheritance Tax. This allows the entire policy payout to pass to the people you intended to benefit from it. Even if your partner is the named beneficiary of your policy (and therefore the claims payout would be exempt from Inheritance Tax under the current rules), it can still be worth putting your cover in trust to speed up the policy payout.
Faster payment
Using a trust should help ensure that your life insurance payout is passed to the people of your choice more quickly without waiting for lengthy legal processes, such as probate.
This can be a welcome relief for those left behind during what is likely to be a very stressful time.
Setting up a trust
Trusts are usually simple to set up, but it’s important to select the right type of trust and complete the documentation carefully.
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 Financial Conduct Authority does not regulate Trust Advice.
The matter of trusts
If you're thinking of putting a life policy in trust, please talk to us first. We can tell you if it’s the right choice for you, which type of trust is most appropriate for your circumstances - and help you put the trust in place.
PEN1051 Exp. 17/06/16
