News & Views

Coronavirus Advice

The coronavirus lockdown has been an absolute game changer for anyone who had spent the first quarter of 2020 planning a spring or summer move. It hasn’t just been down to the Government’s measures effectively shutting down the residential housing sector; other factors have also had a significant influence on how buyers and sellers will – or perhaps won’t – approach the business of moving now the restrictions on property transactions have been relaxed. In just seven short weeks the face of the day-to-day business of moving house has been radically altered in several different ways. Prices Opinion is a little divided on the long-term impact of lockdown on house prices. Depending on what you read, prices may flatline for a short period before recovering (Rightmove); they could tumble by 13%, shaving £30,000 off the value of the average UK property and pushing the average house price below £200,000 (Centre for Economics and Business Research); or we may see gentler fall of between 5% and 10% in prices but a steeper decline in transactions to 20-40% of the 5-year average (Savills) And, of course, there are all sorts of different forecasts and predictions from other sources that add to the noise and uncertainty over precisely how the market will react to nearly two months of stagnation. Additionally, the real picture will be different depending on where in the country you live. Areas that have traditionally been highly desirable may see little or no adverse impact, while others experience a more acute negative effect. The important thing to remember, though, is that wherever you are geographically, the local impact will be broadly the same for everyone. So, if you’re planning on moving within the same area and the pre-pandemic value of your property falls by, say, 5%, the value of the property you might buy will likely have seen a similar if not identical fall. In this case, and all other things being equal, the real-terms effect of falling prices on your planned transaction may well be negligible. The price factor is likely to be more significant, in terms of increasing the amount of borrowing you need, if you’re hoping to move to an identifiably more desirable area, where the value of your current home falls and that of your intended property remains static or grows. Interest rates The decision by the Bank of England to reduce the base rate to an historic low of 0.1% has means it’s now possible to borrow what you need with lower repayments than might have been the case pre-lockdown. And depending on your specific needs and circumstances, if you choose a rate that’s fixed for 2 to 5, or even 10 years (not all lenders offer a 10-year fixed rates, and it’s not always in your best interests to tie yourself into such a long-term deal), you’ll not only benefit from a cheaper loan, you’ll also have a degree of certainty over your repayments for the same period. That said, not all lenders will pass the benefit from the interest rate drop onto their customers, so it’s worth doing your homework here – and ideally you should work with a professional mortgage broker like Oportfolio who will have access to off-market products and deals that you won’t find on price comparison sites or  through dealing with lenders direct. Affordability Inevitably, mortgage lenders are going to be paying particular attention to the affordability criteria as they consider new applications from those planning to buy a new property, so the benefit of having your finances in good shape is as clear now as it was before the pandemic. However, for some people hoping to secure mortgage lending it’s going to be especially tricky given the impact the lockdown measures have had on the economy and employment. If you work in a field that’s been particularly affected by the country coming to a sudden standstill – e.g. the hospitality sector or non-essential, non-online retail – lenders may approach your application with a little more caution. Again, working with a professional mortgage adviser is a smart move because they will be able to identify the areas in your financial circumstances that may be a cause for concern and will be able to give you advice to put you in the best possible position to have your application accepted. Negative equity Negative equity is what happens when economic factors drive house prices down to a point where you owe more on the mortgage than the property is worth. One concern – particularly among those potential buyers who have only a small deposit to put down – may be the prospect of buying a property only for prices to crash if the economic effects of the pandemic suddenly come into play. This is where prudence is required. For most people, a property purchase is a moderately long-term investment. Historically, it’s been generally accepted that on average people move four times in their lifetime, bringing the average time in any given property to around 20 years. No one really knows how the market will perform in the future, but it’s probably fair to assume that any ‘losses’ we see as a direct result of this crisis will be offset by future growth – and of course the more time you expect to stay in the property you buy, the more time you’ll have to rebuild equity. But again, a professional mortgage adviser can advise you based on your specific circumstances and ambitions. The bottom line is that there are plenty of opportunities in the housing market right now – but getting professional mortgage advice can give you the peace of mind of knowing you’ve considered all eventualities before you set the wheels in motion on your purchase or sale. At Oportfolio we pride ourselves on offering highly professional and friendly advice backed by many years of experience and a thorough knowledge of the mortgage market   Please note: all information contained within this article was accurate at the time of publication.   Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.  

by Oliver Whitehead  -  4 June 2020

Financial Protection

As the UK takes its first tentative steps towards coming out of lockdown, the worries that enforced social isolation brought – concerns over job security, food shortages and the clear risk to health – are for many people being replaced by new anxieties relating to what our new world is going to look and feel like. For some people there will be an understandable sense of conflict as the government begins to carefully reopen Great Britain PLC. https://youtu.be/CMG5E5e6bPQ We want life to return to normal, but we know the pandemic isn’t entirely behind us; we’re looking forward to seeing friends, family and colleagues who we’ve perhaps only seen on a video link for the past two months, but we still fear the possibility of infection; and we want to return to work and regular (and secure) income, but we’re apprehensive about the long-term effect of this crisis on the economy. What that anxiety may well translate into is a reluctance to make decisions about the long-term future. But economic recovery – globally, domestically and personally – will only be realised when we have the confidence to act, spend and invest with confidence. And for that, you need the assurance and peace of mind of knowing you’re acting on the right information, advice that’s suited to your individual circumstances and guidance that insulates you as far as possible from financial risk. That’s where we come in. At Oportfolio we have years of experience and expertise in finding the mortgages and financial protection products that are best suited to our clients’ personal needs. Mortgages The housing market is now back in business, though for obvious reasons it’s going to be a slow process regrowth following two months of inactivity and sweeping changes in the financial circumstances of many people who might have been looking to move this summer. That said, if you need to move or your own financial situation has been less affected by lockdown than has others’, then there is still business to be done in the housing sector – and the slow market could well be an advantage for those in a strong position to buy. And with interest rates at an all-time low of 0.1%, there are also lots of good mortgage deals out there. So, if you’re still committed to moving in 2020, we’re ideally placed to help you find the best mortgage to set you on your way. Personal Protection The pandemic has taught us many things, but one of the key lessons has been that being financially prepared for the worst is essential. It’s an unfortunate fact that over the last eight or nine weeks a great many people have had to face what might, two months ago, have seemed like an entirely hypothetical question: what would you do if you suddenly found yourself without an income? But it’s a question that doesn’t just relate to the economics of employment. What if you suddenly suffered life-changing injuries in an accident, or received a diagnosis of a serious or terminal illness that left you physically or mentally unable to work? Would your family be able to cope financially if you died suddenly? Life insurance – whether in trust to avoid Inheritance Tax or not – to provide for those you leave behind, critical illness cover to give you a lump sum payment if you become seriously ill and income replacement insurance to give you a regular monthly payment should you be unable to earn for an extended period are all options that we can advise on to give you peace of mind. Wills According to consumer organisation Which?, more than half of all UK parents don’t have a Will – meaning the spouse/partner and children left behind risk receiving nothing. Making a Will is simple and straightforward, and something we can look after for you. So, if you’re ready to start making the decisions that will get your life back to some semblance of what might be normal, but you want a trusted professional adviser to guide you, we’re just the people to talk to. Why not get in touch with us for a friendly and informal chat – we’d love to hear from you. Please note: all information contained within this article was accurate at the time of publication.     Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.  

by Oliver Whitehead  -  29 May 2020

Life Insurance

If you’re a homeowner, the chances are you’ll already have a life insurance policy in place to cover your mortgage, either because you decided it was the smart thing to do (which it is), or because your mortgage lender insisted on it. If you don’t currently have a life policy but you have a significant outstanding debt on your mortgage loan, it would be prudent to consider taking out a policy to ensure that should you die the people you leave behind are able to meet that financial commitment. https://www.youtube.com/watch?v=kRZl7jP6rHM But the key question today, if you do already have a policy, is whether or not your policy was set up in a discretionary trust. Current Inheritance Tax (IHT) rules mean that if the estate you leave behind amounts to a value of more than £325,000, anything above that figure will be taxed at a rate of 40%. Your estate comprises all of your property and financial assets, including any insurance policies you may have that pay out on death. In many cases, it is these policies that tip someone’s estate beyond the £325,000 tax-free threshold. There are circumstances in which this threshold can be extended – for example, when the estate is passing to a spouse or civil partner. But in most other cases, that figure of £325,000 is likely to trigger the tax liability on your legacy. By writing your life insurance policy into trust, it can be excluded from your estate for probate purposes, meaning your loved ones will benefit from the full value of the policy when it pays out. And because it is not considered as part of the probate process which, depending on the complexity of your estate, can take weeks or months to complete, the people you leave behind should receive that money more quickly. It is rarely the case that your insurance company will pay out on your policy quickly. Their own claim processing times can also be long and drawn out and that can mean delays for your family at what is already likely to be a very distressing and expensive time. Having your policy written into a discretionary trust circumvents that problem as well. How discretionary trusts work To write a life insurance policy in trust requires you (known as the settlor) to set up the trust, specify formally who you want to receive the proceeds of the trust and on what terms – which, for the purposes of this example, we’ll assume is upon your death – and appoint trustees who will administer the trust fund when the time comes. Your beneficiaries will all fall into defined classes and this is to ensure your nominated trustees are able to properly identify who should receive all or part of the gift, as determined in your instructions. Your beneficiaries can be anyone of your choosing, but they must be able to be identified in one of the several classes that will apply to the trust. For example, you may specify ‘my grandchildren’ or ‘my nieces’, but you would not be able to specify something very general like ‘all my friends’, because the trustees would have no way of knowing how you defined a friend. When you die, your trustees will be able to pay your nominated beneficiaries immediately and directly, according to your wishes, without that lump sum being included in your estate for probate and thereby making it exempt from any potential IHT calculation. It isn’t difficult or complicated to set up a life insurance policy with this structure, but it is a good idea to ask a professional adviser like Oportfolio to do this for you to ensure it is watertight, properly reflects your wishes and meets all the tax tests that might potentially be applied to it. A further advantage of setting up your life insurance in a discretionary trust is that it ensires a definite outcome even if you were to die without a will. If you haven’t reviewed your life insurance cover and needs for a while, maybe now is a good time to do so. Why not get in touch with a member of our friendly team and see how Oportfolio can help to give you and the people you love financial security for an uncertain future.   Please note: all information contained within this article was accurate at the time of publication.   Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority  Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.  

by Oliver Whitehead  -  1 May 2020

Coronavirus Advice

As we enter the sixth week of lockdown, it’s not surprising that many people have spent much of the time in isolation from the rest of the world thinking about their health, financial security and the ways in which they can best protect themselves in the future. From health insurance to life cover and from income protection to critical illness cover and everything in between, the options available to you in terms of safeguarding yourself financially are plentiful to the point of being bewildering. https://www.youtube.com/watch?v=6_1f6-WTrMA I’ve talked about some of the most obvious and popular products on the market quite recently in a couple of previous articles and if you missed them at the time they were published, you can find them in our News & Views section of the website. But knowing what the products are and what they do is only part of the story. It’s also important that you choose the right product for your circumstances, and that comes down to a number of things – all of which start with getting finding someone who can give you the right advice based on your existing circumstances and future needs. Getting the right advice We live in a digital world in which Google is the primary source of information, and it’s where most people might be tempted to start when it comes to finding the right product to protect themselves and those they love in the future. But trying to find something when you don’t really know what you’re looking for is a tricky business. Let’s say you’ve decided you need critical illness cover – or cancer cover, as it’s sometimes referred to. You might be right. But do you know what policy terms and benefits to look for? Or which providers have the products that best suit your needs? Do you even know what your needs really are? In the end, and regardless of the type of product and level of cover you might ultimately buy, the financial consequences of making a bad and ill-informed choice could run to thousands of pounds should you need to claim. By working with a professional adviser, you’ll get the benefit of someone with expert knowledge and advice of the financial products you might be considering. That adviser will know which products to avoid and which are likely to be the most favourable in terms of your potential needs. Knowing what you need There are all sorts of reasons why you might be considering a particular policy. Maybe you have a family history of cancer and are looking for critical illness cover. Maybe you’re worried your life insurance no longer covers your needs. Perhaps you’re worried about a long-term absence from work that could threaten your income. All of these scenarios are perfectly valid and good reasons for considering each of those products. But it’s better to talk to someone who’ll take the time to understand your current circumstances and your potential future needs and then guide you to making a decision ‘in the round’, by which I mean looking at all your needs and assessing the priorities. It may be, for example, that you’re in a position financially that enables you to take all the cover you need at the same time. But there’s a good chance that you might not have that luxury, in which case it makes sense to triage your needs. That’s hard to do if you’re not sure what the priorities are. So you might be thinking about income replacement plans, but you haven’t realised your life cover will no longer meet the outstanding balance on the mortgage because you’ve added to the loan over the years but forgot to update your life insurance. Getting the right advice at the start and working with a professional who can take an overview of your current financial arrangements and then make sensible and logical recommendations about how and where to invest in further protection means it’s less likely there will be nasty surprises down the line. Now is also a great time to sit down and start having those discussions. Most of us have a little more time to spend on the things we tend to put to one side when we’re at the mercy of a busy working life. At Oportfolio, we’ve moved much of our work online during the current crisis, which means that although we can’t sit down with you in person, we’re still able to meet you in a video conference or chat to you over the phone. If you haven’t reviewed your financial and health protection for a while, why not get in touch and see how we can help you to plan for the future and give you peace of mind?     Please note: all information contained within this article was accurate at the time of publication.   Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.  

by Oliver Whitehead  -  28 April 2020
Disclaimer

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

Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage / further advance of £395.
Our Product Transfer fee is £295.

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You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with the appropriate data protection requirements. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone.

By submitting this information you have given your agreement to receive verbal contact from us to discuss your mortgage requirements.
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