Archive for January, 2015

What first time buyers need to know

Thursday, January 29th, 2015

Fb - First time buyersBuying your first home can be an experience you’ll never forget. While the actual process of house-buying only starts once you have found a property that you might wish to call home, planning ahead can give you a huge advantage when it comes to getting the home you really want. In particular it is hard to overstate the importance of organizing the family finance so that you have savings in place to put down a respectable deposit and still be able to afford moving costs.

Bigger is better

In very simple terms, a borrower’s deposit is a lender’s protection. When deciding whether or not to accept a mortgage application, lenders have to think about the challenges potential borrowers may encounter during the life of the mortgage. These may include temporary falls in house prices, periods of unemployment, and periods of reduced income or at least reduced disposable income (for example after starting a family). The bigger the deposit a potential borrower can put down, the less exposed the lender is to changes.

Bigger deposits make for smaller monthly repayments

As of April 2014, lenders are legally obliged to assess mortgage applications in terms of “affordability”. In other words, they need to make sure that potential borrowers can afford to meet the repayments over the lifetime of the mortgage. People who need to borrow less also need to repay less. This means their monthly repayments will be smaller and therefore more likely to be seen as affordable.

Set some money aside for moving costs

It’s important to budget for all the costs involved in moving home. Buyers may be liable for stamp duty and are will need to pay solicitor’s and surveyor’s fees. The actual cost of moving from A to B and of furnishing and equipping a new home will depend on a variety of factors. It can, however, be useful to have a budget for unforeseen expenses. In other words, funds available to deal with anything about your new home that you only notice once you’ve moved in. Although not strictly a home-purchasing cost, new home owners household items as the need arises.

Check if there is government help available to you

The Help to Buy scheme is available to help people buying new-built homes. Provided that buyers can put down a deposit of at least 5%, the government will lend up to 20% of the purchase price of the property. This means that the buyer only needs to get a mortgage for the remaining 75% of the purchase price. The Mortgage Guarantee Scheme can be used to buy either new-build or pre-owned property. In this scheme, lenders essentially insure a part of a mortgage with the government. This means that they are guaranteed to get that part of their money back even if the borrower becomes unable to make the repayments. Of course, there are rules and limits for both schemes which means that they may not be applicable to, or suitable for, everyone.

Consider speaking to your family

Older people who have had more time to accumulate personal wealth, may be willing to act as mortgage guarantors for younger people that they trust. This can be helpful for people who might struggle to meet affordability criteria as applied objectively by lenders. It could also be helpful for people who’ve had a chequered financial history and whose credit ratings are therefore less than pristine.

Get some professional financial advice

Investing some time talking to a qualified financial adviser can go a long way to helping you make the best choices during the house-buying process and beyond. Whatever your plans and goals for your new life in your new home, getting your finances in the best possible shape is always a good starting point for making them a reality.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Getting Your Post Christmas Debt Under Control

Wednesday, January 28th, 2015

FB - Getting yourYou might have woken up today to an experience shared by millions of other people in Britain, the first post Christmas credit card bill has arrived.

For some, there will have been days of mounting dread and sense of foreboding. However, this is actually the moment in the year to be proactive, positive and practical.

Instead of worrying or being stressed, it’s a moment to embrace organisation, planning, saving, and making 2015 a year of financial success.

Work out what you owe.

In order to get into a strong financial position for the coming year you need to be able to assess your liabilities and get a clear picture of your debts.

If you have more than one credit card, store card, or loan, work out the total amount owed on each and start with the debt that has the highest rate of interest (this is your greatest liability).

Devise a budget.

Maybe more of your income now needs to be devoted to debt repayment, so you need to work out what you can afford from your monthly wage.

Look at your incomings, outgoings and identify luxuries that you can do without .

Streamlining your spending is quite an empowering experience and you will be amazed how much money has gradually trickled away while you haven’t been watching.

Don’t borrow any more until you’ve repaid what you owe.

If you remember one thing from this article and discard the rest, let it be this golden rule. Despite what lenders might tell you, you cannot borrow your way out of debt. Lenders exist exclusively to keep you indebted

Keep track of your spending.

Staying on top of your spending habits is the way you will ultimately triumph. Debt can be caused by one off purchases of plasma televisions or sports cars, it can also be caused by constant monthly overspends – £50 here, £100 there.

This kind of spending is emotion based (much of our spending is pretty irrational, and shops and advertisers know it), but it does not mean you have to be a slave to it.

Instead, you need to make sure that you ask yourself a question with every purchase: “Is this a need or a want?”

Then ask: “Do I really, actually need it?”

Consider Switching your providers

One quick way of freeing up spare cash to commit to bringing down household debt is to review your utility providers.

By using price comparison websites you can find whether you are getting the best deals on your gas, electricity, phone, and car insurance.

You might even want to see if shifting your bank account can result in lower charges or higher rates of interest.

It might also be worth investigating whether or not you can move your mortgage, as the loan on your property is the biggest debt you are likely to have.

If you need some advice about how best to manage your money, why not talk to a qualified financial adviser?

How to protect your finances during divorce

Friday, January 23rd, 2015

fb - how to protect your financesIf you are going through a divorce, money is probably the last thing you want to talk or think about. Experiencing something as difficult as the end of a marriage cannot be helped by asking questions about your financial future, can it?
Unfortunately, money cannot simply be an afterthought when your are ending a marriage, it has to be one of the central issues that needs to be discussed. In any relationship, finances become intertwined over the years and untangling them is a difficult task.

Inevitably the question of what is ‘fair’ will emerge, but first and foremost, you need to ensure that you can financially survive after a separation.

Immediate Concerns

If you have decided to divorce and you are facing the future on your own, you need to examine your outgoings and make sure that the divorce settlement and your existing income will cover the costs.

An audit of your current or expected bills should include your mortgage, utilities, pension contributions, the cost of running a car and any other liabilities or commitments you might have.

Some luxuries may have to go if you are placed in a more difficult financial position.

Assets

The law requires both partners to disclose their finances, so you need to show what cash assets you have in terms of your current account balance, savings, investments, and pensions.

You will also have to reveal what non-cash assets you have. This might include property or collectables that have a high value.

The home that you have shared with your ex partner might now be unaffordable for you to live in, or if your ex partner becomes the custodian of any children from the relationship, they will normally be granted it as the family home in the divorce settlement.

If you agree to sell the house, you will need to come to an agreement on splitting the profits and you will also need to agree on a sale price. Make sure that you have a clear understanding from your ex partner that they are happy with the price and estate agent has suggested as this can often be a contentious issue.

Children

The law states that maintenance payments for children are payable until they are aged eighteen or until they leave school (whichever is later).

If you become liable for maintenance, you will be obliged to pay it until the spouse who is the primary carer re-marries or one of you dies.

Lawyers

Decades ago, the costs of divorce were significantly higher because of legal fees. Fewer marriages ended in divorce and divorce lawyers were not quite as ubiquitous as they are today.

Now the cost of legal advice during a divorce has substantially fallen and most divorce law specialists offer a package deal that means that costs are unlikely to spiral.

This said, it is important to examine the small print in any legal contract and discuss with your prospective lawyer any issues that are likely to make the proceedings more complex or time consuming (joint ownerships of businesses for example).

At the end of the day, you are trying to secure your own financial future and there is little point in going through a painful process if all you achieve is the paying of excessive legal fees.

If you would like some professional advice about planning your future after a divorce, you should talk to a qualified financial adviser.

6 Essential Retirement Planning Steps

Tuesday, January 20th, 2015

How To Make Your New Year Resolutions Stick

Wednesday, January 7th, 2015

Blog 2015 (3)Cynics might say that the best way to avoid the disappointment of failed New Year’s resolutions is not to make them in the first place, so in this blog we’re going to defy the pessimists and show some simple ways you could have a healthier, happier and more prosperous 2015.

Much of the country is gearing up the festivities which seem to start in about late November and carry on ’til the first week of January. If you’re lucky, you’ll be able to deal with festive excess without too much to worry about.

There are some simple measures that we can all take to make lifestyle changes stick in the new year and this can also help with making positive changes in spending, saving and investing.

Make it manageable

January resolutions invariably fail because they are unrealistic.

If you need to lose weight, stop smoking, and curb your sugar and alcohol intake, the best thing to do is to tackle each problem one at a time.

If you decided to start with losing weight, you are much more likely to succeed by setting yourself small but achievable goals.

Your biggest obstacle isn’t the dieting or exercise, it is maintaining a positive mental attitude, and it’s a lot easier to do this once you start to have small successes. Each milestone you hit will build your confidence and make you see that achieving your goal is possible.

There is no point starting off with a daunting task that seems impossible, the mind invariably convinces us to give up if a task seems to be beyond our power to complete.

Ignore the voices

Humans have evolved to avoid hardship and to gravitate towards comfort.

An afternoon in front of the TV with food and drink may be more gratifying to our nervous systems than training for a marathon; however marathon runners experience far more endorphin highs than couch potatoes in the long run.

This is why, after your first run round the park or your first trip to the gym, the voice within will probably say something like: “Well done, you deserve a treat” or “You can stop now”.

Ignore it.

This voice seeks to avoid effort and steer you towards instant gratification, but it will be your undoing. It’s the same voice that tells you to spend on a credit card when you know you can’t afford it.

Plan Early

In the New Year there are two kinds of plan you could make; a physical fitness plan and a financial one.

In the first case, block a manageable amount of time each week, get some advice on diet, identify your fitness goals, and then stick to it.

In the second case, the procedure is remarkably similar. If you’ve decided that 2015 is the year that your finances need to get back on track, start by identifying your goals (preferably on New Year’s Day).

Smart Saving

As with fitness, your goals need to be SMART – Specific, Measurable, Attainable, Realistic and Time Related. If you’ve decided that your biggest priority is to pay off the credit card and eliminate personal debt, you need to work specifically out exactly how much you owe.

Find a way of measuring how much you are repaying. This is relatively simple; look at your online bank statements regularly, or look at the monthly credit card bill. Keep a close eye on these figures because we cannot manage what we do not measure.

Your monthly debt reduction goals need to be attainable and realistic. If you can only afford to repay £30 a month, don’t attempt to pay off £100 because you will simply fail to do so and collapse into apathy.

Your savings plan should include short term, medium term and long term goals. Plan what you want to save, spend, and invest in 2015. This might include a new car or a summer holiday. Look at what you need to save for in the next 3-5 years – the medium term, which might include university costs or a home extension. Then you need to think about long term savings such as retirement, or paying off the mortgage.

Pay debt before you save

Your financial planning should always focus on eliminating debt first because it will invariably have a higher rate of interest than savings do.

If you are looking for new ways to manage your wealth effectively in 2015, why not get some advice from a financial adviser?

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