Whether you are buying your first home, your family home, an investment property, holiday home or funding a new loft or kitchen extension, a huge consideration is the mortgage. In this guest post, Michael Bower of Aspen Financial Services offers his mortgage advice and details of some of the things to think about. If you’d like to discuss anything further, then just give him a call on 020 8943 8121 or email enquiries@aspenfs.co.uk.

“Obtaining a mortgage is a big step, and keeping it affordable throughout the years is one of the most important elements of financial planning that often goes unchecked. Over the last 20 years I have helped many clients secure their home and manage their costs. Here are my top tips to get the most from your mortgage and keep the mortgage burden to a minimum.

Time & Stress:

  • – House buying and managing builders can be the perfect storm, when time is tight and stress levels rising. A mortgage adviser understands the marketplace and the deals available, meaning one person to ascertain costs and what you need to do to get the mortgage agreed quickly.
  • – Lenders require a great deal of information and checks, and not all require the same. Knowing what is available, realistic and required saves a lot of worry and headaches.

Keeping Rates Competitive:

  • – Many lenders charge fees for lower rates and many offer 2, 3, and 5 year rates. Mortgage advice can tell you whether a 2-year rate with a fee every 2 years is cost effective, or whether you should consider longer-term to keep the overall fees lower.
  • – Many lenders have different parts to their mortgages at alternating rates. We can see if these can be consolidated into a competitive single rate.
  • – Value-based rates provide access to lower rates based on your mortgage versus property value. Sometimes changing lender will give you access to a lower rate if your property has increased in value since the original mortgage was started.

My Property Is My Pension:

  • – Many of our clients have investment properties to provide income in retirement, but current government policy is making second property ownership less advantageous. If this new raft of legislation continues, landlords (big or small) need to consider how they will be affected.

Helping Children Onto The Property Ladder:

  • – The house price boom means that saving for larger and larger deposits is simply out of reach for many young couples. The options open to first purchase has been better with some government schemes, but some of these are ending soon as the new government administration review.
  • – Releasing equity from parents’ or grandparents’ property is often done via an equity release or lifetime mortgage. This type of mortgage requires a lot of consideration and is only available from an adviser such as Aspen that has specific mortgage advice qualifications and licences.

Protecting Deposits Gifted To Your Children:

  • – With more and more parents providing deposits, what happens if they have a partner and that relationship breaks down? Assuming they both own the property, the equity (including your funded deposit), forms part of the money that will be split.
  • – We can advise on a few options. For example – use a trust to protect the money you give to your children; ensure the property is owned as ‘tenants in common’ so you can define a specific percentage of ownership (60/40 for example); or create a second charge on the property to the value of the gift.

Insurances:

  • – We realise that buying life assurance can be a grudge, but done correctly it will provide piece of mind at a reasonable cost. Should you need it, the amount, type and style of insurance needs to be correct… rather than just taking something to ‘cover yourself’, we can help you work out the most cost-effective solutions based on what you actually need.

Funding Retirement:

  • – With medical science keeping us healthier for longer, the reality of outliving our savings is now an acute issue – we are seeing more clients coming to us with a mortgage still running into their 70s and 80s. By converting to a lifetime mortgage (releasing equity from their home), they reduce their monthly commitments and have a less worrying monthly outgoing.
  • – However, lifetime mortgages without committing to a monthly repayment mean that interest charges are added to the original mortgage, thereby increasing the amount owed throughout. Some lenders will now release the mortgage as a regular ‘income’, which slows down the effect of the added interest.
  • – Having a debt or mortgage against the property later in life can help reduce the inheritance tax burden as well, while allowing you to enjoy the money now. For inheritance tax reasons, it’s also good to make gifts to your intended beneficiaries now.”

If you’d like to discuss your options further, Aspen Financial Services can be found at Wickham House, 2 Upper Teddington Road, Hampton Wick KT1 4DY. They can offer mortgage advice as well as advice on a whole host of other financial disciplines, and can be contacted on 020 8943 8121 or at enquiries@aspenfs.co.uk.

 

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