The Help to Buy scheme is a scheme introduced by the UK government to assist people who are struggling to get onto the property ladder because of extremely high house prices in the UK, thereby helping them to break the cycle of continuously renting. Help to Buy enables those who have limited savings and a smaller deposit to buy their own property, and is a scheme open to all. You do not have to be a first-time buyer to be eligible for Help to Buy – current homeowners are able to use the scheme, too. The scheme offers equity loans on properties up to £600,000 in value. In the 2018 budget, the government stated that the Help to Buy Scheme is coming to an end in March 2023.

Are you thinking of buying your own property using the UK government’s Help to Buy scheme? With Financial Advisor UK’s national network of fully FCA-registered and approved financial professionals, you can be instantly matched with an advisor who meets your needs, and can help you find the best deals available (on mortgages, etc).

How does Help to Buy work?

Help to Buy enables potential homebuyers to purchase a new-build property with just a 5% deposit from their own funds, rather than them having to save up a 10% deposit. They will also be able to borrow an additional 20% of the property price from the government (interest-free) for the first five years. This total brings their deposit to a total of 25%, which means that they only need to take out a 75% mortgage.

After the five year interest-free period comes to an end on the 20% government-funded loan, interest on this loan is charged at a rate of 1.75%, rising in line with inflation, plus an additional 1%. The government loan must be paid back within the deadline of 25 years. If the buyer(s) decide to sell the property, they will need to pay back the 20% loan when they move, along with additional charges for any value the property has made in that time.

To qualify for a Help to Buy equity loan, the property you are purchasing must be worth no more than £600,000. Up until 1 April 2021 (when changes come into force), there is currently no strict criteria depending on income, and anyone can apply. However, the property being purchased must be a new-build, must qualify for Help to Buy through the developer, and must be the only property that the homeowner purchases. Government loans of 20% cannot be used for buy-to-let initiatives.

Help to Buy mortgages

If you want to buy through the Help to Buy scheme, you will need a lender that can offer a 75% mortgage. Do your research and approach high street lenders as well as other institutions to see offers that are available. Finding a mortgage can be a confusing process. If you’d like help finding the best mortgage deal for your financial situation, Financial Advisor UK offers a national network of fully FCA-registered and approved professionals that you can be matched with to receive the best professional advice and who can help you find the right mortgage deal.

Equity loans with Help to Buy

If you cannot save more than a 5% deposit for your dream home, it may be worth taking out the 20% equity loan from the government. With the five-year interest free terms, this should give you enough time to save up a lump sum while helping to keep mortgage repayments affordable. Always consider other options and whether a 95% mortgage (and a 5% deposit from your own savings) is worth doing instead of taking out a government equity loan. Remember that the equity loan has to be fully repaid in 25 years.

Help to Buy ISA

A Help to Buy ISA (Interest Savings Account) can help you to save capital for your dream home. A number of providers take part in this scheme, a list of which can be found here.

A Help to Buy ISA can help you save up a deposit of £1,200, along with an additional £200 per month. The government then helps out by putting in an additional 25% on top of contributions you have made (up to £3,000), meaning that you can save a total of £12,000 in your ISA. In order to qualify for a Help to Buy ISA, you have to meet the following criteria:

• A first time buyer in need of a mortgage
• A UK resident
• The purchased property must be your intended sole residence
• You cannot own any other properties either in the UK or abroad
• You must acquire at least £1,600 in your ISA to claim the 25% government bonus
• You cannot pay into a cash ISA in the same year

For financial advice on Help to Buy ISAs and to be instantly matched with a financial expert who suits your requirements, use Financial Advisor UK’s quick matching service. We offer a national network of fully FCA-registered and approved professionals who can advise on your circumstances and help you make the most of your money.

There are two main types of mortgage on offer – these are repayment-based mortgages, and interest-only mortgages. You’ll need to choose which one is best for your financial circumstances when you decide to take out a mortgage to purchase your home.

If you require further advice on mortgages and the right type of mortgage for your circumstances, Financial Advisor UK offers a national network of fully FCA-registered and approved financial professionals who can help you find the best deals available while answering any questions you may have.

Repayment mortgages

With a repayment mortgage, you pay back the total amount you borrow from a lender over a contracted period of time. Your monthly payments also include interest and gradually bring down the total amount you owe to the lender. At the end of the mortgage term, you will have cleared all the debt to the lender and the property is yours outright. In the early years of paying back a repayment mortgage, your payments mostly work to clear the interest accrued on the overall amount. Over time, as the amount you owe reduces, your payments contribute towards paying off the outstanding mortgage amount.

Interest-only mortgages

As of April 2014, interest-only mortgages are only offered to borrowers if they have sufficient evidence that they can pay back the money owed. This makes them a much less likely option for many homeowners. With an interest-only mortgage, you only pay off the interest accrued during the mortgage term – you don’t make monthly contributions to pay back the full debt. Therefore, if your mortgage is £150,000 at the beginning of your term, you will still owe £150,000, as you have only paid off the interest. If you plan to get an interest-only mortgage, you need to set up a standing order to another account with regular monthly payments into this account so that you are actively saving up to pay off the final mortgage sum when the term finishes. This is very important, as you will need to pay the mortgage sum back in full to the lender when the term ends. The lender will want evidence that you have savings and a system in place that enables you to save up the large sum that you need to pay them back.

Once you have decided whether you’d prefer a repayment or interest-only mortgage, you need to choose the right deal for your needs and financial circumstances.

Fixed rate mortgages

A fixed rate mortgage is a mortgage with a ‘fixed’ rate that is often discounted by the lender. This means that your mortgage repayments are fixed for 2, 5, 10 or even 20 years (depending on the type of deal you sign up to). If you decide on a fixed rate mortgage, your payments will stay fixed for the term you have agreed to with the lender, and will not fluctuate, regardless of inflation or interest rates. The positives of this type of mortgage are that you know exactly what you need to pay each month, making it easier to budget. A negative of this type of deal is that if you want to leave the deal early, you’ll have to pay high charges. This is why it is important to consider how long you’d like to fix your payments for, as you won’t want to leave the fixed-rate term before it officially ends.

Variable rate mortgage

Variable rate mortgages, unlike fixed rate mortgages, have rates that can go up or down depending on the base rate of the Bank of England, interest rates and the general state of the economy. Growth and inflation will have an impact on your monthly payments. There are three types of variable rate mortgage – tracker mortgages, standard variable rate mortgages and discounted mortgages. If you sign up to any of these mortgages, you need to budget carefully to ensure that you can afford monthly payments if they go up in line with interest rates or inflation.

Tracker mortgages

This type of mortgage follows (tracks) the base rate of the Bank of England (i.e. the official borrowing rate), so your payments will be in line with this borrowing rate. Tracker mortgages are popular with homebuyers, as monthly payments can go down when interest rates fall, but you have to be prepared for rates to rise. When they do, you’ll need to pay more towards your mortgage. Another benefit is that you know that your mortgage payments can only change because of economic events, and not the lender’s own decisions.

Standard variable rate mortgages

All lenders have Standard Variable Rates (SVRs) which essentially follow the base rate of the Bank of England (typically two to five percent above it). As a result, an SVR can vary greatly between lenders. If you have a fixed-term mortgage which comes to an end, you will automatically be placed onto a lender’s SVR until you remortgage to a new deal. Always keep in mind that SVRs are highly expensive and will cause your mortgage repayments to become very high. A lender can also move its rates at any time, including hiking them if interest rates rise. Positives of an SVR include the ability to make as many overpayments as you like to chip away at the larger mortgage sum, without incurring early repayment charges. It is highly likely however that a fixed rate mortgage will be cheaper for first-time buyers and many homeowners.

Discount rate mortgages

Discounted rate mortgages typically offer a discount off of a lender’s standard variable rate (SVR). Such discounts are usually for a short period of between two and three years, but some lenders do offer the option to take out this type of mortgage for longer periods of time. If interest rates drop, so will your mortgage payments under this type of plan. Always check the small print carefully when signing up to this type of mortgage and find out where the discounts are – there can be a large difference between you receiving a percentage off of a lender’s SVR, and the rate you pay being that actual discounted percentage. Bear in mind also that a lender can raise its SVR at any time, which can affect the rate that you pay.

Top tips

• If you plan to take out a fixed rate mortgage, make sure you are going to stay in your property for that period of time. (You’ll have to pay early repayment charges if you leave the deal early).
• Early repayment charges can be up to 5% of the overall mortgage loan. Make sure you know how to avoid them.
• If you’d like to make overpayments, a fixed-rate mortgage might not be the best deal for you.
• A shorter mortgage may mean higher repayment terms, but you will pay less interest overall and own your home much sooner.
• As well as picking the type of introductory deal you’d like for your mortgage, you’ll also need to decide how long you want the term to run for. An average mortgage lasts for 25 years. Consider when you will retire and how you’ll be able to afford mortgage payments when you have given up work.
• The longer the mortgage term, the more you will have to pay.

Do you need help or advice on all-things mortgages? Are you feeling overwhelmed and wonder  where you can find the right mortgage deal? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals that you can be matched with to ensure you get the best professional advice along with the best deals available on the mortgage market.

Living for another 30 years after work isn’t just a possibility, nowadays it’s a probability. Whether retirement is many years away or just around the corner, unless you start planning for retirement now, there is a great danger that you could outlive your savings.

Start planning your retirement early

The earlier you start planning, the easier it will be to create the retirement lifestyle you want. As the UK’s population is living longer, planning in advance for retirement is becoming even more important. This is because, for most of us, the State Pension will not provide adequate funding in retirement to maintain the lifestyles that we have become accustomed to during our working lives. Putting in place the right provision will ensure that you enjoy a comfortable retirement, free of money worries and with peace of mind that you will not outlive the funds that you have gathered over your working life. It’s never too early (or too late) to think about your retirement; for many people, the savings that are accumulated during their working lives are directed at helping them to become financially secure in retirement. Unfortunately, all too often, some people continue to save without a clear view of how much money they will need to live the life they desire for the entirety of their retirement. This can create uncertainty around when they can retire and what kind of lifestyle they will continue to be able to live when they do eventually retire.

Why use an Independent Financial Advisor (IFA)?

Unless you’re in a pension scheme that pays an income based on your salary once you retire, you’re most likely to be saving in a scheme that provides you with a sum of money (known as your pension pot). If that’s the case, you’ll have to decide how you’re going to use your pension pot to provide an income when you retire. There are lots of options available, some more complex than others, but deciding which is right for you is not straightforward by any means.

Even before you get to that stage, however, there are tricky questions you might need help with such as

• Can you afford to retire?
• Should you bring all your pension pots together?
• How much will your State Pension be?

This is where an IFA can help; they can help you make the decisions that can better your life in retirement. By using our unique matching service, Financial Advisor UK will match you with an FCA-registered independent financial advisor in your area and with expertise in wealth management and retirement planning.

If you own your own home and are in your mid-50s or over, you may be thinking about equity release as it could provide you with a lump sum or some additional income, or you may consider equity release for tax-planning reasons.

Things to consider

It can be important to check whether there are other ways you could meet your financial needs before choosing an equity release scheme.

Some ways might be to:

• claim any benefits you might be entitled to
• check to see if your local authority can help you to pay for essential home improvements
• trace any pensions you may have lost track of, using the Pension Tracing Service
• use your savings or sell your investments (consider getting advice before doing so)
• sell your current home and buy somewhere smaller and cheaper

What is equity release?

Simply put, equity release is a way of getting cash from the value of your home; they can be helpful in certain circumstances, but are not suitable for everyone because they can be expensive and inflexible if your circumstances change in the future, and may affect your current or future entitlement to some benefits.

How does it work?

One way is to borrow a lump sum secured against your home. Another way is to sell part or all of your home to give you a regular income or lump sum, or both. You can continue to live there.

You are more likely to qualify for an equity release scheme if you have no current mortgage, or if any mortgage you have is relatively small.

Types of equity release

There are two main types of equity release scheme:

• lifetime mortgages
• home reversions

They both work differently and are quite complicated, so we have broken them down below:

Lifetime mortgage

With a lifetime mortgage, you take out a loan secured on your home. This mortgage may be:

• A roll-up mortgage (rolled up means interest is added to the loan – for example, each year). You get a lump sum or regular income and are charged a monthly or yearly interest which is added to the loan. The amount you originally borrowed, including the rolled-up interest, is repaid when your home is eventually sold.
• A fixed repayment lifetime mortgage. You get a lump sum, but don’t have to pay any interest. Instead, when the home is sold, you have to pay the lender a higher amount than you borrowed. That amount is agreed in advance. The lender uses this higher sum to repay the mortgage when your home is sold.
• An interest-only mortgage. You get a lump sum, and pay a monthly interest on the loan, which can be fixed or variable. The amount you originally borrowed is repaid when your home is eventually sold.
• A home income plan. The money you borrow is used to buy a regular fixed income for life (an annuity). This income is used to pay the interest on the mortgage and the rest is yours. The amount you originally borrowed is repaid when your home is eventually sold.

Some lifetime mortgages include a shared appreciation element. This means the lender has a share in the value of your home.

When taking out a lifetime mortgage, you can choose to borrow a lump sum or to opt for a drawdown facility. This is suitable if you want to take occasional small amounts rather than one big loan, as it means you only pay interest on the money you actually need.

How does a lifetime mortgage work?

As with a standard mortgage, you borrow money secured against your home and the home still belongs to you. Apart from roll-up schemes and fixed repayment lifetime mortgages, you will have to pay interest on the loan every month. When you die or move out, the home is sold and the money from the sale is used to pay off the loan – anything left goes to your beneficiaries.

It’s worth noting that, if there is not enough money left from the sale to pay off the loan, your beneficiaries would have to repay any extra above the value of your home from your estate, so, to guard against this, most lifetime mortgages offer a no-negative-equity guarantee. With this guarantee the lender promises that you (or your beneficiaries) will never have to pay back more than the value of your home – even if the debt has become larger than this.

Is this option right for you?

It really depends on your age and circumstances, for example:

• With a roll-up mortgage the interest you owe can grow quickly. Eventually this might mean that you owe more than the value of your home, unless you have a no-negative-equity guarantee.
• A fixed repayment mortgage becomes a better deal if you live much longer than the lender thinks you will. But if the home is sold much earlier than you planned, you will get a worse deal.
• An interest-only mortgage with variable interest rates may not be suitable, because the interest rate may rise faster than your income.
• A home income plan only results in a small income after paying interest. It is only suitable if you are older, maybe around the age of 80.

Lenders will expect you to ensure that the condition of your home is maintained at a good level, so bear in mind that you might need to put some money aside to do this. If this is possibly a problem, an equity release scheme may not be suitable for you.

Home reversion

With a home reversion, you sell all or part of your home in return for a cash lump sum, a regular income, or both. Your home, or the part of it you sell, now technically belongs to someone else, but you are allowed to carry on living in it until you die or move out.

How does a home reversion work?

A company either buys your home or a part of it, or arranges for someone else to do so. In return, you will get either a cash lump sum or an income. If you get a cash lump sum, you may decide to invest this yourself to provide an income.
With this scheme, you’ll usually get between 20% and 60% of the market value of your house because the buyer allows you to carry on living there and cannot sell it until you die or move into care. The older you are when you start the scheme, the higher the percentage you’ll get.

You also get the right to carry on living in the home under a lease. The terms of the lease will vary, however, depending on which reversion you choose. You usually pay a nominal rent of, say, £1 each month, or you may have the choice of paying a higher rent in return for more money from the sale.

Is a home reversion the right option for you?

A home reversion can be a useful way of releasing equity from your home, but you must be sure it is right for you.

If you do not need anyone else to benefit from the full value of your home, want a lump sum or income now, and want to stay in your home, a home reversion may be worth considering. Although, in this instance, you will no longer own your home (even if you only sell part of it), you will still have to maintain the home while you live in it, so you may need to set aside money to do this. You’ll also have to follow the terms of the lease and make regular rent payments. If this could be a problem, then a home reversion may not be suitable for you.

Home reversions are normally best suited to individuals over the ages of 70 or 75, but this can vary.

Having Private Medical Insurance will provide you with fast access to high-quality private medical facilities and will include medical treatments when and where it suits you. It also plays a very important role as it will help fund the costs of any early diagnosis and treatment for some acute conditions. This could range from physiotherapy sessions all the way to more complex procedures, like major heart surgery or biological therapy for the treatment of cancers.

What Does Private Medical Insurance Cover?

Private Medical Insurance is there for you to cover the costs of private medical treatment for acute conditions. An acute condition is a disease, illness or injury that is most likely to respond quickly to treatment so someone can have either a full recovery or have the quality of health they had prior to the condition.

Private Medical Insurance does not normally cover any treatment of long-term, or chronic, conditions where the primary focus is to keep symptoms under control – these are still treated by the NHS. Private Medical Insurance will also not cover any pre-existing conditions you may have when taking out a plan.

How will Private Medical Insurance Work?

For the majority of claims, Private Medical Insurance medical treatment will begin with a GP referral for specialist treatment. This can be done by either your NHS GP or a private GP. After this, any treatment you need will be managed by working very closely with your insurer so they can make sure you are getting quick access to the correct medical treatments you need.

How Is Private Medical Insurance Different from NHS Treatment?

Private Medical Insurance was always designed to work with all the services offered by the NHS, not to replace them, by focusing on providing faster access to treatment for acute medical conditions. Private Medical Insurance members are still able to use all services offered by the NHS. But as there are many pressures on the NHS to meet healthcare demands, which grows rapidly and is compounded by increasingly stretched resources – Private Medical Insurance plays a complementary role.

Frequently Asked Questions

What is an insurance premium?

This is what you pay to be covered by a plan like Private Medical Insurance. You will normally pay for your insurance premium via monthly or annual direct debit. Your premium is reviewed after a year and changes depending on your age, your insurance status, if you make a claim and any medical inflation.

What is an excess in private medical insurance?

Like with home insurance, the excess in Private Medical Insurance is a contribution you agree to make toward any claims. The larger the excess you agree to, the lower your premiums will be. A number of insurers ask for you to pay the excess after each claim, while others will ask you to pay it on the first claim in any plan year only, regardless of the amount of claims you make.

If I have a pre-existing medical condition, can I still get Private Medical Insurance?

Private Medical Insurance does not tend to cover pre-existing conditions, but you can still take out cover for conditions that may affect you in future.

What will not be covered with Private Medical Insurance?

Private Medical Insurance does not usually cover treatment of long-term, or chronic, conditions, where the ultimate goal is to keep symptoms under control – that would make premiums far more expensive. Private Medical Insurance will also not cover any pre-existing conditions you may have when you take out a plan.

There are, however, some standard treatments and conditions that we do not cover:

• Any regular monitoring & treatment of long- term conditions, such as diabetes or allergies
• Treatment you receive outside the UK
• Emergency treatment or visits to your NHS GP
• Pregnancy, childbirth and the majority of related conditions
• Cosmetic treatment
• Organ transplants
• Any experimental, unproven or unregistered treatments or practices
• Any treatment for learning difficulties, delayed speech disorders and other developmental problems

What to look out for when buying Private Medical Insurance

• Waiting Lists – Private Medical Insurance takes away the uncertainty of NHS waiting lists by giving you access to the very best medical care, when and where it suits you.
• Quick Diagnostic Tests – Waiting times are a major cause of anxiety in many health events so Private Medical Insurance offers the reassurance of a fast and full diagnosis. However, you will need to make sure the plan you choose includes Out-patient cover.
• Choice of Hospital – Private Medical Insurance offers easy access to hundreds of private hospitals across the UK as well as the freedom for you to choose where and when you are treated.
• Drugs & Treatment – Private Medical Insurance provides access to a wider range of drugs and treatment, including those which might not be approved for use yet, or paid for by the NHS.
• Choice of Consultant – Private Medical Insurance gives you the freedom to choose a consultant for a specific claim.
• Privacy – Private Medical Insurance offers you the comfort and privacy of your own room in a nationwide network of private hospitals, with no need to worry about shared wards.

will I need a medical exam before I can take out Private Medical Insurance?

If you have no pre-existing conditions when you join, there will be no need for a medical exam. Simply pick your preferred level of cover and answer some basic questions about your medical history.

If you do have a pre-existing condition, our insurance partners will need to ask you more questions about your health, or contact your GP. They will of course tell you if that is the case.

If you work and have dependents such as children, a partner or other relatives who depend on your income, it might be worth taking out life insurance to ensure that your loved ones can cover the mortgage and other living expenses should you unexpectedly die. When considering taking out life insurance, you should ask yourself whether you have enough money saved up to cover your family’s bills, mortgage and other expenses such as utilities and food should the worst happen to you. If not, life insurance could be a worthwhile option to help ease any worries about your financial future. That said, life insurance isn’t for everyone, and the benefits of taking out a policy will depend on your circumstances.

Are you thinking about taking out life insurance? Financial Advisor UK has a national network of fully FCA-registered and approved financial professionals that you can be matched with to ensure you get the right professional advice, along with the best deals available.  

If you take out a life insurance policy, an insurer pays out cash to your loved ones in a lump sum or in the form of regular payments in the event of your death, bringing peace of mind that if the worst were to happen, your loved ones left behind would still be able to afford everyday living costs. The sum an insurer pays out to your loved ones depends on the level of life insurance cover purchased. You may also want a policy that covers the costs of your funeral.   

Types of life insurance policy 

There are generally two types of life insurance policy available: 

Term life insurance 

This type of policy is for a set period of time (a term). This term is entirely your preference – an insurer can offer 5, 10, 20 or 25 year policies, depending on your needs. Note that this type of policy only pays out if you die during this fixed period. You will not receive a lump sum if the policy runs until the end of its course.    

Whole-of-life insurance 

This type of policy pays out regardless of when you die, as it doesn’t have a fixed term. You will need to keep up with your premium payments to ensure a successful payout in the event of your death. Defaulting on your account or not keeping up with payments could invalidate your policy. 

Income protection/payment protection 

If you are unable to work because of illness, life-changing injury or redundancy, and cannot cover your everyday living expenses, income protection can enable you and your family to continue receiving a regular income through your policy.  

Critical illness cover 

If you are diagnosed at any time with a critical illness that is covered in the terms of your life insurance policy, an insurer will pay out a lump sum to you that is tax-free. This could help cover the costs of mobility aids, full time care and healthcare bills.   

What does life insurance cover me for? 

A life insurance policy covers you in the event that you should die and leave your family behind (who are dependent on you for financial support). If your death is because of a terminal illness, some life insurance policies offer cover for this if you are diagnosed with a terminal condition, but not all do, so it is important that you check the small print before agreeing to a life insurance policy. 

All life insurance policies place details in their terms and conditions on what is covered and what isn’t. Many policies have exclusions, such as death as a result of substance abuse or alcoholism, or by participating in dangerous sports (although it is possible to obtain life insurance cover that specifically covers winter and dangerous sports). 

If you have an underlying or serious health condition when you first apply for life insurance, you may find that an insurer will not cover you in the event that you die and have to make a claim because of that condition. It is however possible to obtain critical illness cover, long-term illness cover or total and permanent disability cover, although premiums for these types of cover will typically be higher than standard life insurance.   

Should I get life insurance? 

If you have dependents who are relying on your income to survive, life insurance is worth investing in so you can be put at ease over money worries. If you are single, have a healthy income that can cover any major expenses such as a funeral or other bills/your mortgage should the worst happen, it may not be worth taking out life insurance cover. If you’re on a low wage and receive government benefits, you may not need life insurance. If you are in doubt as to whether life insurance would be a good option for your circumstances, speak to an independent financial advisor regulated by the Financial Conduct Authority (FCA). Financial Advisor UK can match you with the best advisor for your circumstances from a national network of fully FCA-registered and approved professionals, ensuring that you get the best professional advice along with the most affordable deals on the market. 

Request a life insurance quote from Key Health

At Key Health, we understand that this isn’t an easy subject to think about, but we also know that preparing for the unthinkable is extremely important.

Whether you’re an individual looking to protect your family, a business looking for ways to insure its staff or a company searching for a tax efficient way to insure against the loss of a shareholder, we can help you protect what’s important to you.

Key Health are experienced insurance specialists working with all of the major insurers to offer the best advice possible. If you’re ready to discuss your requirements, get in touch with one of Key Health’s specialists today.

If you’re thinking of investing money for the future, you may be thinking of investing capital into a stocks and shares ISA. This is a popular investment around the world for mFinancial Advisor UKions of savers, with a wide range of products to choose from – from stocks and shares themselves, to bonds, commercial property, gold and government gilts.
Always bear in mind that there are no guaranteed successes when you invest in stocks and shares. Company share prices could fall, or political/financial or other types of global events can affect commodities markets. This will cause the value of your ISA to fall. You should always consider the level of risk you’d like to take when investing in stocks and shares ISAs, as you could lose some, if not all, of your money if you do not invest wisely.
Are you thinking of investing in a stocks and shares ISA, but require guidance? Financial Advisor UK offers a national network of fully FCA-registered and approved financial advisors and a unique matching service to pair you with the right advisor for your needs. We can ensure you get the best professional advice, along with the best deals available.

Eligibility criteria for stocks and shares ISAs

To hold a stocks and shares ISA, you must be 18 years old or more. If you take out a stocks and shares ISA with one provider but end up unhappy with the deal, you can switch to another provider. All stocks and shares ISAs must allow savers the option to transfer out, but they are not obliged to allow transfers in. Always check before you transfer. You can cash in on your stocks and shares ISA at any time. It is however recommend that you keep your investment for at least five years to see some kind of return before cashing in.

Is a stocks and shares ISA for me?

It is worth investing in a stocks and shares ISA if you are happy to put money away to protect yourself from being taxed on it. It is likely that you’ll have your money invested away for at least five years, so you’ll need to make sure that you don’t require access to it. An ISA is also a good idea if you are okay with the idea that your investment could go up or down, and that there is an element of risk.

What investments are held in stocks and shares ISAs?

There are many types of investments that can be held in stocks and shares ISAs, including investment trusts, exchange-traded funds, stocks and shares, corporate bonds, government bonds, open-ended investment companies and unit trusts. All these types of products are offered and traded in their own right.
You have an allowance of £20,000 a year that you can pay into an ISA. You can decide to put this into a stocks and shares ISA, a cash ISA or both if you wish. You can also put savings into a lifetime ISA. It isn’t possible to put money into the same type of ISA in the same tax year. You have to wait a year if you want to put money into two stocks and shares ISAs (for example). At the end of the tax year, your annual allowance for an ISA expires, so any unused allowance is lost and can’t be taken over to the following year.
It is also possible to choose between making contributions to your ISA throughout the year, or doing it all in one lump sum. Any increases in the value of your investments is free from capital gains tax, and most income is also tax free. It is possible to open a new ISA with a new provider each year if desired – you don’t have to stick to the same provider. It is always worth comparing the market to find the right kind of ISA for your needs. If you need help comparing the market, Financial Advisor UK can help. We can match you to a fully FCA-registered and approved financial advisor who can help you compare products and find the best deal.

Tax on stocks and shares ISAs

Stocks and shares ISAs are designed to protect your investments from income and capital gains taxes. For instance, if you invested in a share fund that made you a profit, you’d have to pay capital gains tax on the sum you had made. If you invest the profit into a stocks and shares ISA, you can avoid such taxes, and any losses made by your ISA can be used to offset any gains on your other investments. A stocks and shares ISA can also minimise the amount of tax you pay on rental income, interest on bonds or gilts or commercial property.

Active and passive: what is the difference?

You can only pay into one stocks and shares ISA per tax year. You can decide whether to do this in instalments, or in one lump sum to the value of £20,000. It is possible to switch from one ISA to another if you are unhappy with how an ISA is performing. Savings from previous years can be split, but switching the current tax year’s ISA must be done in its entirety (the full fund). It is advisable not to cash in an ISA and then invest in a new one straight away. Request a transfer so that you can maintain your tax breaks.

Stocks and shares ISAs fall into either active or passive categories. Active funds are controlled by a manager that selects stocks and finds the best way to constantly raise their value. Passive funds follow an index like the FTSE 100, and can go up or down in line with the market. Active funds carry charges for the management of the fund, which can be up to 1.5%. It is possible to purchase an ISA directly from a bank or an ISA manager, or to choose a self-select ISA – but this is a complex process and you should have considerable financial investment experience or knowledge before doing this. Management fees and charges are normally reduced if you invest directly through a broker. A stocks and shares ISA manager should be regulated by the Financial Services Compensation Scheme, which means that if the firm goes bust, you can claim up to £50,000 in compensation.

There are lots of options and ISA products to choose from, therefore it is recommended that you appoint an independent financial advisor who can guide you based on your current financial circumstances. With Financial Advisor UK, you can be instantly matched with FCA-regulated advisors that suit your requirements.

Investing is essentially the act of putting money into stocks, shares or other types of investment in the hope that the value will increase over time, bringing you a great profit. Investments are a complex business and there is always a level of risk involved. Your investments can go up, as well as down. You can invest in anything from stocks and shares, to other types of funds, bonds, government bonds (gilts) and the UK property market. Many people invest their money into the stock market in the hope of seeing a return. To do this, they buy shares in one or more companies in the hope that those shares will rise in value, bringing them a profit, especially if they decide to sell those shares and cash in while they are at a good price.

Are you thinking of investing money for your future? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals that you will be matched with to ensure you get the best professional advice along with the best deals available.

A share is essentially a unit of a company in terms of its value. For instance, if a company is worth £50 mFinancial Advisor UKion, and there are 50 mFinancial Advisor UKion shares, each share has a value of £1. Those investing in stocks and shares buy a certain number of shares to a value of their choosing within a company. These shares can go up or down depending on market conditions. Companies have shares so that they can raise money through investors. Buying shares does however carry an element of risk, as a company’s share price can go up or down. In the best case scenario, you can made a tidy profit if you buy low and sell high. In the worst case scenario, you could potentially lose all of your money.
In the current climate, savings rates and the general rate of interest is very low, making it a difficult time for savers to make a profit.

The importance of risk-assessment

It is always worth bearing in mind that in the world of investing, prices can go up or down. If you want a greater return on your investment, this will usually mean that you have to deal with a greater level of risk. This is why it’s important to spread your investments across different companies in various industries and in different parts of the world, to moderate the level of risk. If you don’t want to take a long-term investment, it is advisable to opt for a low-risk option. Ideally, you should make an investment for at least five years so that you see a healthy return. If you can’t afford to do this as you may need access to your money, it is best to hold off investing until you can do so.

Always review your investment portfolio and assess which investments are doing better than others. For instance, shares you have may not be performing as well as others. If you don’t keep on top of things, you may end up losing lots of capital. You should also keep an open mind – don’t be influenced to trade in your shares or stocks because other people are doing so. Choose a time that is right for you and your circumstances.

Getting started in investing

You should never invest any money without checking first that you have at least 6 months’ worth of salary and living expenses to fall back on. Start small until you feel confident, and monitor your small investment closely to see how it performs before investing more. Using your ISA allowance is a great way to invest, as this protects your capital from capital gains tax. Use an independent financial advisor and remember that any money invested really needs to stay there for at least five years.

How much should I invest?

You don’t need to have tons of cash to hand to begin investing. It is actually better to invest in the stock market with smaller sums of money on a regular basis. Generally speaking, you should never invest what you can’t afford to lose. You should always make sure that the money you invest stays invested for at least five years, as this allows enough time for ups and downs in the market to pass over (these are times in which you could potentially lose your money). Investing around £30 per month is a good place to start, increasing this gradually. You can purchase shares and stocks online from various websites. You’ll need to decide which platform to use, and which shares you’d like to buy for the right price. You may have to pay fees, depending on the platform you use. If you decide to have someone run your funds for you (a manager), you’ll need to pay their charges.

Market volatility

Political, financial and news events can greatly change the perception of how much a company is worth, and as a result, change share prices. Trading behaviour can also affect the market. If there are lots of people selling rather than buying stocks and shares, the prices of shares will generally fall. Likewise, if there is a stock on the market that people are buying more of than selling, prices will go up. As an investor, you’re sharing the market with individual buyers and sellers, other companies, asset managers and more. Be prepared that prices can fluctuate in a single day, depending on external events. It’s worth keeping an eye on news and political events, as these can greatly impact stock markets.

If you require financial advice on investing, Financial Advisor UK can help. We’ll instantly match you with one of our many FCA-registered and approved financial professionals who can offer you the right advice for your situation and help you compare the market for the best investment deals.

Transferring out of a defined benefit (DB) pension scheme

If you decide to transfer out of a defined benefit (DB) pension scheme (that is related to your salary), this essentially means that you intend to give up your DB scheme benefits for a cash sum that can be invested in another pension scheme.

Pension schemes can be complicated to understand and it is important to seek financial advice. If you require financial advice regarding your pension, Financial Advisor UK offers a national network of FCA-registered approval pension experts and can match you to a financial advisor who can give you the specialist advice you need, along with the best pension deals around.

If you decide to transfer out of a DB pension scheme, the administrators operating that scheme will need to covert the various benefits you have as part of that scheme into a cash fund. This is otherwise known as ‘cash equivalent transfer value’. Once you receive this sum of money, you’ll then need to transfer this into a stakeholder pension, a personal pension with a third-party company of your choosing, a pension scheme with a different employer, or a self-invested personal pension (SIPP).

Generally speaking, it is common for people to be financially worse-off when they transfer out of a DB pension scheme, therefore it is important to consider your options carefully. Always seek advice from a financial advisor before taking action. With Financial Advisor UK, we can take the hassle out of searching for an advisor, and use our matching service to find one who suits your needs.

What can I transfer?

If you have a public sector pension scheme because you work for an organisation such as the NHS, or you are a teacher in the education sector, it is likely that you won’t be able to transfer your pension. You will only be able to transfer your pension if you have a local government pension (or other funded public sector pension), or a private sector DB pension.

Financial incentives offered by employers

An employer may offer you a financial incentive to transfer out of a DB pension scheme. Your employer may offer you extra cash on top of your transfer value, or a boost to the overall value of the benefits in your scheme (called an enhanced transfer value). You must however think whether accepting such offers will benefit you overall. If you take the extra cash sum, you could be taxed on it (and pay National Insurance), and you may end up with a reduced pension fund when you retire.

If you decide to transfer out of your DB pension and the equivalent transfer value comes to over £30,000, you will need to seek help from a regulated financial advisor. With Financial Advisor UK, we can match you with an approved and FCA-registered advisor who can offer you helpful guidance for your circumstances. Any value of over £30,000 that needs to be transferred out of a DB pension scheme must be approved by a regulated financial advisor. In some instances, your employer may pay for an advisor, but not all companies do, so you’ll need to take this expense into account.

The risks of transferring from a DB pension scheme

It is worth bearing in mind that any benefits of transferring from a DB pension scheme can be subject to fees, charges, losses and risks. If you transfer out of a DB scheme, your final pension income is uncertain. If you decide to take up a stakeholder or personal pension, you’ll lose the benefits you previously had in your DB pension scheme with your previous employer. Always consider advice from a regulated financial advisor so that you can weight up your options.

Transferring out of a defined contribution (DC) pension

Transferring out of a defined contribution (DC) pension depends on your circumstances and your financial goals for the future. If you are thinking of transferring a current pension into a self-invested personal pension (SIPP), stakeholder pension or a personal pension with a third-party company, you will need to ask the administrator of the scheme (pension provider) for a transfer value. This is the sum that your pension scheme will pay to your new pension provider when you transfer. Once you have made the switch, you will not have the benefits of your old pension scheme, and could lose important benefits such as life insurance, health insurance and so on. Always check any charges that may be incurred from transferring, and seek help from a financial advisor if in doubt.

Taking out life insurance is a great way to cover your family should they need financial protection in the event of your death. Some life insurance policies will only cover you for a set amount of time (a fixed term), while others will keep you covered for the whole of your life, depending on the cover you take out. No matter which type of policy you take out for life insurance, you should always read the small print carefully, as many providers have exclusions detailed in their terms. You should note these exclusions and determine whether they could affect your eligibility to make a claim in future. Some exclusions mean that cover is void in some instances. Always make sure you understand your policy documents.

Are you looking for advice or the right deal on life insurance? Financial Advisor UK matches you to a specific advisor that meets your needs from a nationwide network of fully FCA-registered and approved professionals. Our unique matching system ensures that customers not only receive the right advice, but the best deals available.

What are exclusions?

Exclusions are instances in which cover cannot be offered. Many companies place exclusions on policies because there are some instances that pose a great level of risk to them. There are many reasons why insurers turn down applications for cover or place exclusions on policies. These include:

• Covering those who are in high risk jobs such as industrial workers, divers and members of the armed forces
• People who partake in dangerous sports or hobbies such as skydiving, mountain climbing, and motor sports.
• Those with underlying health conditions such as heart disease, diabetes and various types of cancer.
• People with underlying addictions to drink and/or drugs, or those who have struggled with addiction problems in the past.
• Those with an unhealthy lifestyle, including heavy smokers and people who are obese.

Not all insurers will approach the above exclusions in the same way. You should also note that there are many circumstances in which life insurance will be invalidated and your family will not be able to make a claim. These circumstances include:

• Death as a result of drug misuse and/or alcoholic poisoning
• Death as a result of a terrorist attack or war
• Death as a result of self-harm or suicide
• Death as a result of reckless behaviour

It is important that you check the small print of your life insurance policy to check what you are covered for. Check your premiums and whether they are due to rise after a certain amount of time, or whether they will remain the same throughout your policy’s duration. This is particularly important if you are at risk of suffering health problems in future and need to make a claim. Make sure your policy has premiums that can be flexible and reviewed on a regular basis to ensure your life insurance remains cost-effective.

Financial Advisor UK offers a unique matching system to ensure that customers can find the best deals for life insurance. If you’re looking for more flexible life insurance premiums, why not give our matching service a try?

What is full disclosure?

Insurers have the right to cancel any policy where they believe that a customer has not fully disclosed all correct information about their health and personal circumstances. When customers take out life insurance, they must declare accurate and truthful information about their health, lifestyle and circumstances when applying for cover, known as ‘all material facts’ or ‘full disclosure’. Customers must inform insurers of any medical conditions they currently have. Likewise, insurers have come under pressure to ask customers all relevant questions in the application process to ensure that they are given all the information they need. This is why life insurance applications are so thorough and detailed.

A pension is a fund that helps you save up for retirement. You make contributions to the fund as you earn your wages, and your employer also pays in, too. When you retire, you can then draw money from your pension fund, or exchange the fund with an insurance company for a regular income (known as an annuity), which covers you financially for the rest of your life. As of 2015, pension funds are becoming more flexible and savers are able to have access to their pension funds more easily, withdrawing as much cash as they want to, when they want to.

Do you need pension advice for your future? Financial Advisor UK has a national network of fully FCA-registered and approved pension advice professionals. Simply enter your details and you will be matched to a professional advisor, ensuring that you get the right know-how and best deals available on the market for your situation.

How does a pension work?

A pension works by you saving a small portion of your current salary into a fund that you can use in later life. It is important to budget how much you can afford to put aside for your pension. A main bonus of a pension plan is that it offers tax relief on the money you put in. Generally, you receive tax back on everything you’ve saved. Whether you pay money into your pension fund yourself, or your employer adds contributions of their own, you automatically receive a 20% tax refund back from the Government. Those on higher tax rates can claim an extra 20% on top of this, while those who pay the top rate of tax can claim back 25%. If you have a workplace pension, you don’t need to reclaim tax if your employer deducts a smaller amount of tax from your salary. Visit the HMRC guidelines on how to reclaim pension tax.

Bear in mind that pension tax relief doesn’t mean that you will receive 20% back of total funds you have contributed, it simply means that you get a 20% tax relief on your pre-tax earnings. For instance, if a person on the standard rate of tax (20%), invests £80 of their salary in a pension, the tax they have to pay from their earnings means that they would have originally put in £100 pre-tax. There is therefore a £20 relief (20% of the £100).

Many companies offering workplace pensions to employees choose to use third-party pension companies to hold pension funds. You can however speak to the third-party company and make decisions on your pension and how you’d like to manage it. If you decide to start your own pension, you can choose the company you hold it with.

How much can I put into a pension?

You can put as much money as you like into a pension, but there are limits to the amount of tax relief you can receive. You can receive tax relief on contributions you make up to your annual salary. For example, if you earned £20,000 per year, but had more than this (£40,000) in savings, because you only earn £20,000, you only get tax relief on the first £20,000 of your contributions. Anything over this £20,000 you’ll need to pay tax on.

Types of pension

There are three main types of pension available – these are a State pension, defined benefit (DB) pension and a defined contribution (DC) pension.

State pension

The state pension is paid by the government and increases by at least the annual rate of inflation. The government makes contributions towards this pot of money to help people in retirement. Most citizens have a State pension. National Insurance contributions you make help pay for your State pension. As of April 2016, the State pension is £168.60 per week. To be eligible for a full State pension, you need to have 35 years of National Insurance payments on record.

Defined Benefit (DB) pension

A defined benefit pension is for those working in very large companies or in the public sector. Pensions depend on how many years of service an individual has accrued, thereby increasing every year. Some people with defined benefit pensions have ‘final salary schemes’ whereby their pension is based on their pay when they leave work and retire.

Defined contribution pension (DC) pension

A defined contribution pension is a cash fund that you can draw an income from once you retire or work less. To be eligible, you must be 55 or over. This type of pension enables you to withdraw at least 25% of your pension fund tax-free. Your overall pension pot depends on how much you and your employer contribute, what is invested and how, and how much you pay in charges. Defined contribution pensions cover personal, workplace and stakeholder pension plans.

Auto-enrolment and pensions

Employers must now enrol all employees over 22 earning at least £10,000 per year into a pension scheme in accordance with new legislation. As of 6 April 2019, the minimum an employer can contribute to a pension scheme is 3%. This means that the employee has to contribute 5%, as total contributions must equal 8%.

If you require advice on pension types and how to invest your money for your future, Financial Advisor UK has a national network of fully FCA-registered and approved pension advice professionals. Let us match you with an advisor that suits your needs.

What happens to my pension when I retire?

Keep in mind that once you have put money into a pension fund, it cannot be taken out whenever you like. You will have to wait until you are at least 55 years old, when you can take 25% of it without paying tax. If you take more than this, you will be charged tax at normal rates (20%) The rest will act as a fund that you can take a drawdown from for the rest of your life.

The house-buying process is an exciting journey to undertake, but can also be a long and sometimes complicated process. Here’s Financial Advisor UK’s guide on what to expect and how to be as prepared as possible. Do you require help and advice on first-time buying? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals, ensuring that you are matched with the best professional advice along with the best deals available.

House-buying costs

There are several costs that you need to think about when buying your first home. The first cost is the deposit. As a rule of thumb, the more deposit you can put down on a property, the better, as you’ll then have to take out less money in the form of a mortgage from a lender. To get a great choice of mortgage deals, having a healthy deposit is important, as this will make you highly attractive to a lender. 40% is the ideal deposit amount. Create a budget and figure out how much you can afford to pay in mortgage payments per month, and the maximum amount you can afford to put down as a deposit.

Stamp duty is another cost you’ll need to think about. In England and Wales, buyers don’t have to pay stamp duty on the first £125,000. For properties with a value between £250,001 and £925,000 buyers have to pay 2% on the portion of the price between £125,001 and £250,000, then 5% on everything over £250,001. It is always worth checking the government’s advice on stamp duty and land tax. You’ll also need to pay valuation fees, which will be charged by your mortgage lender to assess how much the property you intend to buy is actually worth. Costs for valuation fees can vary from £150 to £1,500.

Finally, you’ll need to pay legal fees for a solicitor or conveyancer to do local searches and carry out all of the legal paperwork, as you cannot do this yourself. You may also want to pay to have a survey conducted on the property you are thinking of buying, as this will highlight any defects and issues with the structural integrity of the property, which can affect the price you pay for it and give you room to haggle the price down. Also, don’t forget your removal costs to move your belongings into your new property!

Finding a mortgage

The world of mortgages can be tricky to navigate. It is sometimes worth seeking professional advice from a mortgage advisor who can discuss your financial circumstances with you and search the market on your behalf, so that you can find the best deal. The mortgage advisor can also start the application process for you. Always make sure that your mortgage advisor is impartial, so that they search the whole of the market and do not offer products from a particular company they are working for. Also check with them that they are regulated by the Financial Conduct Authority (FCA). Financial Advisor UK can help you find the right advisor for your needs.

If you’d rather do this on your own, you will need to search the market (using comparison websites), and also visit various high street lenders to ask about the types of mortgage available to you. Allow a couple of hours for any mortgage appointments you have. If you have a mortgage advisor, they will help you to obtain an ‘agreement in principle’ from a suitable lender, showing that you are serious about purchasing a property. It’s then time to start searching for a home to buy.

There are different types of mortgages on offer that are available for first-time buyers.

Fixed-rate mortgages

A fixed rate mortgage locks in the interest rate for a particular length of time. After this term comes to an end, you’ll be transferred onto a lender’s Standard Variable Rate (SVR). This type of mortgage is ideal if you want more financial stability and do not want the uncertainty of fluctuating interest rates.

Tracker mortgages

A tracker mortgage tracks the base rate of the Bank of England, so interest rates (and monthly repayments), can rise or fall depending on whether the base rate increases or now. After this type of mortgage comes to an end, you’ll be put on a lender’s Standard Variable Rate (SVR).

Standard variable rate (SVR) mortgage

An SVR doesn’t include any special deals or discounts and is the standard mortgage offered by a lender. Interest rates can go up or down, depending on the base rate of the Bank of England.

Guarantor mortgage

This type of mortgage is ideal for first-time buyers with a very small deposit. Parents or family members agree to be a guarantor for the mortgage, enabling them to cover repayments if the mortgage holder is unable to. At the same time, if the family members struggle to make repayments, this could also put them in financial difficulty.

Offset mortgage

An offset mortgage enables you to offset the amount you owe on your mortgage against your savings accounts held with the same lender. The more savings you have, the less interest you pay.

Finding a property

When you’re looking for a property, it is important to consider what you need from your home. Do you need a space for working in? How many bedrooms do you need? Do you require on-site parking? Should you buy a new build or an older home? When you have found a property you like, take a friend or family member with you to have a viewing. A home is one of the most important things you’ll ever buy in your life. Check for signs of damp, the integrity of the walls, fittings, and ask to see the loft. Ask about the boiler, heating and plumbing. Check utility and council tax bills, and ask what the owner will be leaving when they move out. When you are happy with the idea of living there, you can make an offer. Before making an offer, check if the property needs work. If it does, you can negotiate the price with the seller. Remember that as a first-time buyer with no chain, you are in a strong position to negotiate.

Exchanging of contracts and completion

When your offer has been accepted, your solicitor will start the conveyancing process so that you can buy the property and have the deeds transferred into your name. Your solicitor will arrange Stamp Duty, contact the Land Registry, and transfer the money between the lender (of your mortgage) and you. A day of exchanging contracts will be agreed, which legally locks you into a deal to buy the property, as well as a completion date, upon which you can move into your new home. The home isn’t yours until you complete, and either party can unfortunately walk away from the sale, right up until and on the day of exchange. You will need to put down your deposit on the day of exchange. When you complete, you can pick up the keys from the estate agent or seller.
Financial Advisor UK offers a national network of fully FCA-registered and approved financial professionals who can give advice on all questions from first-time buyers. Get matched today with the best advisor for your circumstances.

When someone purchases a home, due to the high expense of property, it is common for them to take out a mortgage to help them financially. A mortgage isn’t just a one-off transaction however – it is an arrangement between a mortgage lender and a customer that needs to be revisited and monitored from time to time to ensure that the customer is getting the best deal. The mortgage deal you are originally offered when you first approach a mortgage lender will typically change over the course of your mortgage term, which could mean that the monthly payments you make become higher over time. Those with mortgages should therefore look to remortgage when the opportunity allows and compare the market to ensure they are on the best mortgage deal.

Do you need advice on remortgaging? Financial Advisor UK has a national network of fully FCA- registered and approved mortgage advisors that you can be matched with to ensure you get the best professional advice along with the best deals available. Our advisors help you compare the market, find the right mortgage, and can offer advice on your circumstances.

Why should I remortgage?

When you take out a mortgage, it is usually for a long time, (around 25 years or more). Mortgage lenders do however offer mortgages for shorter terms such as 5 or 10 years. Mortgage lenders offer different deals depending on the length of the mortgage taken out. It is important to bear in mind that when a mortgage deal (such as a tracker or fixed rate) comes to end, you will be automatically switched to the lender’s standard variable rate (SVR). This will typically mean higher monthly payments. It is therefore worth remortgaging if any of the following applies to your circumstances:

Your current mortgage deal is about to come to an end

This will place you onto the lender’s SVR (Standard Variable Rate). Many of the best mortgage deals are only for a fixed amount of time. Some deals last 2 years, while others can last 5 or 10 years. This can fix your interest rate for that time, but after this time expires, the interest rate will go up, usually far beyond what you were previously paying. Remortgaging can help you get a new, more affordable fixed rate.

Your financial circumstances have changed

You may need a more affordable mortgage rate or one that offers mortgage holidays or the freedom to make overpayments.

Your home has increased in value since you first purchased it

This means that the equity you hold within your property has risen. As you repay a mortgage, the level of equity you hold in a property will continue to rise. Over time, this means that your loan-to- value ratio (LTV) goes down, as you will own more of the property than you did when you started. A lower LTV ratio will mean lower interest rates and could save you money.

You’d like to switch to a different mortgage deal

You’d like to change to a tracker mortgage, fixed-rate mortgage, or a capped mortgage.

How do I remortgage?

The best way to know whether or not you are on the best mortgage deal is to hire an independent financial or mortgage advisor who can search the market for you and find the best product (based on your current financial circumstances and future plans). Doing this can help you save lots of money in the long run.

If you’d rather do things yourself, the first way to remortgage is to check comparison websites and compare lenders. Always make sure that you approach lenders who are not on comparison websites too, as this will give you more options and variety to choose from. Always thoroughly research the features of any mortgage deal, checking the small print. Getting expert advice from a qualified financial advisor can be worthwhile, because if the mortgage was sold to you improperly, you can put a case to the Financial Ombudsman.

When should I remortgage?

You should ideally think about remortgaging around six months before your current deal comes to an end. This will give you plenty of time to properly search the market and find the right deal. Many mortgage lenders write to their customers a few months before their current mortgage deal expires, to inform them that they will be automatically switched to a Standard Variable Rate (SVR), if they do nothing, usually whilst inviting them to remortgage. The remortgaging process can take on average between 6 and 8 weeks, so being prepared is useful.

Do I need a solicitor?

Unless you are staying with the same mortgage provider, you will require a solicitor to do the legal work when you remortgage your property. The solicitor will carry out identity checks, property searches and will go over the terms in your new mortgage deal. Anything of concern will be presented to you to ensure that you understand what you are agreeing to. The solicitor will also collect the money from your new lender and will repay your existing mortgage lender. There are many lenders who offer free legal services as part of a remortgage deal, but there are some that do not, so check carefully as you may have to pay legal fees.

How much does remortgaging cost?

There are four types of fees that are associated with remortgaging your home.

Exit fees

If you sign up to a fixed or tracker rate mortgage deal but then want to leave that deal before it expires, you will need to pay exit fees, otherwise known as an early repayment charge (ERC). An ERC is calculated as a percentage of your outstanding sum, and can be quite costly. It is not unheard of for an exit fee to be 5% of a person’s mortgage.

Administration fees

Some lenders also charge administration fees to cover the costs of closing your account with them.

Arrangement fees

Many mortgage products come with arrangement fees to set up your new mortgage, which are normally around £1,000. This can be added to your mortgage balance, but bear in mind that you will pay interest on it.

Legal fees

Unless you have legal fees included in your new remortgaging deal and your new lender has agreed to cover them, you will need to pay legal fees to cover conveyancing and valuing your property.

If you’re thinking of remortgaging, Financial Advisor UK has a national network of fully FCA- registered and approved mortgage advisors who can offer the best professional advice, while helping you find the best mortgage deals available.

A credit score is a rating that indicates how profitable and appealing a person is to a lender. Lenders and credit brokers use credit scores to assess customers. Credit scores are all about trying to predict customers’ future spending behaviours based on the way they have conducted their finances in the past. If you’re trying to improve your credit score, or want some advice on your finances, Financial Advisor UK can match you with a financial professional from a national network of fully FCA-registered and approved advisors, ensuring you receive the best professional advice along with the best deals available.

To assess credit scores, lenders compare data from transactions and loan applications that a customer has previously made. This will enable the lender to determine what the customer owes, the credit products they have purchased in the past, and whether they are reliable in making payments on time. A lender will also look at a customer’s credit file and any previous dealings they have had with them to estimate how profitable they are as a customer, and their level of risk.

There are many falsehoods surrounding credit scores, which mainly stem from conflicting information from lenders and general misunderstanding. Credit reference agencies generally don’t want customers to understand how their credit score system works, so that they can continue to sell products to customers based on a lack of comprehension. For example, it is believed that there is a credit score ‘blacklist’ of people to whom credit companies will never sell products. This is completely false, as each lender assesses a customer differently. Credit checks are based on complicated algorithms which can vary based on the lender’s system.

If you are rejected for a loan or credit card by one lender, that doesn’t mean that you won’t be able to obtain a product elsewhere with a different lender. It’s important to remember that even if you have a poor credit score or a bad credit history, you won’t be ‘blacklisted’ by companies, even if it may feel that way. There are companies that offer products and services to those with a poor credit history, although rates are much higher because of the heightened level of risk.

Why should I try and improve my credit score?

When you apply for a loan or some form of credit, a credit broker or lender will need to assess your credit score to determine the level of risk in lending money to you. A lender will make the valuation based on your credit report, details you have placed in your loan application, and any data that they may already have on file about your spending behaviour or credit history. If you are trying to improve your credit score, it will take time (up to three months).

The higher the number you have as your credit score, the lower risk you are to a lender, as a high number means that you have managed money responsibly in the past and have made payments on time when you have taken out a loan. This means that you are more likely to be approved for a loan or credit product.

Improving your credit score can help you in many ways financially-speaking. You can benefit from higher credit limits, more options from credit brokers, larger amounts of money (that you can borrow), and more affordable interest rates, which can help make borrowing easier. These benefits are great for helping you to achieve long-term financial goals, such as purchasing a home, having an extension or building works completed on your current home, buying a car, or having a a dream holiday. Use our service to get matched with a financial professional from Financial Advisor UK’s national network of fully FCA-registered and approved advisors.

What makes a good credit score?

Keep in mind that different lenders have different criteria for what makes a ‘good’ credit score. Generally speaking however, the below credit report agencies state the following to be good credit scores:

Experian: Scoring over 880 (out of 999 in total)

Equifax: Scoring over 420 (out of 700 in total)

Having a good credit score isn’t always a guarantee that a lender will view your application favourably. You could be declined based on your previous behaviours, defaulted accounts, debts etc.

How can I improve my credit score?

There are several things you can do to improve your credit score. The most important is to have a credit history. Having no credit history (for example, no credit cards), can make it harder for credit companies to find information on you. As a result, your credit score may be automatically lowered to cover the lender’s risk. This is especially common with younger people, or those who have just emigrated to the UK.

It is also worth being on the electoral roll, as this can help improve your score as you can prove where you live, regardless of your living circumstances.

Always be on time in making repayments, as this will prove that you are a responsible and reliable borrower. Make sure your accounts are well managed, and that your payment history is consistent. If you have accounts that are old or are not well-managed, or have unused credit cards, this could have an impact on your credit score. Close down any accounts or cards that you are not using, and avoid defaulted or delinquent accounts. County Court Judgements forcing you to pay debts can also greatly damage your credit rating. Bankruptcy can stay on your files for over six years, and it can be a difficult and long time before you can recover a credit score from here.

You should also keep what is known as your ‘credit utilisation’ to a low amount. This is the percentage of your overall credit limit that you can use. For example, if your credit limit is £5,000 and you have used £2,500, you have used half of your limit, so your utilisation is 50%. If you only borrowed £500, you will have only borrowed 10%, therefore your utilisation will be lower. Creditors like customers that have a lower credit utilisation, and tend to give them better credit scores.

Finally, try not to apply for credit too often or in quick succession. If you approach many lenders within a short space of time, your credit history may become affected as lenders may feel that you are relying on loans to get by, making you a higher level of risk. Space out credit card and loan applications as much as possible – leaving at least four months in between each application.

If you are struggling with debts from personal loans, store and credit cards, a debt consolidation loan groups all of these debts together into one large loan, rather than several smaller ones. You then work to pay this single large debt off with regular monthly payments, making your debt easier to manage in the long-term. It is important to remember that consolidating your debts won’t remove them or mean that you have to pay back less. You will still need to make monthly payments on your large loan, but may find that your repayments are easier on your monthly outgoings.

When you take out a debt consolidation loan, you can pay the same amount of interest on all of the debt you have accrued. That said, you may have the option to spread the larger loan over a longer period, making your monthly repayments easier to make (this will however come with higher interest rates from the lender).

Whether or not to consolidate your debts is a decision that entirely depends on your personal circumstances. In some cases, the interest rate can be so high for a consolidation loan that it can actually cost a borrower far more than if they had kept several smaller loans. If however you can make the repayments on a larger debt and budget well, consolidating your debts may be a workable option. You should always carefully consider whether or not debt consolidation is right for you. Increasing your debts or being unable to pay back the monthly repayments can lead to serious money problems.

Are you thinking of consolidating your debts, but need advice? Financial Advisor UK offers a national network of fully FCA-registered and approved professionals that you can be matched with to ensure you get the best professional advice for your circumstances, along with the best deals available.

Things to consider before consolidating your debts

Before approaching a lender that can help you to consolidate your debts, you need to ask yourself a few simple and honest questions.

Can I realistically afford the new payments?

If you consolidate your debts, they will be moved into one debt all together. This debt will need to be paid back via monthly repayments. If you are unsure whether you can make these repayments, do a budget sheet, listing your outgoings and monthly income. Figure out how much money you could potentially afford to pay back to a lender per month.

Do I have a poor credit score?

If you have a poor credit score, you might not be eligible for a consolidation loan, or you could be offered one with a very high interest rate. You’ll need to decide how much extra this interest rate will mean in terms of how long it will take you to pay the loan back, and the overall loan amount.

Should I secure my debts against my home?

If you secure debts against your home, you may lose your home if you do not keep up with repayments.

Can I afford the interest rate?

A debt consolidation loan doesn’t mean that you will get a cheaper interest rate. Work out what you are currently paying, and compare this with interest rates offered on consolidation loans.

Can I afford the fees to move my debts?

The debts you currently have may have terms and conditions stating that you will need to pay charges if you decide to move them to another broker. Check the small print you have agreed to and decide whether the switch is worth it.

Should I take out a debt consolidation loan?

You should think about consolidating your debts if you are sure that you can keep up with the monthly repayments of a consolidation loan, and that your payments will not affect your savings due to fees and charges. If you like the idea of using the loan to give yourself a chance to save and get your finances back on track, consolidation is for you. It is especially worth doing if the interest level is lower than what you were paying before on various smaller loans.

If you can’t afford to make repayments on a consolidation loan, keep spending on things like credit cards and can’t clear all of your debts with a consolidation loan, it may be worth speaking to a debt advisor who can help you and arrange a repayment plan based on your circumstances.

Types of debt consolidation loans

There are two different types of consolidation loan – these are secured loans and unsecured loans.
Secured debt consolidation loans involve the lender securing your loan against something you own (in most cases, your home). Failure to repay the loan means that the lender can get back the costs owed by taking what your loan is secured against and selling it. Secured loans generally have lower interest rates because there is a reduced risk to the lender, and more of an incentive to the borrower to pay back the loan.

Unsecured debt consolidation loans are loans that are not secured by anything (such as your home or assets). The lender uses your credit report and credit score to determine the risk of letting you have the loan. If you fail to repay the money back, your credit score could be greatly impacted.

Top tips for taking out debt consolidation loans

• Research the market to find the best loan, interest rate and deal that works for your circumstances.
• Seek financial advice about your debts before taking out any loan.
• Look beyond the initial interest rate being advertised. Check for additional costs such as arrangement fees, as well as the annual percentage rate (APR).
• Get a trusted family member to help you keep a budget of your incomings and outgoings.
• Destroy your credit cards to prevent you from creating further debt.

Financial Advisor UK offers a national network of fully FCA-registered and approved debt advice professionals. Get instantly matched with a debt advisor to suit your circumstances.