PAYDAY LOANS AND CREDIT UNIONS

There has been considerable controversy about payday lenders providing small loans at very high interest rates. Even the Archbishop of Canterbury has entered the fray. It has served to highlight one of the lesser known type of financial institutions – the credit union. These are small non-profit financial organisations set up by members with something in common and with the intention to benefit their community. The common factor might be those living in the same area or working in the same industry. If you are interested in finding out about credit unions near to you, search on www.findyourcreditunion.co.uk.

HOW MUCH WOULD LIFE ASSURANCE COST?

We are required by law to insure our car and our driving, our home and its contents, but insuring our lives is not required, even though the consequences of an unexpected death can be very considerable. Research by the Liverpool Victoria Assurance Company has established that only 31% of households in the UK have life assurance. Life assurance does not need to be expensive. Give us a call and we can tell you what it would cost within the hour.

BUY NOW!

It is probably the best time to set up a new mortgage whether by purchasing or remortgaging. The rates are at historical lows and there are changes in mortgage regulation being introduced by the Regulators in April next year which could make obtaining mortgages more difficult than it is now. Lenders and mortgage brokers will have more hoops they have to jump through, and lenders are likely to have to keep higher reserves to support their lending. If you are not locked into a mortgage, we would recommend that you look at your options now. Just give us a ring and we can tell you what may be available for you.

More Mortgage Options

Also available to help people to buy property are various Shared Ownership Schemes whereby a person buys part of a property and pays rent for the rest of it. To find out more information on this contact the local Help To Buy Agent, by going on line and searching on Help To Buy Agent. There is also to be another Government scheme to be launched in January 2014 which is to help those looking to buy properties which do not have to be new. While we know that it intended to assist those who can only afford a 5% deposit like the other Help To Buy schemes, the full details of this scheme are still being worked on and we will hear more about them later in the year.

MORTGAGES AND THE PROPERTY MARKET

The property market is reported to be rising at a rate higher than for many years, although this does vary according to where you live. Contributing to this is likely to be the strong increase in the number of First Time Buyers, which is rising more quickly than for many years. There are several reasons for this. First, mortgage rates have fallen to their most competitive level for many years, if not ever. Another reason is the assistance that the Government has been providing through its “Help To Buy” schemes. The focus of the “Help To Buy” schemes most recently have been new properties. The Help To Buy equity loan scheme provides help in the way of any equity loan so buyers with only a 5% deposit can get help with a loan of a further 20% of the purchase price, so that buyers only have to get a mortgage for 75% of the purchase price. The equity loan carries no payments for the first 5 years. When the property comes to be sold, 20% of the sale price will need to be used to discharge the loan – regardless of whether the property value has gone up or gone down. Another option for new properties has been the NewBuy scheme. This is also intended to help those who can contribute only a 5% deposit. In this case the builder and the Government pay for an insurance policy which guarantees part of the mortgage, so if the property is sold at a loss, the insurance policy will cover the difference. With this scheme and the equity loan scheme, the buyers must be using the scheme to purchase the property for their own private residence. They do not have to be First Time Buyers but they cannot have any other properties. And most importantly, of course, with either scheme the purchasers need to be able to afford the mortgage and meet the lenders’ income and affordability requirements.

OTHER OPTIONS FOR INCOME IN RETIREMENT

While pensions are traditionally the way most people will provide for themselves in their later years, they are not the only option. Many people have greater faith in property and will build up a portfolio of residential investment properties producing a net rental income and the possibility of an increase in the property values. Mortgages for Buy-To-Lets have become very competitive and still can be done on an interest-only basis in order to maximise the income produced. Please contact us if you require any further information about Buy-To-Let mortgages. Other savings such as Individual Savings Accounts and stocks and shares generally can also provide an income in retirement. The return on cash investments is not very good currently but has been better in the past. The income from shares in the way of dividends can provide a very useful source of retirement income, for those who understand the risks and are willing to take them. Pretty much a last resort for income or a lump sum in retirement are Equity Release Plans. They are available from age 55 (note: for a couple the qualifying age is determined by the younger of the two). Interest rates and costs for these options have been going down, so they are worth reviewing if needed. We would be happy to provide quotes and clarify the options for you.

Finding Lost Pensions

Commonly people have accumulated various pension entitlements over the years and it is important to track these all down. The Government provides a Pension Tracing Service which will help you locate any bits that might have gone missing. For details of how to use this Tracing Service (which is free), google Pension Tracing Service or ring them on 0800 1223104.