If you are looking to get on the property ladder or want to start putting a bit of extra cash away to support you in your retirement, you could get a free 25% cash injection to help you on your way with a Lifetime ISA!
Savers aged between 18 and 40, who open the new Lifetime ISA when it launches on 06 April, can put away up to £4,000 a year and receive an additional 25% tax free, government bonus until they reach the age of 50. By this time, you could have received as much as £32,000 in free cash! – Who doesn’t want free money?
- Contributions to a Lifetime ISA will count towards your annual tax free savings limit of £15,240 – Fortunately, this will rise to £20,000 for the 2017/18 tax year
- If you withdraw cash for anything other than buying your first home or before you turn 60, you will incur a 25% penalty! – Be wise and only use it for home buying or retirement
Is it better than a pension?
The Lifetime ISA can be used to save for your retirement in addition to your pension. But, the rewards of only saving in a LISA are not as attractive and here’s why:
- You can only withdraw cash from a LISA once you turn 60 – Not great if you plan on soaking up the sun and retiring early
- For most, having a pension is just as beneficial, as you save from gross (pre-tax) income – Certainly wouldn’t be attractive to high earners
- If you’re employed, the workplace pension scheme requires that your employer has to pay in as well – You won’t get this from a LISA
What wins, Help to Buy ISA or Lifetime ISA?
You can save in both schemes, but will only be able to use the government bonus from one of them to buy your home. If you are looking to buy a property within the year, the Help to Buy ISA will enable you to get the government bonus faster, with a minimum deposit of £1,600.
But, for those looking or thinking to buy over the next year or so, the Lifetime ISA is far more attractive! Plus, if you already have a Help to Buy ISA and transfer your savings to a LISA before 06 April, the 25% bonus will be applied to the entire amount saved! – Now that’s certainly worth considering!
We have compiled a handy breakdown below to help you quickly see how each compare:
|Question||Help to Buy ISA||Lifetime ISA|
|How much can I pay in?||£1,200 in the first month, followed by £200 a month thereafter||£4,000 a year|
|How does the Government bonus work?||Maximum bonus of £3,000, which you receive upon completion of buying your home||25% applied to your savings at the end of the first year, monthly after that|
|What’s the maximum property purchase price?||Can be used by First Time Buyers to purchase a home up to the value of £250,000 (£450,000 in London)||Can be used by First Time Buyers to buy a residential property up to the value of £450,000|
|How long will I need to have it before I can use it?||No time limit||12 months+|
|How can I use it?||For a mortgage deposit only||Can be used for your mortgage deposit and home deposit|
|Where can I get one?||From most banks and building societies||Stocks and shares providers at present. But, Skipton will have one for launch, and it is expected that other high street banks will follow|
Ready to get moving?
Do you think the new Lifetime ISA will help you reach your savings target much sooner than expected? Are you thinking of buying a property in the near future and would like some advice? Our professional mortgage advisors are at hand to help you with all your mortgage related questions!
They will assess your personal circumstances and explain all your available options, so you can get a good idea of how much you can borrow and/or start searching for your dream home. Their advice is completely free, so get in touch!
Getting a self-employed mortgage
If you own your own business, you are probably used to hearing how difficult it is nowadays to get a self-employed mortgage – but this simply isn’t true. The process has certainly changed, as Self-Certification mortgages which enabled self-employed individuals to borrow money without proving their income, are no longer in use. But, your chances of getting a mortgage are just as good as anyone’s and here’s how.
Most mortgage lenders deem self-employed individuals to be a higher risk than a salaried employee, and therefore require at least 2 years accounts in the form of an SA302 form (proof from the HMRC that you have reported your income) and a tax year overview – be wise and use a chartered or certified accountant to help you with this. They will ensure that your accounts are up to scratch and help you understand any details that you are not too sure about.
If you have less than 2 years’ accounts, it’s not the end of the world! There are lenders who will consider you. But, you will need to prove that you have either; have regular work, recently left full time employment and started contracting or can guarantee that you will have regular work in the near future.
Everyone loves stability
The self-employed mortgage process differs according to the set-up of your business:
- Sole trader: A mortgage lender will look at your profits when assessing your income and usually request an SA302, to see the total income received and tax due.
- Partnership: If you go into business with someone else, lenders will look at each partner’s share of the profit to determine you annual salary.
- Limited company: The lender will need to see your business and personal accounts separately, in order to assess your mortgage affordability.
As lenders love to see consistency, you should delay making any changes to the structure of your company if you are considering this. If you can’t, it’s probably worthwhile postponing your mortgage application, in order for lenders to clearly see how the changes have affected your business.
It’s usually always a good idea to retain more profit within the business. But, if you are too stringent with your income, it could affect your chances of getting a mortgage, so treat yourself! Paying yourself a higher wage for a period of time can help boost both your mortgage application and your savings – make sure you can still afford your mortgage repayments and other outgoings, if you choose to reduce your salary again though.
Save, save, save!
As with all mortgage applications, the larger your deposit, the lower your repayments will be – but, it can improve your chances of getting a mortgage even more so when you’re self-employed.
Let your partner take the lead
If your partner is a salaried employee, then adding them as the first name on your mortgage application, could also help your chances of getting it approved. They may not earn as much as you, but lenders will favour them, as their income is looked at as being more regular and predictable.
Seek expert advice
Our mortgage advisors are experts in self-employed mortgages and can help advise you on how much you can afford to borrow, and source the best lenders to suit your individual needs, in order to maximise your chances of being approved first time. If you decide that a mortgage is the right choice for you, they will also complete all the relevant paperwork, and liaise with your lender, estate agent and solicitors to ensure that your application is a success!
Saving for a mortgage deposit
A mortgage deposit is the largest amount of money most people will ever save. It’s a big milestone to reach. But, if you think smart and make a few small adjustments to your current spending habits, the pounds will soon pile up and you’ll be in your new home in no time!
How much deposit will I need?
The minimum amount needed for a mortgage deposit is 5%. However, the more you can save, the more favourable your mortgage rate will be. A 10% deposit would put you in a far stronger position and should be achievable if you are saving to buy a home with someone else – don’t forget to also budget for your moving costs; Stamp Duty Land Tax, valuation and legal fees!
Review your finances
Once you know how much you need to save, a thorough review of your finances could make all the difference. Make a simple list of all your outgoings including your; rent, insurance policies, energy bills, television, broadband, landline and mobile phone contract/s, and how much you are paying for them each month, and compare it with your monthly income, including your current earnings and any regular overtime payments and bonuses – this will give you a solid foundation to work from.
Clean up your act!
If you’re serious about saving for a mortgage deposit, then cutting back on some little luxuries, such as your daily coffee or weekly takeaway, will free up some additional finances for your home fund. Lenders will also look at your credit history and spending habits when you apply for a mortgage, so an orderly bank statement could benefit your application!
Boost your savings!
Cash ISAs and savings accounts are two great ways to make your money grow faster. To make sure you stick to your plan, consider setting up a standing order or direct debit, so that your savings are automatically paid into your account every month.
- ISAs Allow you to save money tax free, up to the annual allowance of £15,240.
- Fixed bonds By depositing a sum of cash for a set period of time, you can secure a fixed interest rate. However, you won’t be able to access your cash until after the agreed time.
- Savings accounts Tend to offer slightly higher interest rates than current accounts. But, you usually need to pay in a certain amount each month to benefit from the interest.
Free, specialist advice & support
When you are nearing your savings target, it’s a good idea to obtain an Agreement in Principle, which we can obtain for you at no charge!
Alternatively, if you would just like some free advice about your affordability options, our expert mortgage advisors are available 7 days a week to meet or chat with you to help you get your dream home.
Why you should NEVER take out a payday loan
Are you considering taking out a payday loan? Take our advice and consider all the available options first. Payday loans may seem like a quick fix to a short term problem. But, they can seriously jeopardise your credit score, and risk your chances of being approved for future credit, especially a mortgage!
6 years bad luck?
Payday loans can significantly reduce your ability to get a mortgage, even if paid on time. Lenders use your credit report to check your repayment history, which contains records on bank accounts, credit cards, loans, overdrafts, mortgages, mobile phone/s and some utilities payments, from the past 6 years!
Payday loans are associated with financial instability, so if you are looking to buy a property and have had a payday loan within the past 12 months, you will not be able to get a mortgage. Similarly, if you had a payday loan a few years ago and only have a small deposit, your chances of getting a mortgage are restricted and will likely be at a far less favourable rate!
Alternatives to payday loans
If you need some extra cash, there are other options which can be far cheaper – so long as you can afford the repayments!
Most banks offer a 0% interest overdraft with their current accounts, allowing you to gain access to a reserve amount of cash. You can spend on your card and make withdrawals from a cashpoint, up to the limit the bank agrees with you.
Interest rates are at an all-time low, so it’s a good time to get a loan. However, you should only ever borrow what you need and repay it as quickly as possible – you won’t want to pay any more interest than is needed!
A credit card will enable you to spend on your card up to the agreed limit. This is fine, so long as you can afford to repay what you have borrowed at the end of each month, to avoid having to pay any interest.
Many credit cards now also offer 0% interest for 12 months+ on balance transfers, giving you plenty of time to repay the money you borrow! This could be a great option if you have a good credit score and are able to make the repayments. Bad credit? There are still options available, but the time you have to make the repayments may be shorter. However, you will likely have much longer than you would with a payday loan!
Watch out! Make sure you know how long the interest-free period is for and don’t go over the agreed limit – you won’t want to be hit with any additional charges. Remember to also never withdraw any sum of cash on your card, as you will pay a fee for this which could be hefty!
Credit unions and CDFIs
Credit unions and Community Development Finance Institutions (CDFI) aim to assist people who may not be able to get standard financial products and services available on the market. They offer loans that are similar to payday lenders with generally cheaper interest rates.
If you are interested in obtaining a copy of your credit report, you can do so by signing up with either Experian, Noddle or Equifax.
Moving in together is one of the most exciting things you’ll do, but it can be stressful if you do not plan ahead. However, we have compiled our top tips to ensure that you make the most of your experience. You only get to move into your first home once, so make sure you get organised and enjoy it – you’ve earned it!
Put together an essentials box filled with everything you’ll need for moving in day including; cleaning products, toilet roll, coffee, teabags, sugar and snacks for your helpers – don’t forget the kettle!
The essentials – It won’t be much fun without them!
One of the first things you’ll need to do is set up is your gas, electric and water. Make sure you arrange this as early as possible, as you will want to have everything up and running from day one.
You should also take a meter reading as soon as you move in to make sure your bills are correct, otherwise you could end up paying for the energy used by the previous occupants!
If either of you have owned a property before, you’ll also need to settle any outstanding balances. Just take a final meter reading before you move out and call your providers.
Tell your bank
The last thing you’ll want to deal with is a new card or PIN number being sent to the wrong address! If it was used for fraudulent purposes you would also not be covered by your bank, so advise them of your new address as soon as possible.
The easiest thing to do is to compose a standard letter, which we have put together for you here. Your bank statements are also a great place for noting any other companies you’ll need to inform.
Redirect your mail – it’s hard to remember everyone who has your address!
You can easily redirect your mail online via the Post Office. There may be a small cost for doing this, but it’s a small price to pay to avoid becoming a victim of fraud!
Update your online accounts
Ensure you add your new address to your online shopping accounts as soon as possible, otherwise someone else might benefit from your recent purchases!
Set up your television subscription (don’t forget your TV license!), broadband, landline and mobile phone contract in advance. You will often need to wait a few weeks to have these installed, so we recommend booking this work in as soon as you receive your moving in date.
Electoral roll – make sure you’re registered
Credit providers use the electoral roll to measure your eligibility for credit, so make sure you are firstly registered, and that your details are up to date!
Don’t forget your car
Your car insurance, V5C vehicle registration certificate and driving license all have to be updated – preferably before your move.
Be sure to also tell your insurer how your vehicle will be parked at night, as you may be able to save yourself some money! It could work the other way, but not notifying them in time could result in your claim being turned down, if you need to make one.
5 things to do now you’re married with your partner’s surname
So the big day has been and gone and you’re now settling into your new life as a married couple. Now it might not be at the top of your priority list, but changing your surname could affect your credit rating and there is quite a bit to think about. Luckily, we have come up with our top 5 things to do to avoid this.
1. Who should you inform?
Basically everyone. Some are more important than others, but we have compiled a handy checklist below for you to work from. The easiest thing to do is to compose a standard letter advising of your new name. We have put one together for you, which you can download here and send along with a photocopy of your marriage certificate. It’s worth noting that some companies like your bank, may request the original – I hope you’ve got a spare!
- Bank accounts
- Clubs, societies and associations
- Credit card, finance and loan companies
- Department of Work and Pensions (if you are entitled to any benefits)
- Driving license
- HM Land Registry (if you own land or property)
- HMRC for tax and NI records (obtain your reference and tax office address from your employer)
- Insurance (car, home etc.)
- Internet provider
- Local authority (council tax and electoral register)
- Magazine subscriptions
- Mail-order companies
- Mobile phone provider
- Pension providers
- Premium Bonds office
- Telephone provider
- TV license office
- Utility services (gas, electricity, water and sewage providers)
2. Buying your dream home
Buying your first property is one of the most exciting things you will do together, but you need to decide how you’ll own it? As ‘joint tenants’ you will both own the property and if anything were to happen to one of you, it will automatically go to the other. The other option is ‘tenants-in-common’, where you both have a fixed share in the property, but if one of you died, the other may not automatically receive it.
3. Joint insurance policies – could save you ££s!
Arranging insurance is something we all put off doing until we have to do. But, one of the many benefits of being married is that it is you can normally save money by adding your partner to your existing insurance policies! It’s not compulsory, but who doesn’t want extra cash in their back pocket?
4. Beneficiaries – check yours are right
It is likely that you will want to leave any assets you own to your partner in the event that something were to happen to you. But, if it’s your first marriage, it’s likely everything has been set up to go to your parents. Contact your banking, insurance and pension providers to make sure they have been set up accordingly!
5. Wills – gloomy, but important!
Writing a will is not something anyone ever wants to do, but once you’ve done it, that’s it until you have kids. It doesn’t have to be complicated, but it is recommended that you see an Attorney, who will arrange it for you and keep a copy on file.
5 key reasons why you should use a mortgage advisor
Comparing mortgages online is a good starting place for a general understanding of the market. But, choosing a mortgage is far more complicated than just getting a low rate or the best incentives. A professional mortgage advisor will provide a level of service that cannot be attained from a high street lender or comparison site. They take the time to access your personal needs and circumstances to ensure that you get the product that’s right for you. They can compare hundreds of mortgage quotes and access a number of products that are only available to mortgage advisors.
Tailored mortgage advice
A mortgage is the biggest commitment most people will ever make. It is often a daunting process for a lot of people and can be risky if you do not seek professional, financial advice first. Lenders can tell you about their own products, but are often unable to advise you about other options available on the market, which may be more suited to your needs.
Mortgage advisors usually charge a small fee for their services. However, they have a duty of care to you. They have to recommend a suitable mortgage and be able to justify why a particular mortgage they have chosen is right for you. If you are not happy with their advice, you can complain and and if the complaint is upheld receive compensation.
A helping hand
Mortgage advisors help relieve the stress and hassle of the mortgage application procedure by arranging it for you. They are used to dealing with lenders and can process your application quickly, with many larger brokers also having direct access to the underwriters themselves.
The benefit of this is that they can discuss any potential complexities with a particular case from the very beginning. Preparing all the documentation and liaising with the lender, estate agent and solicitor to ensure deadlines are met, is a time consuming process and this is all part of the broker’s service to you.
Once your mortgage application has completed, you will receive a personalised aftercare service from your mortgage advisor. This is optional, but the benefit of this service is that they will let you know when your product is due for renewal, and provide you with some helpful advice if you find that your circumstances change.