Wednesday 20 December 2017

STATE PENSION

The Basic State Pension is not a fortune but at £122.30 per week currently for a full Basic State Pension, it is still something worth having. It does depend on making



National Insurance Contributions for the required number of years or getting years credited for women for those years they receive Child Benefit. If you do not know your State Pension Retirement Age, you can simply go on-line to www.gov.uk/state-pension-age



and there is a simple calculator. You can also arrange to get your State Pension Forecast

on-line at www.gov.uk/check-state-pension.

Wednesday 13 December 2017

WORKPLACE PENSION PAYMENTS TO INCREASE

By now anyone who is paid on a PA YE (Pay As You Earn) basis will find themselves having been automatically enrolled into their employer’s Workplace Pension.
Both the employer and employee have to make contributions into the employer’s pension.

The initial level of compulsory payment has started very low – 1% of pay by employers and a similar amount by the employee. However, these will start to rise annually until they reach the final level currently required of 5% by the employee and 3% by the employer. The first increase was originally scheduled to take place in October 2017; however in 2015 the Government announced that the first increase would not take place until 6 April 2018 and then

on the 6th of April in subsequent years.

For most people the increase on the 6th of April 2018 will be from 1% to 3% for their own contributions and from 1% to 2% for their employer’s contributions. For example, a person earning £400.00 per week will have been paying £3.20 per month and the Government would have added 80p and the employer would have paid £4.00. That means the employee would have had £8.00 go into his pension for only a £3.20 payment monthly by himself. This is a 250% immediate return on his contribution!


The change in April for the same employee earning £400.00 per month will mean they would be paying £9.60 per month with the Government adding £2.40 and the employer £8.00. That is still a very attractive total of £20.00 into the pension for a £9.60 contribution – more than a 100% return on investment. It would be very difficult to get a better return than that! For most people being part of their Workplace Pension is a very good idea.



Wednesday 29 November 2017

STRICTER RULES FOR BUY-TO-LET BORROWING

New regulations have just come into force which require lenders to deal differently with those owning 4 or more residential rental properties. This level of landlord will now have to submit full details of their portfolio including values and rental incomes for all of the properties owned, and these must fit into the new affordability calculations.

Those who own fewer than 4 residential rental properties will be able to remortgage properties and increase their portfolio up to the level of 4 much more simply. This does look to be yet a further effort by the Government to disadvantage those seeking to build a large property portfolio.




Friday 17 November 2017

OTHER OPTIONS FOR OLDER BORROWERS

The market is becoming generally more flexible in dealing with borrowers aged 60 and over.


Many lenders will automatically accept earnings from employment for up to age 70. Where the

borrowers have pension incomes or investment income, then mortgage terms up to 80, or even

age 85, are not out of the question. Give us a ring and we can make enquiries for you.


Monday 13 November 2017

OVER 60? CHECK OUT LIFETIME MORTGAGES

Lifetime mortgage rates are normally fixed for the whole term of the mortgage which is usually until the property is sold on death or when moving into care.




So if you have one already, then there is probably nothing you need to do. However, if you have been considering taking one out, it would be wise to do so quickly. Over the last year the number of older

borrowers taking out a Lifetime Mortgage has increased by over 40%. This is a result of more older people approaching the end of an interest only mortgage arranged many years ago, and changes in Lifetime Mortgages which have made them more flexible.


A Lifetime Mortgage is effectively a self-certification mortgage as there are no affordability requirements as with a standard residential mortgage. The amount that can be borrowed depends only on age and the property value.

Even a poor credit record generally does not affect the ability to borrow. This can provide a powerful solution for older borrowers.

The borrowers have the choice of servicing the mortgage with regular or ad hoc payments or letting the interest simply roll-up. The bottom line is that there is no threat that missed payments would end up with one being kicked out of their property. Note: Lifetime Mortgages have a minimum age of 55; a husband and wife would require both to be aged 55 or older. Do give us a ring and we can quickly give you an idea of how much you would be able to borrow based on your age and property value.




Thursday 9 November 2017

FIXING YOUR MORTGAGE

If you have a mortgage, review it. If you are already on a fixed rate for a reasonable term,


you probably do not need to take further action. However, if you are on your lender’s Standard



Variable Rate, you face an increase in your monthly costs in the event of any mortgage rate increase.

The easy solution is to talk to your lender about changing your mortgage over to a fixed rate. This

can usually be done for little or no cost, and for most people will also mean they will immediately

pay less than they were paying. For example a switch to a fixed rate can mean your paying a rate

which is 2.0% or so lower than you are paying currently. This can result in significantly lower monthly payments. Check it out.


Wednesday 1 November 2017

CHANGES AHEAD!

The Governor of the Bank of England has been preparing us for an increase in interest rates in the near future. That and the uncertainty with the BREXIT negotiations are reasons



for reviewing one’s finances sooner rather than later. Mortgage and Lifetime Mortgage interest rates will both be influenced by any increase announced by the Bank of England and, in fact, some lenders have already started making adjustments.


Monday 25 September 2017

Looking After Each Other

It is an unfortunate fact that eventually we are all likely to reach a point where we will need help either physically or in looking after our other affairs. If you have not already made enquiries about Lasting Powers of Attorney, we certainly advise that you do look into it and inform yourself

about them. A reliable source of information is gov.uk’s “Make, register or end a lasting power of attorney”


Monday 18 September 2017

Lifetime Mortgage Interest Rates

Most Lifetime Mortgage interest rates are fixed for the term of the mortgage. The rates currently range from about 3.68% upwards with the rate dependant on the percentage of borrowing and other scheme options. The maximum levels of borrowing shown in the previous example commonly come with higher rates of 5.55%. The lower rates are for lower percentage borrowing. While these rates are
much higher than the residential mortgage rates currently available, they are for potentially much longer terms and they are in line with the average mortgage interest rates over the past 10 years or so. There are also some variable rate options starting at 3.5% but these are increased in line with inflation (Consumer Price Index) each year.




Monday 11 September 2017

Some More Details of the Lifetime Mortgage

Because of the potentially very long term of the mortgage, the maximum amounts that can be borrowed are generally less than you would be able to borrow with the usual residential mortgage. Here are examples of the maximum amount of borrowing possible based on age. (Note: in the case of a couple the age that the lender’s operate on is that of the younger of the two.)


Age      Loan To Value        Maximum borrowing on property worth £300,000

55          25.5%                           £76,500

60          31.0%                           £93,000

65          36.0%                           £108,000

70          41.1%                           £123,300

75          47.0%                           £141,000

80          51.5%                           £154,500


Note: These are examples only but do represent a reasonable estimate of the maximum borrowing possible at the ages shown. In the event that there are serious medical conditions a higher level of borrowing may be possible.




Monday 4 September 2017

Looking Inside a Lifetime Mortgage

A Lifetime Mortgage is a mortgage like any other mortgage. You borrow money against the security of the property. You remain the owner of the property and benefit from any increases in the property value. You also remain responsible for keeping the property in a good condition. Usually the interest rate is fixed for the term of the mortgage which can be as long as you live or until you go into care.

You can pay off the mortgage at any time, although in the initial years there may well be early

repayment penalties – just as there are with most fixed rates with the usual residential mortgages. With a Lifetime Mortgage you can either choose to repay the interest being charged, or make no payments of interest – letting the interest build up and be repaid by the eventual sale of the property.


Thursday 31 August 2017

Other Solutions - The Lifetime Mortgage – A New Flexible Mortgage Tool for the Older Generation

In many ways the new Lifetime Mortgages provide the sort of flexibility that was a feature of mortgage borrowing many years ago.

The level of borrowing is determined in most cases not by affordability calculations, but by just the borrower’s age and value of the property. The older you are and the more the property is worth, the more you can borrow.


This can provide an escape from an older interest-only mortgage arrangement. It can also open the door for using the value in the property for any other reason – whether it is for one’s own projects or to help family with problems they may have. The Lifetime Mortgage interest rates have also been inching downwards in the last few years as competition has increased. Past credit problems also usually do not present a barrier.

























Monday 21 August 2017

Mortgage Problems

As one gets older, one can hit various problems with mortgages. The older you get, usually the more difficult it is to take out a mortgage. One of the common problems we are often asked to assist with is interest-only mortgages – particularly those reaching the end of their term. Ultimately one can sell their property and downsize or go into rented accommodation, but as one gets older it becomes more and more undesirable to leave the home and area one has lived in for so long and which have become such an important part of their lives. Another option is to seek advice from an independent mortgage broker such as ourselves, as there are a number of niche lenders who provide special terms for older borrowers.
































Monday 14 August 2017

The Inertia Tax!

Those with residential mortgages that stay on their lenders’ Standard Variable Rate are effectively suffering a voluntary tax by not taking advantage of their lender’s special deals. Shifting over to the lender’s special deals, such as a fixed rate for two or three years, can save hundreds or even thousands of pounds over those couple of years. Simply contact your lender and ask them what is

available. This same principle applies for those who have buy-to-let mortgages on investment properties.


Monday 7 August 2017

Pension Bits and Pieces

The older of us have often worked in many jobs and often with each job came some sort of pension arrangement.


When approaching age 55 or older, it is worth gathering all of these pieces and working out how you want to use them. Where such bits and pieces go back quite a ways in time, the Government can help you locate them through their free Pension Tracing Service(0345 600 2537). If you are not sure when your State Pension comes into effect, you can find out by searching “Check Your State Pension Age.gov.uk”, and for your State Pension Forecast search “Check Your State Pension.gov.uk”.





 







Thursday 3 August 2017

Pension Freedoms



The majority of pensions now basically consist of a pot of money. The current rules allow a person aged 55 or older to take 25% of the value of this pot tax-free. The rest can be used to set up an income for life or to draw down lump sums when needed. Any of these remaining funds that are taken out or turned into income are taxable. They are treated the same way as any other earned income in the year they are taken.
While the majority of people we see have the relatively simple type of pension described above, there are some complications with older pensions where there are certain guaranteed benefits built into the plan. It is worth having such plans looked at by a professional to ensure you are not missing out.

There are also many people who still will be able to benefit from better pension schemes termed
“defined benefit or final salary pensions” as they guarantee an income based on years of service and salary. We are available for assistance with such matters. Just give us a ring.

Tuesday 18 July 2017

An Important age – 55!

In today’s financial world reaching 55 carries with it certain opportunities. 55 is the minimum age at which one can take most pension benefits (with the key exception being the State Pension which is no longer age 65 for most people).


It is also the minimum age at which a person can take out a Lifetime Mortgage.


Monday 3 July 2017

OPTIONS AND SOLUTIONS!

While there is much uncertainty politically in our and other countries, we can maintain our own personal financial stability by following sensible and proven rules. One of the first is to ensure that you have more money coming in than you spend! This certainly will keep you in the “Happiness” zone described by Charles Dickens, in one of his books.


This principle applies to individuals as well as groups and businesses and even countries.


To achieve this you do need to have a bit of organization in place so you can see all that comes in

and all that goes out. Much more could be done to help educate those growing up so that they do

grasp such basics and also learn the patience of setting money aside for a special purchase rather

than having to buy things immediately on impulse.


Thursday 22 June 2017

Lifetime Mortgage Options

Whether you have an interest-only mortgage coming to the end of its term, or simply want to raise funds for other reasons, a Lifetime Mortgage could be a good solution.



Based only on age and property value, they are not dependent on income or affordability or credit status. Money can be raised for virtually any reason. You can choose to make payments or let the interest roll up. The minimum age for a Lifetime Mortgage is 55. For a couple the youngest has to be at least 55 years old. Note: Any mortgage already on the property must be repaid; it is not possible to have a Lifetime Mortgage in addition to an existing one.



Contact us for quotes or with any questions you may have.

Tuesday 13 June 2017

USING OUR EXPERIENCE AND EXPERTISE

“Service is, as ever, unbelievable.”


Mr CE of Crawley



“Very professional and helpful service.”


Mr JG of East Grinstead

Monday 5 June 2017

USING OUR EXPERIENCE AND EXPERTISE

“Thank you so much for all your help with these pensions.

We couldn’t have done it without you.”


Mr & Mrs KC of West Sussex



“Friendly and accurate advice.”


Mr AO of East Sussex

Wednesday 31 May 2017

USING OUR EXPERIENCE AND EXPERTISE

We have accumulated much experience and expertise over the last 35 plus years which we can

use in providing impartial financial advice and helping to unravel the mysteries of pensions.

We always aim to provide a speedy and efficient service. Here are a few recent client comments:




“I was very happy with the service provided. Already recommended a family member.”

Mrs JA of East Grinstead


Monday 22 May 2017

GETTING OUT OF THE MORTGAGE TRAP!

One problem that a number of older people face currently is how to pay off their interest only mortgage when it reaches the end of the mortgage term.


The Lifetime Mortgage is helping many in such a situation. The borrowing is based on age and property value only so it avoids many of the obstacles that the majority of lenders throw up. For those 55 and older it is possible to have an interest-only lifetime mortgage which can go on as long as they live. Besides repayment of interest, it is also possible to repay capital – although there may be early repayment penalties. Since this borrowing is based only on age and property value, it can help those who might not otherwise be able to borrow money. It can also provide a potential solution for those who have had an interest-only mortgage which is coming to the end of the mortgage term. Note: A Lifetime Mortgage cannot be arranged in addition to an existing mortgage. Any existing mortgage must be repaid. Lifetime Mortgages range from about 20% of property value for those aged 55 to about 50% for those aged 80. Here is a sample table of the maximum borrowing that may be available (note: in the case of a couple the providers will work on the age of the younger):


Age           % of             Age               % of
                 Property                             Property
                 Value                                  Value

55                20%            70                   40%


60                30%            75                   45%


65                35%            80                   50%


We can provide estimates for you to help with your planning if you feel this approach may suit your circumstances.






Monday 15 May 2017

BANK OF MUM AND DAD!

At least one out of three first-time buyers are having to rely on assistance from their parents to buy their first property. In most cases this is help with money for the deposit, although in other cases the parents may act as guarantors.


Monday 8 May 2017

MORTGAGES AND REMORTGAGES – LOOKING GOOD!

Residential mortgage rates remain very low although the most recent hike in inflation can be taken as a reminder that rates can go up.



It is probably a very good time to lock into a fixed interest rate for 5 years or so which can be as low as 2.0%. Many lenders are also working on making borrowing easier for older borrowers. We can provide rapid assessments of what rates may be available for your circumstances.

The market in purchasing buy-to-let properties has slowed following the hefty increases in Stamp Duty when you buy a second/investment property, and also due to the reduction in tax relief on mortgage interest for higher rate taxpayers. However, rates are also good in this sector for those reaching the end of a mortgage term on their rental property and looking to replace the existing mortgage.




Tuesday 2 May 2017

TAX-FREE SAVINGS ACCOUNTS

The ISA (Individual Savings Account) is the most commonly used tax-free savings plan. From the

6th of April 2017 the limit that one can put into ISAs in this tax year is £20,000. There are various ISA choices which one can use but the total in the year cannot exceed the £20,000.


YOUR ISA MENU


A. The “old fashioned” simple ISA – can be invested in cash or stocks and shares. Good for anyone.


B. Junior ISA – only for those under 18. Anyone can pay into it for the person concerned,  e.g. grandparents. The maximum annual contribution is £4,080.


C. Help to Buy ISA – Only of real use for someone looking to save specifically to buy their first property. Anyone over 16 can start one, but the bonus from the Government is only added when the person actually buys their first property. If monies are taken from the Help to Buy ISA for other than purchasing the person’s own first home, no Government bonus is added to the monies withdrawn. The maximum that can be saved in the Help to Buy ISA is £1200 initially and £200 per month thereafter up to a maximum of £12,000. The Government bonus added is 25% up to a maximum of £3000.


D. Innovative Finance ISA – High risk. You lend your money through websites regulated by the FCA (Financial Conduct Authority). These are known as peer-to-peer lending platforms or “crowd-lending”. The expected return is approximately double the rates offered by Cash ISA providers. For more information go to MoneySavingExpert.com – “Peer to Peer Lending”


E. The new Lifetime ISA (Lisa) launched 6 April 2017. This is only available for those aged 18 to 40. It is complicated but generally it would suit someone saving for buying their first property or as an alternative to a pension – particularly for someone who is self-employed. The maximum you can put in is £4,000 per annum. The Government will add a 25% bonus each year. The Lisa can be invested in cash, or stocks and shares. Note: The 25% Government bonus is added annually to what you put in, but monies cannot be withdrawn before age 60 unless it is being used for buying a first home. After age 60 it can be used for any purpose. Withdrawals for any purpose other than the home purchase before age 60 are subject to a 25% penalty. The Government will only add its annual 25% bonus for monies put into the Lisa up to age 50.
Note:
Lisa's are not yet broadly available as many providers consider them too complicated. Search the Internet if you want to know what choices there are.










Thursday 27 April 2017

ENJOYING ACCESS TO ONE’S PENSION SAVINGS

Over the last couple of years we have assisted many clients to access their pensions – either for lump sums to help family members or other projects, or to set up a regular income to supplement their current income.


The minimum age for accessing pension benefits currently is 55. Most people will be able to take 25% of the pension fund value as a tax-free cash lump sum. You can also access more of the pension but money taken this way is taxable and may affect your ability to add money to a pension in the future. Please contact us if you wish to find out what options are available to you with your pensions.






































Thursday 20 April 2017

WELCOME TO THE NEW TAX YEAR!

TAX NOTES FOR 2017/18 from the Budget


Personal Allowance £11,500 (reduced for those with incomes over £100,000)


20% Rate Tax Band £33,500 (adding in the Personal Allowance of £11,500 means that your income would need to be in excess of £45,000 before the 40% tax rate would start to be charged)


Annual ISA Allowance £20,000 (up from £15,400 last year)


Lifetime Pension Allowance £1 million


Inheritance Tax Nil Rate Band £325,000 (same as last year)


Annual Pension Allowance £40,000 (reduced for those with incomes over £100,000)


Rent-A-Room Allowance £7,000 per annum tax free (same as last year)


National Living Wage £7.50 per hour (up from £7.20 per hour last year)

Monday 20 March 2017

INHERITANCE TAX CHANGES

Announced last year, from April 2017 there will be additional Inheritance Tax relief for those passing

residential property down to their children. This will be in addition to the £325,000 Inheritance

Tax relief for each individual. This will be an extra £100,000 in 2017/18 and will increase over the

coming years until it reaches £175,000 in 2020/21. While this is good news for many, the details

are rather complex so it is worth some study. It is called the Residence Nil Rate Band (RNRB). Go to

www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band for more information.

Wednesday 15 March 2017

MORTGAGE OPTIONS FOR THE MORE MATURE OF US!

There are more and more mortgage options for those of us getting older.

These include normal residential mortgage options as well as the useful Lifetime Mortgage options. These can open doors to many who otherwise have felt caught in a mortgage trap which they could not escape from due to age or income limitations. Do contact us if you would like to find out what might be available for you.






Wednesday 8 March 2017

PENSION FREEDOM CONSEQUENCES

You can take your pension benefits from age 55, but be aware that taking the benefits early could restrict how much you could then continue to contribute into a pension.
Contact us for more details.




Also, if you have built up substantial pension benefits over the years, be aware that there is a Pension Lifetime Allowance. Pension savings made in excess of that could result in having to pay charges. Contact us if you have questions about this.


Wednesday 1 March 2017

PENSION FREEDOM

You can take your pension benefits from age 55, but be aware that taking the benefits early could restrict how much you could then continue to contribute into a pension.


Contact us for more details.




Also, if you have built up substantial pension benefits over the years, be aware that there is a Pension Lifetime Allowance. Pension savings made in excess of that could result in having to pay charges. Contact us if you have questions about this.


Monday 20 February 2017

PENSION FACTS

If you pay into a personal pension, for every £100.00 you put in, the Government adds £25.00. And, if you are a higher rate taxpayer, you will get a further £25.00 off your tax bill. This makes saving by means of pensions a very attractive option – particularly for those paying higher rates of tax. If you are a higher rate taxpayer, however, do be advised that the Government is seriously considering reducing pension tax relief for higher earners.


It would be a good time to look and see about maximising your pension contributions. You can pay up to £40,000 each year into a pension (subject to your earnings) and may also be able to catch up pension payments from the last 3 years if you have not paid the maximum in each of those earlier years.


Wednesday 15 February 2017

ATTACKS ON THE BUY-TO-LET MARKET!

Over the past 12 months there has been a deliberate effort by the Government to make buying properties to let less attractive.



First, there was the announcement that the Stamp Duty payable on second properties would be 3.0% more than that payable on residential properties. That is a very significant amount of money. Then there is the progressive reducing of tax advantages on the interest on mortgages on let properties – ultimately dropping from as much as 45% for Additional Rate Taxpayers down to a level of 20% for all. This effectively raises the costs for many landlords who are higher rate taxpayers.

There are further changes. In 2017 we will see the affordability calculations for Buy-To-Let mortgages significantly increased – the bottom line being that the amount of mortgage available based on the monthly rental, will go down from the levels they have been. This could make buying and remortgaging more difficult. Do contact us if you need any remortgage calculations. All in all the
Government may be shooting itself in the foot with these actions as the result could be a stagnant housing market with reduced levels of house building and sales.




Monday 6 February 2017

LIFETIME ISA (LISA)! YET ANOTHER ISA, BUT PRETTY ATTRACTIVE

From 6 April 2016 there will now be the new Lifetime ISA (Individual Savings Account)available to anyone aged between 18 and 40.



You can put up to £4,000 into it each year. Up to age 50 any amount you put in will have a further 25% bonus added by the Government. For example, if you put in the full £4,000, the Government will add £1,000 at the end of the tax year, so you would have £5,000 in your Lifetime ISA. You can invest the money in cash or in stocks and shares.


This Lifetime ISA is meant to be a tool either for buying a first home or for use to help fund retirement from age 60. You can withdraw money at any time, but if it is withdrawn before age 60 and is not used to buy a first property, it will suffer a 25% penalty – in effect it is the Government taking back its bonus. From age 60 onwards you can take money out as you wish and it is not subject to tax. You can have a Lifetime ISA for up to £4000 per year if you qualify age-wise (18 to 40). It will count towards your total annual ISA allowance from next April of £20,000.

There is an ISA Helpline – 0300 2003312 – for those with questions about the Lifetime ISA or the other ISAs available. It is becoming rather complicated and it is good to have a point of contact to get questions answered.













Friday 27 January 2017

THE AUTUMN STATEMENT!

There was not much that was new announced in the Chancellor’s November statement

but it is worth taking note of the key tax changes from the 6th of April 2017:


Personal Tax And Benefits Changing From 6 April 2017



The Personal Allowance will increase from the present £11,000 to £11,500. (This is the amount



of money you can earn before you start paying any tax at all.)


The amount you can earn over and above your Personal Allowance and pay only 20% tax will



increase from £32,000 to £33,500. (If you include the Personal Allowance from next April of £11,500, it means that you will have to earn in excess of £45,000 before you start paying 40% tax.)


You will pay 40% from that level up to £150,000, and over £150,000 you will pay the Additional



Rate of Tax – 45%. (Note: If you earn £100,000 or more, your entitlement to a Personal Allowance

will be lost progressively until it is gone completely for those earning £122,000 or more.)


The Individual Savings Account (ISA) contribution limit will rise from £15,240 to £20,000.


The Government announced its intention to launch a savings bond with a £3,000 limit and an



interest rate expected to be about 2.2% over a three year period.


We understand that the Rent-A-Room relief will continue at the level of £7,500 per annum.



This is income you can earn from letting a room in your personal residence which will not be

taxable if it is less than £7,500 in the year. If you have any questions how this works, go to

www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme.

Monday 16 January 2017

Sovereign Finance

Sovereign Finance enters its 36th year of trading in 2017. We look forward to a busy year helping our clients achieve their objectives and enjoy financial security.

It will be an interesting year. We still have to see how BREXIT will progress and affect the economy, and we have a new US president who, for better or for worse, is not an experienced politician. While these matters are not within our control, we can continue to work hard and flourish and prosper on our own and together with others in companies or groups in which we are involved.

The basics of a successful and happy life remain the same.