August 2022

Recent research conducted by Later Life Lender more2life**, revealed the true extent to which gifting via Equity Release can benefit fund recipients.

When those over 55 access equity locked up in their homes to gift their children, or even grandchildren, they open the opportunity for young first-time buyers to secure lower Loan-to-Value options on their first mortgage, essentially meaning they can secure lower rates saving them money in the long term.

This saving could equate to as much as half the span of a mortgage without gifting in areas such as the North of England, while even in the UK areas with the highest house prices – in London – a first-time buyer could save 20%, or five years, allowing them to start putting increasing savings of their own towards other expenses.

Reduction in time taken to pay off 25-year mortgage by augmenting a deposit with average equity release gift amount of £69,376

The equity release provider used data from the Land Registry***’s most recent UK House Price Index to find the average amount of money paid by a first-time buyer across all UK regions. It then used a mortgage calculator to work out the average financial cost over two and five years for a mortgage purchased at a standard fixed rate 90 per cent LTV over 25 years.

To calculate the possible savings unlocked by an equity release enhanced gift, more2life added the £69,376 lump sum to the first-time buyer’s initial deposit, which changed the LTV and both slashed the mortgage’s lifetime cost and the time spent paying the capital borrowed to the lender.

To discuss how you could release cash from your home via an equity release/Lifetime mortgage product, get in touch with us today.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. 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 country has seen a lot of warmer weather lately, it is Summer after all, but the long periods of dry weather followed by a period of rainfall can cause flooding and when it comes to the significant increase in rainfall during the winter months flooding can be even more prevalent causing significant property damage.

If you’re in an area more at risk of flooding you might doubt your ability to secure buildings insurance for your home, but that isn’t strictly true.

Firstly, you may want to check to see if you’re in an area more at risk of flooding, or if you’re looking to move, you might want to check to see if your future home is more at risk of flooding.
 The Environment Agency provides live maps which give information about long-term flood risk to properties.

Its online postcode search will enable you to find out if the area you are in is in danger of being flooded. You can also sign up for free flood alerts on the agency’s website, with warnings available by text, phone or email.
Once you’ve determined whether your property is at risk, it begs the question- what do I do about insuring my home against the damage?
Historically, it was difficult to find reasonably priced cover if your home had previously been hit by a flood.
 
The Association of British Insurers launched the Flood Re scheme in 2016 to combat this. Flood Re help insurance providers offer more affordable flood risk insurance policies.
Under the scheme, your insurer pays out if you make a valid claim for flood damage, but it can then claim back a proportion of the money from the Flood Re fund. This reduces the insurer’s financial risk, so it can offer you cheaper cover.

What does flood insurance cover?

Flood cover under buildings insurance can pay for:

•     Removal of debris inside the home
•     Drying out a property
•     Repairs and restoration to structure, fixtures and fittings such as the building foundations, electrics and plumbing
•     Fees for services like legal expenses, property surveyors and architect fees

Flood cover on a contents insurance policy will include repairs or restoration for your household items. This included things like:

•     Furniture, carpets, lamps and sofas
•     TVs, computers and other electricals
•     Fridge freezers, washing machines and other kitchen appliances
•     DVDs, books, and toys
•     Any items worth more than your policy’s single article limit will need to be listed separately on your policy.
•     If you want cover for valuable items like jewellery, gadgets, bikes or musical equipment you'll need to tell your insurer and probably pay an additional premium.

Exclusions:
Home insurance policies don’t all offer the same level of cover and some types of cover will only be available as an optional extras. For instance, you might not be covered as standard for:

•     Flooding that occurs due to a burst pipe or escape of water
•     Alternative accommodation if your home becomes inhabitable
•     Damaged fences, hedges or gates

 
If you’d like to discuss your options around securing insurance for your home, please get in touch with the team.

As we continue to battle the cost-of-living crisis, it’s easy to see the solutions damaging our credit file, impacting our future finances as well as hitting us in the pocket today.
As our wages will typically stagnate in comparison to the rapid climb on our outgoings, it means we’ll all have to tighten our belts that bit more as we have less disposable income at our fingertips.

The biggest impact this is likely to have on future finances is the impact on lower rate mortgages. Typically, lenders carry out two types of checks when ascertaining if your suitable for a mortgage; an affordability check and a credit check.

The affordability check is the one most impacted by the cost of living, and it's tough to improve, especially if you've already cut back.

Many who only just passed affordability checks before may now struggle to get a new affordable deal when their current deal ends - leaving some locked to their existing lender, or paying higher rates, or having no choice but to go on the expensive standard rate.
That's the reason the credit check is so important, as it may tip the balance. Of course, it'll be hit too if you've increased borrowing to cover cost-of-living increases. Yet as you may be able to polish your credit score, it's worth the effort.

10 Quick tips to help your Credit Score:

1. Evidence your stability. Be that showing the same job, bank, or telephone number on applications.
2. Get on the electoral roll. Not being on the electoral roll makes getting credit tough, as it can cause ID and tracing issues, so sign up to the electoral roll. If you're a foreign national unable to get on the roll, ask the three credit reference agencies to add a note to your file saying you can provide proof of residency (utility bills, a UK driving licence etc). The hope is lenders will ask for the proofs & accept them to complete ID/address checks.
3. Never miss or be late on repayments. Use a direct debit to be sure, even if just for the minimum (then repay more on top).
4. Don't withdraw cash on credit cards. It's expensive & evidence of poor money management.
5. Be consistent, even on different applications, to avoid fraud scoring. Fraud scoring, where external agencies filter applications to check for inconsistencies, is credit scoring's secret cousin, so try to use the same details for each application or it looks dodgy and can cause problems.
6. Ensure you time it right. Major problems, such as county court judgments (CCJs), defaults or bankruptcy, stay on your file for 6 years. Applications for products stay on for 1 year. So, if they'll soon lapse, try holding off applying until they do.
7. Avoid lots of applications in quick succession. Many debt applications leave a footprint on your credit file. Too many, especially in a short space of time, hurt future applications (the system is anti-shopping around) as if you get rejected or a worse rate than advertised, you'll want to apply elsewhere. So space out and prioritise applications. For example, if you're due to apply for a mortgage, don't apply for minor things such as cashback credit cards for a month or two before.
8. Avoid payday loans, they can mean bad news for mortgage applications. They're dangerous in their own right, but some mortgage underwriters simply won't lend to anyone who's had one.
9. If you rent, your payment can now boost your credit score. There are three schemes available, all designed so that you paying your rent on time will benefit your credit history (pay late and it'll be negative).
10. Buy now, pay later (BNPL) will SOON appear on credit reports, so timely repayment matters even more. The three credit reference agencies are all expected to be adding data about BNPL use (eg, Klarna, Laybuy) to credit files this year. So, on-time repayments should boost your credit history, late repayments may harm it.

You may be able to claim tax relief for additional household costs if you have to work at home for all or part of the week.

Important note: If you previously claimed tax relief when you worked from home because of coronavirus (COVID-19), you might no longer be eligible.
 
Important notes when considering if you’re eligible:

• You can claim tax relief if you have to work from home, for example because:
  • your job requires you to live far away from your office
  • your employer does not have an office
  • Who cannot claim tax relief
• You cannot claim tax relief if you choose to work from home. This includes if:
  • your employment contract lets you work from home some or all of the time
  • you work from home because of COVID-19
  • your employer has an office, but you cannot go there sometimes because it’s full
• What you can claim for: you can only claim for things to do with your work, such as:
  • business phone calls
  • gas and electricity for your work area
  • You cannot claim for things that you use for both private and business use, such as rent or broadband access.
• How much you can claim. You can either claim tax relief on:
  • £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) - you will not need to keep evidence of your extra costs
  • the exact amount of extra costs you’ve incurred above the weekly amount - you’ll need evidence such as receipts, bills or contracts
  • You’ll get tax relief based on the rate at which you pay tax.
    Example If you pay the 20% basic rate of tax and claim tax relief on £6 a week, you would get £1.20 per week in tax relief (20% of £6).
  • You’ll usually get tax relief through a change to your tax code.

You can check here to see if you’re eligible >>

Tammie Cook Director & Co-Founder BA (Hons), Dip.RS, CeMap, CeRER Telephone: 07990 522 770 Email: tammie@home-finance.co.uk	Damion Silcock Director & Co-Founder CeFA, CeMAP, CeRER, CeLTM Telephone: 07941 323 600 Email: damion@home-finance.co.uk