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What homebuyers regret

Although most people are happy that they made their move, some buyers admit to having made the wrong choice. Regrets include being too far from friends and family, compromising on location, finding the neighbours a problem, choosing the wrong-sized property and discovering that their new home had hidden and expensive-to-fix problems when they moved in.

With home buying it’s important to take your time, ask the right questions and take practical steps like getting a property professionally surveyed before you commit to buying it.

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How much of your home do you own?

Although you may have purchased a property, how much of it do you actually own right now? It’s estimated that at point of purchase the average UK buyer in effect, owns the equivalent of the kitchen and a bathroom.

Thinking of moving?

If you’re contemplating your next house move, then you’ll need to work out how much equity you have, the amount of your existing property you own. To make a rough calculation, you’ll need to know what your property is currently worth, and subtract the amount of mortgage you have outstanding. So, if you have a property valued at £300,000 and your outstanding mortgage is £175,000, then your equity is roughly £125,000.

Knowing what equity you have will help you decide how much you can afford to spend on buying your next property. If you’re thinking about moving, then it makes sense to talk to us, as we can help you calculate the amount of mortgage you’ll need, give you an indication of the interest rate you’re likely to be charged, and help you make your application to the right lender.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

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Should you remortgage?

Over the last few years, we’ve all got used to shopping around for the best prices available on major household bills such as energy supplies and it makes sense to adopt the same approach when it comes to your mortgage.

Reaching the end of your deal

When your fixed-rate deal ends, your lender automatically moves your mortgage to their Standard Variable Rate, which as the name suggests can vary, rising and falling in line with the Bank of England base rate. With the mortgage market remaining competitive, there are many deals currently available that might be more cost-efficient.

Homeowners can often save hundreds of pounds a year by moving their mortgage to a more attractive rate with their existing lender or a different lender.

If you’re currently in a fixed-rate or tracker mortgage with early repayment charges, you don’t have to wait until it has come to an end. We can help you find a deal three months before your lock-in period finishes.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

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WORRYINGLY, 68% OF RETIREES DON’T TAKE ADVICE

If you’re looking ahead to your retirement, the good news is that nowadays there are more choices open to you than ever before. However, recent research7 shows that many retirees may not be exploring these options and aren’t shopping around at retirement, selecting instead to take the annuity or drawdown facility offered to them by their existing provider.

How advice can help

A report from the Financial Conduct Authority8 highlighted that those who didn’t take financial advice often struggled to choose between retirement options, and many ended up making poor investment decisions, or put their money into cash funds that provide low returns and risk being eroded by inflation.

We can explain what the various choices available to you are, what they could mean for you, and help you make the right decisions for the future. We know that for many people this is a complex and bewildering area, so will explain everything in plain English and will be able to answer any queries you may have.

7Canada Life, March 2019
8FCA Financial Lives Survey, 2018

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Gifting money for a deposit – what you need to know

Parents and grandparents keen to help their offspring get onto the housing ladder are increasingly helping them out with the money they need for their deposit. This can help reduce Inheritance Tax (IHT) too, but you need to be aware of the rules.

Everyone has a yearly ‘gift’ allowance for IHT and can give away up to £3,000 each year. If you don’t use it, you can carry over any unused allowance from one tax year to the next up to a maximum of £6,000. This means you could give away up to £6,000, or £12,000 for a couple.

Wedding gifts

You can also make small gifts of up to £250 per person per tax year to as many people as you like. Weddings are another opportunity to hand over cash to loved ones – parents can each give children £5,000 as wedding presents, and £2,500 to grandchildren or great-grandchildren, or £1,000 to anyone else, all free of IHT.

You can make more significant gifts above and beyond those listed above, known as ‘potentially exempt transfers’. You need to live for at least seven years after making the gift for it to be outside the estate for IHT.

This article is purely for information only and does not constitute advice, for advice based on your individual needs and circumstances please contact a financial adviser.

The Financial Conduct Authority does not regulate some forms of taxation advice.

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Transfers of wealth – who gets what

Data from the Office for National Statistics5 show that various patterns are emerging in how wealth is transferred down the generations.
Unsurprisingly, gifts and loans are more commonly made to those aged 25–34, with 11% in this age bracket receiving more than £500 during the previous two years, with the average across all age groups being £2,000. This illustrates that parents are stepping in to help their offspring cope with times of major expense, like buying a house or starting a family.

Inheritances come later in life

The average inheritance across all age ranges during the previous two years was £11,000, with those aged 55 to 64 most likely to receive larger inheritances, receiving on average £33,000. Those aged 65 and over inherited on average £20,000. This money was put into savings or investments by around 49% of recipients.

This research serves to highlight that those who rely on receiving an inheritance instead of putting adequate pension provision in place might find they’ve reached retirement before they inherit. With gifts often given earlier in life, inheritances may be smaller in the years to come.

5ONS, Oct 2018

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In the news

ARE ‘SLASHIES’ THE FUTURE OF WORK?

A study by the Association of Independent Professionals and the Self-Employed1 reports that more than 320,000 self-employed people in the UK have two or more jobs. The term used to describe this is ‘slashie’, as in “I’m a writer/dog-walker/gardener”.

AUTO-ENROLMENT BENEFITTING THOSE IN SMALLER FIRMS

The government reports that auto-enrolment has been an “extraordinary success”. A study by the Institute for Fiscal Studies2 shows that only 26% of small business employees would be saving in a workplace pension if auto-enrolment had not been introduced, whereas the actual figure is now 70%. Auto-enrolment has effectively increased the pension participation rate amongst employees of small firms by 44%.

PENSIONS – DON’T LEAVE MONEY TO THE WRONG PEOPLE

A pension nomination form allows pension plan holders to give instructions as to who should receive their pension on death. But if it isn’t updated when circumstances change, there’s a risk that the pension could pass to the wrong person, for example an ex-partner.

UNRATED POLICY WARNING

People often buy unrated policies from comparison sites as they can seem a cheap option, but the Financial Conduct Authority warns that consumers buying unrated insurance policies could be at risk. Four unrated insurers have gone into administration in the last 18 months, leaving people with certain types of motor and buildings policies without cover.

This article is purely for information only and does not constitute advice, for advice based on your individual needs and circumstances please contact a financial adviser.

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What time of the year is best for selling a home?

This can be a difficult question to answer as there are many factors, economic and political, that can affect the UK housing market. As many people will be aware, the protracted negotiations over Brexit have recently taken their toll, particularly on the London property market, as uncertainties affecting the future prospects of European workers coming to the capital have yet to be resolved.

Spring kick-starts the market

The time of the year can play a part in whether your property sells quickly. Traditionally, estate agents report that once the clocks go forward in spring, housing demand picks up. Improving weather and in-bloom gardens can all help a property look its best. Families with school-age children who are moving into a new area often choose this time to start house hunting, hoping to tie in their move with school terms.

The peak holiday months of July and August are quiet months for property sales. However, once the children go back to school in September, the housing market tends to pick up, in the hope that the move can be completed in time to celebrate Christmas in a new home. Although December is traditionally slow, January sees renewed activity as people start making their plans for the year ahead.

Getting the timing right

Whilst seasonal peaks and troughs can be universal, it always makes sense to look at what’s happening in your local market before contemplating a sale. Taking a look at the various online sites that show what comparable properties have been sold for, rather than the price they were initially advertised at, will help ensure you get your asking price right. This can be key in getting a quick sale.

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Goal-based investing explained

Although it might be tempting to think that investing is just about getting the best possible return on one pot of money, goal-based investing, structuring your investment around your specific financial aims, has become a widely-used way of helping people plan their financial futures.

Thinking things through

One of the most significant benefits to a goal-based approach is that it encourages us to think about what we want our money to achieve in a tangible way, across a range of time horizons. No two investors have the same financial aims, and meeting different goals means using a variety of investment strategies.

This approach starts with the investor defining their objectives such as saving for school fees, a child’s wedding, a deposit on a home, a comfortable retirement. These goals then become the building blocks of an investment plan. The information gathered is used to define the right level of savings and the most appropriate mix of funds to meet the investor’s goals and will also take account of all available annual allowances and employ taxation saving strategies too.

For instance, a retired couple might typically want an income stream now to boost their pension, but also want to invest some of their capital to fund the likelihood of care costs later in life. In this instance, a portfolio can be tailored to meet each specific goal.
A younger investor may want to structure their investments to cover school fees from nursery to graduation for their children, whilst at the same time building up a substantial pension pot for retirement.

Gauging your attitude to risk

Being clear about your goals will make it easier for us to tailor your risk profile to different investments. Each goal may have its own risk tolerance and time horizon. Naturally, over time your goals may change as your life and circumstances change, and your attitude to risk may alter too, that’s why we always recommend regular reviews.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

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The impact of humble mortgage overpayments

If you’ve ever wondered whether it’s worth making overpayments on your mortgage, then new research1 could help you decide.

The data shows the benefits of a monthly £10 overpayment with interest rates at their current low level and illustrates that even modest overpayments can make a difference to the day when borrowers become mortgage free.

If a borrower took out a £200,000 mortgage over a 25-year term, they could save £1,146 in interest (based on current rates) and become mortgage-free four months earlier. By making a £100 overpayment each month on a £200,000 mortgage, a borrower could save £9,948 in interest and reduce their mortgage term by three years in the process.

Those with a £500,000 mortgage, making the same £100 overpayment, could save over £10,000 in interest and become mortgage-free one year and five months earlier.

Don’t forget to save too

Whilst these figures show that modest levels of overpayment can prove effective, it’s important to remember to keep some savings aside for rainy day events such as unexpected bills and expenses.

1Santander, 2018

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

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Oakhill IFS Ltd | 94 Kingsway, Woking, Surrey, GU21 6NR
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Phone: 01483 750575 | Email: enquiries@oakhillifs.com

Oakhill IFS Ltd is registered in England and Wales no. 3864703. Registered office, 94 Kingsway, Woking, Surrey, GU21 6NR.

Authorised and regulated by the Financial Conduct Authority. Oakhill IFS Ltd is entered on the Financial Services Register https://register.fca.org.uk/ under reference 453119.

If you wish to register a complaint, please write to enquiries@oakhillifs.com or telephone 01483 750575

A summary of our internal complaints handling procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service at www.financial-ombudsman.org.uk or by contacting them on 0800 0234 567.

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