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Helping to have certainty in uncertain times

Helping to have certainty in uncertain times

We wanted to ensure that our clients and others that may have concerns right now have information that they need, so we’re sharing some ways in which we can help.

The Bank of England has slashed interest rates to combat coronavirus ‘shock’ – what it means for you.

The Bank of England has cut the base rate to 0.1% in an emergency response to the “economic shock” of the coronavirus outbreak. This makes the interest rate the lowest ever in the Banks 325-year history. In a dramatic move by the new governor, Andrew Bailey, the surprise cut was a response to the “economic shock” of coronavirus and would “help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance”. In response, many lenders have reduced their rates, and we are seeing incredible low fixed and discounted rate products. Now is a great opportunity to look at taking advantage of the rate cut and potential to re-mortgage to a lower rate, to provide a saving on your monthly payments and some certainty for your payment amounts in the challenging weeks and months ahead.

Protecting your health and income

Having a mortgage that is covered and will be paid in the event of you not being able to work or if you have a critical illness or worse is so very important. I am / we are very happy to discuss your needs over the phone so there is no need to travel to come in to see me/us and if there are plans we can help to arrange for you we can manage everything for you from here.

As the situation develops, understandably, we have received many questions in relation to protection policies and customer queries. We have tried to generally summarise some of them below, in a format you can share with customers:

If I am diagnosed with Covid 19 – Do I have to tell my existing Insurers?

Life Insurance Policy owners 

No – you advised Insurers at the time of your application about your health situation. As long it was accurate, then no further action is needed.

Reports currently show that the vast majority of fit and healthy people recover. If sadly you passed away from Covid 19 – the Insurers will payout as per any other valid claim.

Check if your plan was written into trust. If so, your trustees need to be notified. Also, please check any wills made are up to date.

Critical Illness Policy owners 

No – you advised Insurers at the time of your application about your health situation. As long it was accurate, then no further action is needed

Covid 19, specifically, is not classed currently as a critical illness, so you cannot claim. Reports currently show that the vast majority of fit and healthy people recover.

However, if for whatever reason associated health issues occur that your Critical Illness policy could then cover, then you could make a potential claim.

If sadly you passed away from Covid 19, the Insurers will payout as per any other valid claim if your plan is also combined with life insurance.

Income Protection & Accident Sickness Policy owners 

Covid 19 is classed currently as a valid income sickness claim.

Check if your policy offered cover starting at Day 1 or after 1 week waiting claim period ( often the most expensive option )

Alternatively, if it was after 4 or 8  or 13 weeks etc; you may still be able to claim if your health situation is ongoing.

Sadly if you then pass away from Covid 19, some Insurers will payout as per any other valid claim if your plan also included any life insurance element.

If I have to self isolate – Do I have to tell my existing Insurers?

Income Protection & Accident Sickness Policy owners 

Yes – Coronavirus self-isolation is classed currently as a valid income sickness claim for some Insurers.

If your policy offered cover starting at Day 1 or after 1 week waiting claim period, you may be able to make a valid claim.

Alternatively, if it was after 4 or 8  or 13 weeks etc; you may still be able to claim only if your situation is ongoing.

Note: many Insurers are now excluding self-isolation on their new plans

Negative Mental Health impact of Covid 19 – Stress & Anxiety

Psychotherapists and charities such as Mind have said that the coronavirus outbreak may be having a negative impact on

our everyday mental health and wellbeing ( especially for those who have currently or previously mental health conditions ).

The World Health Organisation (WHO) also acknowledged that this Pandemic is causing stress. They advise people to avoid news that causes feelings of stress and anxiety.

Many protection policies may offer mental health helplines or provide health information services as part of the premium.

What if I temporarily lose my income & livelihood – I may not be able to pay for my Protection Policy & have to cancel it?

Millions of people across the world it seems are going to be in the same situation, as this is unprecedented for most in our lifetime.

Contact your Bank, Mortgage Lender, Loan Company, Credit card etc; immediately – about how Coronavirus is impacting your family finances

All lenders currently have already implemented some backup support systems to help ordinary people out financially in the short term

https://www.lloydsbank.com/help-guidance/coronavirus.html#manage

https://home.barclays/news/2020/03/supporting-customers-affected-by-coronavirus/

https://www.halifax.co.uk/helpcentre/coronavirus/Default.asp

https://supportcentre.natwest.com/Searchable/1459340472/I-m-worried-about-Coronavirus.htm

https://www.tsb.co.uk/coronavirus/

https://www.business.rbs.co.uk/business/support-centre/service-status/coronavirus.html

https://www.santander.co.uk/about-santander/media-centre/press-releases/santander-uk-outlines-support-for-customers-during-coronavirus-outbreak

https://www.bbc.co.uk/news/business-51817947

https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/

https://protectionguru.co.uk/coronavirus-updates/

What if I cancel my Insurance Protection policy temporarily… and then intend to take it out again when things improve financially?

If you sadly become ill or pass away from Covid 19, your protection insurance policy would not payout, as you have no cover at the time of claim (i.e; Catch 22 as you have cancelled it).

Should you then be diagnosed with Covid 19 or in ‘self-isolation’, your Insurers may postpone allowing you to buy any new insurance policy until you fully recover.

Any associated symptoms resulting from Covid 19 could mean any new protection policy is more expensive, or in the worst case, insurers decline to offer another protection policy.

Unrelated to Covid 19, if your health, lifestyle or age changes between taking out the previous policy and any new one, then this will affect the cost of taking out another policy.

Some Insurers may decline to offer another protection policy based on this information or on any market conditions at that time.

Please note: Your current policy may have no surrender cash-in value. Check the small print T&C’s of your policy.

We hope that this answers some of the questions you have. For policy guidance on specific situations, you should contact your provider’s helpline.

So please don’t hesitate to contact us to see how we can help you generate some real certainty in these unprecedented times. We are available by many non-face to face means to talk, as many of us work from home and have some additional time to plan for the future, contact us today to see how we can help.

Additionally, as the impact of the outbreak affects those around us in our extended families, companies and communities, please share this message through conversation and social media we are here to help, support and offer guidance.

 

Tips for home sellers in 2020

Tips for home sellers in 2020

If you’re planning on selling your home in 2020, you’ll presumably be hoping for the best price in the shortest time.  Here are some tips on how to make this happen.

Start by pulling your paperwork together

This may seem like a dull tip, but it really does matter, so it’s as well to get it over and done with before you go into full “house-selling mode”.  Basically, gather together any and all paperwork which could be relevant to the sale of your home.

First of all, you will need to pull together any legal paperwork, which may have been mothballed since you moved in (especially if you have lived in a property a long time).  You might want to have a lawyer double-check it to see if there are any issues which could be red-flagged by the current generation of buyers and see if there are any steps you can take to remedy them before you put the property on the market.

After this, you will need to compile any administrative documents regarding your home and its contents.  This could include your EPC, warranties for any building work you had done, receipts and warranty information for any white goods you are selling with the house and so on.

For bonus points, you could take this a step further and create a folder containing all the factual information a buyer could reasonably be expected to want to know about your home and the local area.

Focus on presenting what you have rather than upgrading your home

Unless you are selling a property as in need of refurbishment, you will want your property to be in its best “move-in” condition.  What that means in practice is that you want to take care of any maintenance issues (if they’re not spotted on the viewing they may well be picked up later and delay the sale) and you want to take all reasonable steps to keep your home clean, tidy and odour-free during the sales period.

It is unlikely to be in your best interests to do any major home improvements.  First of all, they may not increase the value of your home by as much as the vendor might have suggested.  Secondly, if they do, they could end up putting your home out of the budget of some potential buyers and/or increasing the Stamp Duty payable on it.  Thirdly, if they go wrong, they could be a serious hindrance to the sales process.

What you could do is look at potential improvements a buyer might want to make to your home, see if they would need planning permission and if so see if you can either obtain permission for the change or give a compelling reason why permission would be likely to be granted.

Let the estate agent do the selling

There are two good reasons for having your estate agent take charge of the actual sales process.  The first is that it is literally how they earn their living, so they will get a lot of practice at it and will probably do a far better job than the average homeowner.  Even if you work in sales, home sales is a specialist niche and benefits from specialist knowledge

Secondly, potential buyers may be more inclined to talk freely in front of an estate agent, who will not have an emotional connection to a property, than to a homeowner, who probably will.  If buyers have concerns about a property you want them to feel able to voice them so that they can be addressed, rather than have them walk away and look at another property instead.

Your property may be repossessed if you do not keep up repayments on your mortgage.

For estate agents we act as introducer only

The FCA does not regulate estate agents

 

Getting a “bad credit” mortgage

Getting a “bad credit” mortgage

Mortgage lenders are now obligated to look at long-term “affordability” when calculating whether or not to offer a mortgage.  This is not necessarily a bad thing, but it can create challenges for people in unusual situations, especially for those who have a bad credit record.  Fortunately, these challenges often be overcome.  Here are some tips.

Make your credit record as good as it can be

There may be nothing you can do about your credit record being bad, but there may be some actions you can take to limit the damage.  Make sure you take care of any “quick wins” such as making sure that you are listed on the electoral roll.  Similarly, make sure that you check for any mistakes as you can ask for these to be rectified.

Depending on the situation you may even want to see if you can get any “black marks” removed, for example, if you defaulted on a debt, but can now afford to pay it, then you might want to try reaching out to the company and seeing if they will take your payment and remove the mark.

Make a point of managing your finances impeccably

This is partly an extension of the previous point and partly a reflection of the need to practice good financial management in general.  Basically, you want to be in a position where you can convince lenders that you really have dealt with whatever issues messed up your credit file in the first place.  Acting responsibly for a month or two is unlikely to impress anyone, but acting responsibly for a year or two is more likely to be taken seriously.

In short, even if your credit record is “bad”, if the issues were in the past and you can clearly demonstrate that you’ve now sorted yourself out, then you can really improve your chances of being taken seriously by lenders.

Build as big a deposit as you possibly can

Admittedly this holds true for just about everyone in the UK (and quite possibly in other countries as well) but it has particular relevance for borrowers with bad credit.  Basically the more of the purchase price you can pay upfront, the less the lender is at risk in the event that you default, or, to put it another way, the more chance there is that they’ll recover the full loan principal from the sale of the house, even if it takes place in a buyer’s market.

With this in mind, depending on your situation, you may want to look at properties which have room for some kind of expansion, for example space at the side, an attic or a basement.  That way you could take out the mortgage on the price of the house “as is” and then increase the usable space later when your credit record has improved (if only through time).

If you’re thinking about going down this route, be sure to consider all the implications.  For example, you might want to research the likelihood of you needing planning permission (and if so your chances of getting it) and think about the level of potential disruption building works could involve.

Go through a specialist mortgage broker

Simply put, if you’re a potential borrower with a bad credit record then you’re the proverbial square peg in a round hole.  In other words, you’re exactly the sort of person who’s likely to struggle with algorithms and automated scoring and, by contrast, to get particular benefit from “the human touch”.  A good mortgage broker will take time to listen to you and understand your situation and as well as having a good knowledge of available mortgage products, they may also have professional contacts with lenders to help get your application past computers and in front of actual people.

If you would like to know more or are thinking of applying, please contact us

Your property may be repossessed if you do not keep up repayments on your mortgage.

 

What does the election mean for mortgages?

What does the election mean for mortgages?

All things considered, it’s probably fair enough that the news has been dominated by the question of what Boris Johnson’s election victory means for Brexit.  It’s probably also fair to say that Brexit will have a huge influence on the UK over the coming years, if not decades.

It is, however, also important to note that Brexit is only one issue among many.  The economy in general and the housing market, in particular, are also key issues for UK residents and while they will almost certainly be influenced by Brexit, they will also be influenced by various other factors, not least of which being government policy and practice.  With that in mind, here’s a quick overview of what the election could mean for mortgages.

The Brexit issue

Having just said that Brexit is only one issue among many, there’s no getting away from the fact that it is likely to be a very important issue.  Given that the Conservative win makes a hard Brexit massively more likely, it’s probably safe to assume that this will have an adverse impact on the Pound, at least over the short term.  This assumption can be supported by a look at the way the currency markets have reacted to Brexit-related news and, in particular, the way the Pound has dived since it was announced that Boris Johnson intended to try to make it illegal to delay Brexit any further.

In and of itself, a weak Pound is bad news for some and good news for others.  It does, however, have the potential to push up inflation and if that happens there will be one of two outcomes.  Assuming that the government sticks to the current rules on inflation (i.e. a target of 2% with a 1% margin of error either way), this would effectively force the Bank of England to raise interest rates, which, of course, is bad news for borrowers.  That being so, borrowers might want to look for a fixed rate, possibly a longer-term fixed-rate, to give themselves reassurance.

Any remortgaging decision should be taken with care and not just because there tends to be quite a bit of upfront expense and paperwork.  Fixed-rate mortgages can be relatively expensive, partly because they are still something of a niche market and partly because they essentially combine two products, a mortgage and an insurance policy.  At the same time, however, while there is a limit to how far interest rates can drop (unless you believe the government would use negative interest rates), they can rise indefinitely. 

The affordability issue

Whatever your views on Brexit, hopefully, you will benefit from the fact that the saga appears to be coming to a close and that, one way or another, we can all move on.  As is always the case in life, this is likely to be easier for some people than others.  For example, people in professions for which there is high demand globally may feel confident about their ability to “keep calm and carry on”, whereas other people may feel rather more vulnerable.

If you already own your home and are having concerns about how to pay your mortgage over the long term, then it might be a good idea to speak to a professional financial adviser.  They might be able to help you find options you might otherwise have overlooked, which could be anything from taking advantage of the rent-a-room scheme to looking for a mortgage product with some degree of flexibility, such as an offset mortgage.

If you are looking to buy your first home and are concerned that Brexit could make it harder for you to get a mortgage, then you may want to look at products such as the Lifetime ISA and/or the Help-to-Buy scheme, to see if they could make it easier to build a substantial deposit and thus increase your attractiveness to lenders.

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

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