While we’re not quite at Christmas yet, many of us will have made a big dent in our Christmas shopping to do list, but at what expense?
Budgets this year are significantly tighter for many households, and many will have turned to borrowing via credit cards, store credit and loans to afford a Christmas like those enjoyed previously. But what if the debts are growing and you’re unsure how you’ll look to repay them in the new year?
Debt consolidation loans could help round up the existing debts into one easier to manage outstanding debt.
Benefits of debt consolidation:
Book a call in for January to discuss how we could help support you through the post-Christmas debt difficulties.
Has your money run away from you this year? With financial obligations being a focal point of 2022 for many, maybe the New Year provides new opportunity to adjust your spending habits and make financial adjustments more manageable. This handy budget planner download could help guide your financial commitments and help you to have a spend savvy year.
Have you outgrown your home? Relocating to a different area? Perhaps you’re looking to downsize? No matter the reason, 2023 could be the year of the New Home for you and your family.
Why would you port your mortgage?
Most likely because you are tied into your current mortgage deal. This means if you were to pay it off and take out a new mortgage for your next home, you’d be hit with early repayment charges (ERCs)
Equally, you may not be tied in but want to keep hold of a particularly competitive rate.
Are all mortgages portable?
These days the majority of mortgages – whether they are fixed or variable – are portable.
Some smaller or more specialist lenders may not offer portable deals however, and it’s also less common among buy-to-let mortgages.
It’s always worth double-checking with the lender or mortgage broker whether a deal you are applying for can be ported.
Are there any circumstances where I won’t be able to port?
It’s not as simple as just packing up your mortgage and taking it with you to another property. The lender will underwrite the whole loan again and the numbers will need to stack up.
Here are the most common reasons why it may not be possible to port your mortgage:
- Your circumstances have changed: You are earning less, have bigger monthly outgoings or your employment status has changed – say from permanent to contractor
- Your credit score has gone down: You have missed payments on your mortgage or other borrowing
- The new property is outside the lender’s remit: For example, it’s above a fast food outlet or is of unusual construction
- The lender’s valuation of the new property is too low: This could limit the amount of borrowing you have available or access to the new mortgage deal you need
What happens if my lender refuses to port my mortgage?
If you cannot get out of your current mortgage or make the sums work for your new home, you'll just need to wait until your mortgage deal has ended - which may not be long if you have only tied in for two years.
If the lender declines on the basis of the property itself, you may want to consider if you want to buy – or at the least get a comprehensive survey.
What happens if I port my mortgage to a more expensive property?
You can use any equity in your current home (the difference between what you sell it for and what you owe on your mortgage) as a deposit towards your new one. And, of course, any savings you have built up.
But if the amount remaining exceeds your current mortgage, you’ll need to top it up with additional borrowing.
Rather than being the same as your current mortgage, this extra slice of loan will be priced on whatever deals the lender is offering at the time.
It’s a good idea to try marry up any tie-ins between the two parts of your mortgage. For example, if you only have one year remaining of a fix on your main mortgage, you may want to avoid two-year tie-ins on your top-up lending.
What about porting a mortgage to a cheaper house?
If you are downsizing or taking a step down the property ladder, you may be in a position to pay back some of what you owe to the mortgage lender – and most mortgage deals will allow you to repay up to 10% a year of the outstanding balance each year without a charge.
If you want to repay more than this and are tied into your deal, ERCs will apply.
Are there fees involved to move my mortgage?
There are no ‘porting fees’ as such. Although you may be charged for a valuation that the lender will carry out to check your new property.
Can I still port if I don’t sell and buy at the same time?
In some circumstances, there may be an unavoidable delay between when you sell your current property and when you buy the next one – and the mortgage debt is paid back to the lender.
But in this case, most lenders will still allow you to port across the same deal usually with a grace period of around three months.
While you will need to pay any ERCs initially, they will be fully or partially refunded when you take the loan onto the new property.
Your home or property may be repossessed if you do not keep up repayments on your mortgage. You may be charged a fee for mortgage advice.
As announced in the Autumn statement by Chancellor Jeremy Hunt, the government have made the decision to freeze the inheritance tax (IHT) thresholds for two more years. But what does this mean?
IHT is the amount an individual is allowed before inheritance tax is payable, has now frozen until April 2028. An individual has a nil rate band allowance of £325,000 before inheritance tax is payable at 40%, and in addition to this we have the residence nil rate band currently set at £175,000 per individual where a family home is left to direct descendants, usually children, although there are other persons who can fall within this category. The allowance of £325,000 has not changed since 2009, and with inflation and increasing house prices will mean more families will now face paying Inheritance Tax over the coming years.
The intent is to try and claw back government money and is anticipated to save the government around £1bn. House price increases have meant that the number of people paying IHT has been rising for several years now. As the house prices have increased more people have entered the bracket due to their property wealth increasing.
While house prices may soon slow due to the never-ending list of financial concerns facing the UK such as inflation, energy prices and an unpredictable European war, this is unlikely to take the sting out of IHT bills for some time.
The challenge comes as the government, while trying to rectify their own bank balances following the pandemic, have inevitably ensured more people will struggle. One hope we could look for is an announcement to also increase gifting allowances to enable younger generations to access help from the Bank of Mum and Dad or even the Bank of Grandma and Grandad.
There are a few ways to offset some of your estate value to ensure you pay a little less IHT, though these are always done under professional estate planning advice, which we can help refer you for.
Here are a few ideas you may consider:
- Gift your money to loved ones
- There is a limit on how much you can give away annually, and provided there is 7 years clear between gifting and your death it will be exempt from taxation, but should you die in that period it may become liable for tax payment.
- Leave money to a charity
- Any money you leave to a charity, providing it is registered in the UK, will always be free from inheritance tax. The same goes for gifts to political parties, or to local sports clubs. What's more, if you leave more than 10% of your taxable estate to one of these groups in your will, the inheritance tax rate for the rest of your estate will fall from 40% to 36%. The 10% only applies to the amount of your estate over the IHT allowance. So, for example, if you were leaving behind £425,000, you would benefit from the lower rate if you gave more than £10,000 (10% of the amount over £325,000).
- Leave your estate to your spouse
- Your spouse or civil partner will never have to pay tax on assets you leave them, regardless of the amount. Making the most of this in your will can save your family a small fortune. When your spouse then passes away, they will have inherited your unused IHT allowance, potentially allowing them to pass on up to £650,000 tax-free.
Speak to us today to discuss your estate planning needs and we may refer you to our trusted estate planning partners.
The Financial Conduct Authority does not regulate taxation and trust advice.
As we pull together plans for Christmas and often, we are looking to spend it with our loved ones. But what if the worst were to happen, would your loved ones still be able to have a Christmas?
Protecting your family’s finances can ensure the least disruption to those events that can be particularly difficult to face for loved ones after losing someone important.
Here are three types of life insurance to help protect your family
1. Life insurance
Life insurance gives you much needed peace of mind in knowing that if you were to die while you're covered by the policy, it could pay out a cash sum. It could be used to help protect your family's lifestyle and everyday living expenses or help to pay the mortgage.
2. Decreasing life insurance
If you have a young family and you own a property, you may want to consider decreasing life insurance, which is designed to protect a repayment mortgage. Your cover amount decreases approximately in line with the way a repayment mortgage decreases.
3. Critical illness cover
If you can stretch your monthly budget a little further, it might be worth looking into Critical Illness Cover too. It’s an option that can be added for an extra cost when you take out our Life Insurance or Decreasing Life Insurance, and could help minimise the financial impact on you and your family if you were to become critically ill. Children’s Critical Illness Cover is often included, which could offer some financial relief during a difficult time.
If you’d like to discuss how best to protect your family should the worst happen, get in touch today.
Source: Legal & General
As we dip deeper into the winter months, it inevitably gets colder and we’re all looking for ways to keep warm. But putting the heating on or using our electric to keep toasty is coming with significantly higher bills and many are struggling to afford the huge increases so what other options are there?
For the most at-risk groups such as the older generation, young children, those with illnesses and other vulnerabilities this can be an especially daunting time, despite the help on offer. This comes alongside the general ‘cost-of-living crisis’ and as we watch the costs increase in most areas of our lives, there could be a few options available to help tackle the increases.
For those over 55, could there be another solution in releasing equity locked up in the value of their property?
Those who fit the eligibility criteria for a lifetime mortgage, could be utilising funds to replace and upgrade boilers to improve energy efficiency, they could be looking at greener more efficient energy options such a solar energy or even looking to offset the bill increases on their standard heating options.
Furthermore, the intergenerational wealth released from the property could be shared among loved ones to aid their abilities to afford the energy cost hikes.
The most common equity release deals are mortgage-based products that are loans secured against your home. Typically, there are no monthly repayments – the loan, including the built-up interest, is repaid from the sale of the property when you die or go into long-term care. These are known as lifetime mortgages.
Utilising Equity Release products can help to ensure those over 55, are not risking going without heating, food, or other essentials where they may otherwise have to make sacrifices to ensure they can afford the basics.
While Equity Release is an increasingly flexible and therefore popular product that can help offset the cost-of-living crisis for many, it can have drawbacks and doesn’t necessarily offer a solution that will save money in the long-term, so it’s vital that independent advice is secured when considering this product.
We are available to discuss your needs regarding your finances in the current climate, so please do get in touch for a no obligation conversation.
This is a lifetime mortgage. To understand the features and risks, please 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
