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Would You Want A Mortgage In Your 90’s?

Most mortgage borrowers aim to make sure their home loan is paid off by the time they retire. The idea of repaying a mortgage without the regular income that a salary brings is not an attractive option for many. Banks, as a rule, tend to be wary of offering mortgages to older borrowers, knowing that there is less time in terms of prime earning years for the mortgage to be repaid in. However, there are some lenders who now offer mortgages to older borrowers and whilst few people actively plan to pay a mortgage at the end of their lives, for some it is a new financial reality. Getting a Mortgage While on a Pension Following the financial crisis of 2008 and the ensuing property slump, the government became very particular about enforcing responsible lending. The kind of borrowing that was possible during the decade of ‘cheap money’ from 1997 onwards had resulted in many borrowers being over committed, in negative equity and facing repossession of their homes. Lending from 2014 became even more stringent, as banks and building societies were required to conduct thorough audits of prospective borrowers’ financial means, in order to vet their suitability for borrowing. It is of course unlawful to discriminate against a borrower on the grounds of age, just as it would be to discriminate in any other way; banks cannot refuse to lend because the borrower is too old. However, older lenders looking for low cost mortgages are often declined based purely on repayment criteria. If a lender believes that once a borrower retires their earning potential will decline, a loan is... read more

Raise Money: Downsize To A Smaller Property

Your current home may well be the place where some of your happiest memories were created. Realistically, however, downsizing may be an excellent way of financing many more. Here is a quick guide to some key questions on the topic. Why should I downsize my home? Home may be where the heart is, but property has a financial value. There are various equity release schemes, which make it possible to release equity in property while you continue to live in it. These each have their advantages and disadvantages and you would need to do your research thoroughly to decide if one of them was right for you. Equity release can affect eligibility for state benefits and grants, and may work out more expensive than other alternatives such as downsizing. Downsizing simply means moving from a more expensive property to a more affordable one. This may be a smaller property and/or one in a different area. This turns home equity into cash, which can be used for other purposes. For example it can be used to help your children get on the property ladder themselves. AN EQUITY RELEASE PRODUCT WILL REDUCE THE VALUE OF YOUR ESTATE, WILL NOT BE SUITABLE FOR EVERYONE AND MAY AFFECT YOUR ENTITLEMENT TO STATE BENEFITS. TO UNDERSTAND THE FEATURES AND RISKS PLEASE ASK FOR A PERSONALISED ILLUSTRATION. Please check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it.  If you are in any doubt, seek independent advice  The practicalities of downsizing Downsizing is essentially selling a home and buying another... read more

Flood Risk – Check Your Insurance

One of the grim inevitabilities of the winter months in Britain is the prevalence of flooding. Britain has experienced several years of above average rainfall that many scientists attribute to climate change. In 2007, for example, the country was 20 percent wetter during the winter than any other year since records began in 1879. Some studies have suggested that flooding is in part due to the development of towns, cities and farmland, preventing natural drainage from taking place. Are you ready for the rain? This article is a quick guide to the likely risks of flooding and the steps that you can take to make your home safe from the high waters, or insured against them. Waterlogged postcodes Towns like Boscastle in Cornwall that was virtually swept away by flooding in 2004, or Hebden Bridge in 2012, are reminders to Britain and to the insurance industry, that some areas pose higher risks of flooding than others. Insurers pay a great deal of attention to scientific information on flooding and calculate insurance premiums accordingly. As risks change, so the insurance industry devises new products to insure against them. There are two types of flood risk insurance: buildings flood insurance that covers structural damage to your home, and home contents flood insurance that covers your belongings and furnishings. If you have standard buildings and home contents insurance but you live in a high risk flooding area, you will need to change your policies to specific flood risk cover. If you don’t have flood insurance and your home is damaged by flooding, there is a chance that your insurer will not pay... read more

Is Life Insurance Still An Asset For The 50+?

Most people start families in their 20s or 30s and this is also the first time they think about family protection, life insurance and making sure that their loved ones are taken care of if they die. Once this life cover is purchased, it is common to forget all about it and only review it every couple of years when a review of ones finances is due. Decades later, when your circumstances have changed and your family has grown up, it might be tempting to question whether a life insurance policy is necessary at all. However, cancelling a policy might involve hidden costs. This blog post is a quick guide to the possible pitfalls of cancelling your policy. Changing Circumstances If your children are over the age of 18 or a substantial part of the mortgage is paid off, there might be little reason to keep your policy. It seems rather obvious to say, but if you cancel your policy the first thing you will lose is the cover it offers. If you need to take out a future policy for any reason, you will find it far more expensive in terms of monthly payments than the original agreement. Some policies are designed to pay for the cost of schooling and university education of children if a parent dies, but this might seem redundant if your children are now grown up and have left home. You might also find that you still need a life insurance policy as grandchildren could become dependents and the financial future of your partner might be in jeopardy if you pass away. It might... read more

Should We Be Ditching Cash?

Apple Pay has now arrived in the UK. Paypal has now outgrown eBay. Visa Europe is said to be in talks to be bought back by its larger sibling Visa Inc. In short, digital payment systems are big business in every sense of the phrase. Notwithstanding this, cash is still very much a part of life around the world. Is it, however, headed the way of the penny farthing bicycle? Certainly there has been a push against cash in recent times. A UK MP has already suggested paying benefits on restricted-use payment cards. The Danish government is considering allowing retailers to refuse to accept cash for payment. Meanwhile the French government has lowered the amount vendors are legally allowed to accept in cash for any single transaction. Let’s look at three areas which concern us all and see where cash stands against digital payment methods. Everyday Purchases From morning coffee to supermarket shopping and paying utility bills, there are all sorts of everyday purchases people make time after time. Some of these purchases are now impossible to make with cash. If you get your supermarket shopping online, then you need to pay online. Some of these purchases penalize those who want (or need) to pay with cash. For example, pay-as-you-go utilities are notoriously more expensive than other tariffs. Of course, there are still plenty of purchases where it is possible to pay with cash. In fact in the face-to-face environment, there are some places which essentially penalize people for paying by other means. Some retailers (generally smaller ones) put surcharges or other fees on card payments. Others insist on... read more

What Next For Inflation?

The UK has now experienced deflation for the first time since records began in 1996. The Office for National Statistics believes that the last time the UK experienced deflation was in the 1960s. This was so long ago that you may well be asking yourself “What exactly is deflation and what does deflation mean for our economy?”. Inflation v Deflation – What’s The Difference? In very simple terms, inflation is when the overall cost of living goes up and deflation is when the cost of living goes down. The word overall is important because prices of different items can go up and down at different times. How Is The Overall Cost Of Living Measured? There are two main measures used for determining changes in the cost of living. The older method is called the Retail Price Index (RPI). This was introduced in June 1947. The newer method is called the Consumer Price Index (CPI) and was introduced in 1996. Both systems use an “average basket of goods” to keep track of how much “average consumers” are spending. In other words, they select a range of items which they think most people need (or want) to buy. They then track the prices of these items. There are, however, important differences in what they track. For example, the RPI includes the cost of housing (including the impact of Council Tax) but the CPI doesn’t. They also use different methods for calculating the average. Summing all this up in a nutshell, the CPI is almost always lower than the RPI. Can Inflation Be Managed? It’s the Bank of England’s job to try.... read more

DOES IT MAKE SENSE FOR BRITAIN TO QUIT THE EU?

However it is eventually phrased on the ballot paper, the underlying question is essentially the same.  “Should Britain stay in the EU?” Sometime between now and the end of 2017, the great British public will be required to answer it. So, is the grass really greener on the other side of the EU fence?  What would happen if the UK actually did leave the EU?  Let’s look at some of the key points of EU membership and see how the UK might be affected in the event of a “Brexit”. Free Movement Of Citizens The free movement of citizens is a key part of theMaastricht Treaty and therefore of the EU.  It is what enables Polish workers to come to the UK.  It is also what enables British retirees to make their homes in sunnier climates.  Polish workers compete against local job seekers.  British retirees may need to make use of their host-country’s medical facilities.  There are economic pros and cons to many aspects of EU membership. There are also security issues to consider.  The recent “I am an Immigrant” campaign stressed the positive contribution immigrants make to the UK.  At the same time, British teenager Alice Gross is believed to have been murdered by Latvian builder Arnis Zalkalns.  He already had a conviction for murder in his home country.  The EU’s open-borders policy, however, allowed him to come to the UK regardless. There have also been issues with Polish criminals organizing sham marriages with people who want UK residency. Likewise, there are ongoing issues with the Eurotunnel being targeting by refugees living in France.   Free Movement of... read more

How The Rich Get Richer

What have the philosopher Pierre Bourdieu and the finance advice guru Robert Kiyosaki got in common? They both know how and why some people accumulate wealth and others remain poor and struggle financially all their lives. The key is the values parents teach their children, though both men have expressed this in different ways. Bourdieu, a sociologist, tried to understand why people seemed to stay within their social class and rarely ever leave it. He concluded that it didn’t have much to do with the amount of cash that was readily available; instead he argued that there were different types of capital. Educational capital, for example, was the sum total of knowledge and training a person received, which gave more educated people broader horizons and less educated people a more limited outlook. However, in terms of accumulating wealth, the most important capital that parents passed down was ‘cultural capital’. This is the sum total of outlooks, attitudes and values towards everything in life, including the vexed issue of making, saving and investing money. Bourdieu said that this explained inequality; there was an inequality of ideas, beliefs and values being passed on to subsequent generations. Some people instinctively know how to be sensible with money and how to acquire more of it, where others struggle. Kiyosaki, in a less academic but more practical way has argued the same thing and has a loyal following of fans round the world. He believes that sound financial planning is something that is passed from ‘rich dads’ to their children (along, presumably, with their wealth) and poor money advice is also passed on. Kiyosaki... read more

Have You Made Your Will Yet?

After a lifetime of saving and prudence, you may well have accumulated a great deal of personal financial wealth that will outlast you. However, without a will to state who will benefit from your wealth, much of the hard work you have put in over the years might be lost. Dying without a will (being intestate), can present your loved ones with all sorts of difficulties when it comes to dealing with your estate and it presents the tax man with an opportunity to extract wealth from your life savings. This blog article is a quick guide to making a will and ensuring that your legacy goes to your loved ones as you intend. A Will To Fit Your Circumstances Leaving your wealth behind might not be quite as straight forward as you think. Depending on your circumstances, your age, health and life expectancy and the number and age of your dependents, you might find you have to word your will specifically. For example, if you have young children or grandchildren, you might want them to inherit your estate at a certain age, or you might stipulate that the money is used for something specific, such as university fees. It might be that you want to appoint certain trustees or guardians in your will. This might be the solicitor who is drawing up the will or another legally recognised individual who can administer and distribute your estate. Giving To Charity If you are leaving an estate to others, you can give part (or all, if you want) of this away to charity. The amount that you leave to charity... read more

Can You Get A Mortgage Before The House Is Built?

How do you find your dream home? Well that depends on what your dream home is. If you’re looking for a character-filled period property then obviously you will need to buy an existing home. If, however, you’d prefer a modern home built to your exact requirements, then maybe it’s time to look at building your own home. How Do I Build My Own Home? Building a home is obviously a major undertaking. First of all you will need to find suitable land. This means a place where you would be happy to live and where you can get planning permission for a house. How easy this will be depends greatly on what part of the country you want to live in. It is likely to be easier to find a plot of land in rural Yorkshire than in Central London. You will then need to decide exactly what type of home you want. Again a 1 bedroom cottage will be cheaper to build than a 4 bedroom family home. With a self build you can always start small and leave your options open to extend later, e.g. if you start a family. Finally you have to decide how you want to go about building your new home. If you have the necessary skills you can, of course, build it yourself. Otherwise you will need to get in people to help. If you need professional help then you will need to budget for this. Budgeting to Build Your Own Home The budget for your future home can be divided into 4 parts: land, fees and miscellaneous costs, materials and labour.... read more
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