FINANCIAL ADVICE CENTRE NEWS
Your Spring Newsletter 2022
Mortgage and Property News
Looming crisis in older people’s housing
With demand for homes for older people four times higher than supply, the government has been urged to investigate3. The UK’s largest retirement housebuilder is requesting the introduction of rules to ensure 10% of new housing is designed for pensioners. A new government initiative ‘The Older People’s Housing Taskforce’ is set to examine barriers to supply of housing for older people, to look at how homes can be adapted to make them more suitable for older inhabitants and to examine the limited choice of properties available to OAPs, revealed in the Levelling Up White Paper.
3McCarthy Stone, 2022
Bumper Q4 for equity release
The Equity Release Council says record amounts of property wealth were accessed through equity release products in the last quarter of 2021, taking total lending for the year to £4.8bn, representing a 24% rise from the 2020 figure of £3.86bn4. Average loan sizes also increased, which the Council says is partly influenced by a rise in property prices as well as an increase in wealthier customers using equity release as part of their financial planning.
4Equity Release Council, 2022
Do you know your mortgage rate?
Do you know if you could benefit from remortgaging? If not, the first step is to compare your current interest rate to those currently available on the market. Several surveys over recent years have shown that a substantial minority of people have no idea what their mortgage interest rate actually is.
Interest rates are rising
If you’re unsure about your mortgage interest rate, now is the time to find out, with Base Rate on the rise. If you currently have a tracker or discount mortgage, or are on your lender’s Standard Variable Rate, it’s likely you’re already feeling the impact on your bank account. So, now would be a good time to lock into a fixed rate deal before interest rates rise any further.
Knowledge is power
Understanding your current financial situation is the first step towards improving it. Don’t stick your head in the sand - we can help you to assess your current mortgage rates, and whether more favourable options are out there. Please get in touch to find out whether you could save on your mortgage.
Investors tap into holiday let demand
Pandemic-related travel restrictions have unleashed huge demand for UK-based rentals among British holidaymakers – with buy-to-let investors scrambling to take advantage. According to figures5, holiday let mortgage availability has trebled since 2020, giving would-be investors ample opportunity to tap into this demand. There are now 231 buy-to-let mortgages eligible for holiday lets on the market, versus just 74 back in August 2020. As the number of deals increases, competition between lenders is also on the rise, with average rates reducing from 4.14% in September 2021 to 3.92% in January 2022.
Things to think about
If you’re thinking about investing in a holiday let, there are some factors to consider before taking the plunge. Firstly, the government is currently working to close a tax loophole that has seen people claiming tax relief on empty ‘holiday lets’. Holiday let owners will soon be required to prove that their property is being let for at least 70 days each year in order to claim small business tax relief. Secondly, it’s important to think about the cost of purchasing a holiday let above and beyond the property itself. For example, you may have to spend a significant amount up-front to get the property ready for holiday let clientele. You’ll also have to consider how much the property is likely to generate in rental income – is it in a good enough location to attract a steady stream of holidaymakers?
Get advice
We’ll be able to help you weigh up the various factors and recommend mortgage finance that’s suitable for your needs.
5Moneyfacts, 2022
Life changes – so should your mortgage
The cost of living has shot up in recent months, with inflation expected to reach a peak of 7% this spring6 and many families facing a significant hike on their annual energy bills from April. With finances squeezed, every penny counts – so it’s important to consider all the options for streamlining your outgoings. If you’re reaching the end of your current mortgage term, taking the time to explore whether more favourable rates are available could really pay.
Paying over the odds?
If your mortgage deal has expired and you are on your lender’s Standard Variable Rate (SVR), it is likely you’ll already have been hit by recent increases to the Bank of England base rate. SVRs are typically higher than those offered by available deals and fluctuate as interest rates rise and fall. Switching to a fixed rate mortgage deal instead could both save you money and make budgeting easier, as you’ll know exactly what is going out each month.
Time for a review?
While you can switch your mortgage at any time, you may face early repayment charges (ERCs). Even if your current mortgage deal hasn’t quite expired, however, you could start the remortgaging process up to six months beforehand. Many lenders will permit you to lock into a new deal up to three months in advance, so starting early will give you the time you need to assess your available options. That’s where we can help – we can scour the market for the most suitable mortgage finance for your circumstances.
6Bank of England, 2022
If you’re reaching the end of your current mortgage term, taking the time to explore whether more favourable rates are available could really pay.
Your home contents could be worth more than you think
In January this year, a team clearing out the home of retired antiques dealer and lifelong hoarder found a treasure trove of valuables worth £50,000. Among the piles of bags and boxes stuffed haphazardly into the Victorian town house were eight grandfather clocks worth £1,000, an antique chair worth between £600 and £800, and a 1956 Morris Minor ‘Split Screen’ classic car valued at up to £6,000 in the garage.
Do you know what’s in your home?
Of course, most people don’t have a home crammed with antiques; nevertheless, homeowners have made some incredible discoveries over the years. For example, an ancient Japanese coffer that had been sought aft er for decades by the Victoria and Albert Museum was found in the owner’s home aft er his death, where it had served as a TV stand for 16 years. It sold for £6.3m! If you haven’t been up in your attic for a while, now could be the time. If you have any valuables knocking around that are currently unaccounted for, you might risk being underinsured.
Know your worth
Understanding the true value of your home contents (whether or not you have undiscovered valuables lurking in the attic) is crucial to getting the right home insurance cover. We can help you value your possessions and source the home insurance policy that best suits your