Archive for the ‘Mortgage’ Category

Nice to see you–to see you NISA!

Amongst all the major pension changes announced in the Budget you could have easily missed the fact that the ISA rules are also changing.

On 1 July 2014 the new rules relating to ISAs announced in March’s Budget announcement come into effect. The launch of the NISA is the biggest change to the ISA rules in 15 years. So – here goes – your five minute guide to the changes.

  • The limit has increased – from 1 July you can invest up to £15,000 into your ISA this tax year – this is an increase from £11,880. In practice many people stuck to the Cash ISA limit of £5,940 so that is quite an increase for most people.


  • You can hold cash in your Stocks and Shares ISA – if your existing Stocks and Shares ISA qualifies as a NISA (although the name will be staying the same) – this means that you can hold both cash and funds, within your ISA. Previously, you were allowed to hold cash temporarily within a Stocks and Shares ISA as long as you were going to invest it in funds.


  • More flexibility to transfer – from 1 July 2014 you’ll be able to transfer freely between Stocks and Shares ISAs and Cash ISAs, as many times as you like. However, you must transfer the whole current year holding each time.


    There are a load of other “what if” questions that you may have. We’ll tackle these in another blog post soon. For now that’s probably enough.

    As always, this information isn’t intended to constitute financial advice or suggest that a NISA is suitable for you. To get to the bottom of that thorny question you may need to sit down with an authorised financial adviser and get some personalised advice. Get in touch if you fancy a chat, a cup of coffee and, if you’re lucky, a biscuit or two!

  • Steve Clark


    Your 5 minute news round-up

    An airport in your pension?

    The Daily Telegraph ran a story on Tony Fowler, who now owns a 50% stake in the Isle of Wight airport.

    He and a friend bought it from the receivers and expect to restore it to profitability. Mr Fowler bought his share through his pension fund – an airport is a commercial property which is among the permitted assets for a self invested personal pension scheme. Mr Fowler now commutes from his home to the airport in his gyrocopter – but has to pay the same landing fees as everyone else.

    Interest rates: what to do?

    With the recovery in the UK economy, many are predicting that interest rates will rise sooner than the Bank of England predicted with its ‘forward guidance’ in the summer.

    At that time, it expected its own base rate to remain at about current 0.5% level until 2016, but could that happen sooner? And what can you do to prevent a rate rise becoming a personal calamity? Both the Daily Telegraph and the Sunday Times asked the question. Both agreed rates could rise sooner than 2016. And both came up with only one positive recommendation: if you have a mortgage, fix the interest rate at today’s low levels to protect yourself from the possibility of soaring mortgage repayments.

    Cautious SMEs reluctant to grow

    Most small and medium sized enterprises (SMEs) don’t want to grow, reports the Daily Telegraph.

    Over 80% of those surveyed said they wouldn’t borrow to expand, while only a fifth plan to increase their capital investment over the next year and 16% will increase R&D spending. Just under a fifth expect to take on more staff.

    Is it time to fix?

    Borrowers might do well to take advantage of current low interest rates, suggests the Daily Mail.

    With inflation currently at 2.7%, two-year fixes at 1.5% and five-year fixes at 2.5% look like a bargain. Rates may fall a bit further for the kind of higher loan-to-value loans supported by the government’s Help-to-Buy scheme (typically 90%+), but fixed rates for borrowers with lower LTV ratios have risen a little in recent weeks.


    The 50th anniversary of Dr Who has seen a boom in associated memorabilia, reports the Daily Mail.

    Real Daleks are pretty rare, but anyone still in possession of a 1965 Codeg clockwork Dalek – purchased for a princely 82p – can now get up to £800 for it, which is better than a lot of stock market investments have done.

    Tech boom forecast

    One of Britain’s most successful fund managers has predicted a boom in technology shares.

    Nick Train, manager of the Finsbury Growth & Income fund, is quoted by the Daily Telegraph as predicting a massive boom in tech stocks over the next decade. (For the record, Mr Train was not managing a technology fund at the time of the notorious dot-com bust). He holds a third of the fund’s investment in technology stocks.

    Carbon credit fraudsters closed

    The UK authorities have closed down 19 firms which, between them, had tricked 1500 investors into paying £24 million for worthless ‘carbon credits’.

    The scam played up the ‘green’ merits of carbon credits, but these certificates were sold at vastly inflated prices.

    Hoping for a Jisa boost

    The Daily Telegraph has been campaigning for a change to the rules on Child Trust Funds, to allow parents to transfer these CTFs to the newer and more flexible Junior Isa (Jisa) which replaced CTFs in 2011.

    According to the Telegraph, up to 6 million children have CTFs paying poor rates while better rates are available in Jisas, and Jisa schemes also offer a larger range of funds for longer-term investments. The Telegraph predicts that Chancellor George Osborne will announce a change in his Autumn Statement on December 5th.

    Affordability tests may spell trouble

    At least half of all potential borrowers under the second phase of the Help to Buy scheme could be disqualified by lenders, reports the Sunday Telegraph.

    The two biggest lenders that have signed up to the scheme – Lloyds and RBS – use ‘affordability’ tests which measure what proportion of a buyer’s income goes on mortgage repayments. These two banks require borrowers to be able to cope if rates rise to 7%, in effect almost doubling from their current level. Experts say this will prevent a great many potential homebuyers from securing a loan.

    Steve Clark

    Deadline to the Breadline?

    Here’s a thought. It seems that the average person in Britain has only 19 days of savings to tide them by if the worst happens – e.g. loss of income, criticFamily Flickr swan-tal illness or death.

    That’s according to the recent report from Legal & General.

    There are some startling facts in there. For example the report reveals Britons typically spend more of their income on alcohol and tobacco than on protecting the income that pays for all of this with financial protection products.

    And yet according to the British Gambling Prevalence Survey (BGPS) scratch cards alone were enough to tempt 24% of British adults to spend their money in this way, with 15% playing at least once a week. The “it’ll never happen to me” approach seems to be alive and well in Britain with only one in three UK adults having a life insurance policy in place.

    This is disturbing when the average premium for life insurance last year, according to Legal & General, was only £189 per year. That’s around £3.50 a week.

    As advisers we see the aftermath of both scenarios – those that have planned ahead and those that  haven’t. Two recent cases bring that into focus for me. In both cases the husband was in his 40’s and died one very suddenly and the other after a short illness.

    For the couple that had planned the wife was able to repay the mortgage and had additional money for income so that the future financial security of the family to be taken care of.

    For the couple who had some cover but who hadn’t updated their policies the wife didn’t have enough money to repay all the mortgage. She has had to go back to full-time working just to be able to keep the house they live in. Childcare is a major issue and they rely on a network of carers, friends and family to make it all work. There’s little excess money for when things go wrong and not a lot for luxuries like holidays, birthdays etc, When I met the wife recently she was so upset that they hadn’t reviewed their protection to make sure that they had enough.

    Don’t find yourself thinking “….if only”. The 44 Financial Ltd Family Protection Review has been designed for people like you. Quite simply we’ll work with you to make sure that you and your family have money when you most need it.

    To book your initial appointment click here to contact us.

    Steve Clark



    Credit – Photo (Flickr – swan-t)

    Your 5 Minute Catch Up


    Here’s a quick and easy catch up on some of the news storied we think you might want to read.

    Perils of the wrong pension

    Making the wrong choice with your pension can be costly. The Daily Mail told the story of a retired solicitor who was concerned about his poor state of health and wanted to secure lifetime income for his wife from his pension fund. But he bought the wrong type of annuity, one that had a guarantee period of ten years. He died only weeks after the ten year guarantee ended – and his widow was left without any income.

    44 Financial offer a full retirement planning service to help make sure that you make the right choices when you are retiring.

    Cap on pension charges proposed

    The government has opened a consultation on an upper limit on pension charges, reports the Daily Telegraph.

    Its target is older schemes, often closed to new members, that can have charges of up to 2.1% a year. Modern schemes have charges of under 1%, and the higher charges can cut pension scheme members’ retirement pots by tens of thousands of pounds.

    If you have older pensions that you have not checked for some time it may be worth looking at this. Please contact 44 Financial to discuss our Pension Review & Health Check.

    Fund costs are falling

    Over 85% of investment funds have created new share classes with lower annual fees, according to research cited by the Daily Mail.

    Previously, fund managers could pay rebates to the ‘platforms’ on which investors hold their assets out of their management fees, but new ‘clean’ share classes that pay no rebates offer investors lower charges and a better deal overall. Most platforms are in the process of switching to the new lower-cost share classes.

    Charges to hit more trusts

    The Chancellor’s Autumn statement is likely to include a measure that will raise charges on trusts, predicts the Daily Telegraph. At present, those seeking to avoid inheritance tax can set up a series of trusts and so long as each trust is worth less than £325,000 no tax is paid. But the legislation provides for a 6% periodic charge every ten years on larger trusts, and it is likely this tax rate will be extended to all trusts whose combined value exceeds the £325,000 threshold.

    More could save from offset switch

    Millions of homeowners could make useful savings by switching to an offset mortgage, says the Independent. At present only about 10% of borrowers have this type of loan, but with savings rates so low the benefit is significant. By merging your saving and mortgage accounts you avoid receiving taxable interest. Instead of earning a taxable 1% on your savings, you reduce the interest you pay on your mortgage by the amount in your savings account. With mortgage rates at 3-4% you will save far more in mortgage interest than you were earning on your savings.

    Tax task forces get tough

    HMRC’s tax task forces, set up to track down tax avoidance in specific sectors, are hitting their targets, reports the Daily Mail. In the first half of 2013 they collected an additional £32 million and are on target to bring in over £90 million for the full year. Restaurants, landlords and owners of second homes are among their targets.

    Parents shell out more than ever

    Young adults are getting an unprecedented level of financial support from their parents, reports the Daily Mail.

    Over 70% of home leavers get some help, and nationally parents fork out £44 billion a year, or an average of £1,125 a year per child. But 25-29 year olds get even more, an average of £2,599 a year. The biggest items of support are property (£11 billion), cars (£4 billion) and weddings (£4 billion), but the biggest change in recent years has been the rise in the number of parents helping adult children with their living expenses – rent and bills.

    Lenders target accidental landlords

    Mortgage lenders are targeting ‘accidental landlords’ who they think should be paying higher interest rates, reports the Daily Telegraph.

    Homeowners who have been unable to sell, have moved and rented out their homes have become landlords by accident rather than by choice. They should have informed their lenders and converted from residential to buy-to-let mortgages, but hundreds of thousands have not done so. Often the lender’s buy-to-let interest rate will be as much as 2% above the residential rate.

    Mortgage brokers say people whose properties are worth more than their loans can usually re-mortgage to a more favourable rate if their own lender’s but-to-let rate is high, but that those in negative equity are trapped and have to accept their existing lender’s terms.

    Financial Planning and Divorce


    No-one who is goingDivorce scissors through a divorce finds the process easy: it’s long, messy and almost always painful. Even if there are no children involved, divorce is a procedure that takes its toll on both sides: the acrimony, the paperwork – and the inevitable meetings with your solicitor.

    It’s understandable that many people involved in a divorce want to minimise the number of meetings they attend and simply let the solicitors get on with sorting it out.

    Unfortunately, trying to cut down on meetings could be a serious mistake. Divorces are not just about broken relationships, dividing up the family home and arranging custody of the children. Sadly, they’re about financial planning as well – and meetings with your independent financial adviser may turn out to be even more important than meetings with your solicitor.

    Even if a couple have only been married for a relatively short time their financial affairs are likely to be inextricably linked. The mortgage will almost certainly be in joint names; they could well have shared protection policies and pension benefits may need taking into account when assets are divided.

    Couples who have been together for longer – and an increasing number of people are now getting divorced in later life – will find the financial situation even more complex. Pensions will certainly be an area that requires specialist financial advice as some people, particularly high-earners in final salary pension schemes, will have built up pension funds which could well be worth more than the family home.

    The new rules on pensions sharing in divorce have introduced a variety of options when it comes to dividing accumulated pension funds: they have also introduced the need for some seriously complicated (and potentially contentious) calculations, making expert advice absolutely essential.

    All these areas mean independent financial advice can be crucial to making sure that any financial ‘damage’ you suffer as a result of a divorce is kept to a minimum, and that you emerge with a clear idea of the financial planning steps you need to take in the aftermath of the divorce.

    Virtually no-one relishes going through divorce proceedings, but if you find yourself in that position, seeking out independent financial advice will be one of the wisest decisions you make. A good IFA will help make sure that you receive the best possible financial ‘result’ from the divorce and will work with your solicitor to see that everything runs as smoothly and painlessly as possible. Whether it’s helping to sort out the mortgage, reaching an equitable settlement of pension assets or any of the other complications that a divorce can throw up, an IFA will be on your side, constantly giving advice with your best interests at heart.

    If you are – or fear that you might become – involved in divorce proceedings then please don’t hesitate to contact us. We’ll provide you with expert and wholly confidential advice – and do our best to make sure that the financial pain of your divorce is kept to an absolute minimum.

    Steve Clark