Worried young woman checks mortgage payment

In these unprecedented times, there are a lot of questions around what the Government has announced as ‘mortgage relief for homeowners’, writes Lyndsey. Hopefully, the points below will help offer some clarification of the finer details.

Many lenders are now offering support to those who are impacted by Coronavirus by agreeing a mortgage payment holiday for up to three months.

Residential mortgages

Lenders will check if your payments are up to date, you’re not in arrears and can confirm that you’ve been affected – directly or indirectly – by Coronavirus.

Buy to Let (BTL) mortgages

Again, you need your payments up to date and your account to not be in arrears and to be able to confirm that you’ve been affected – directly or indirectly – by Coronavirus. But the big change here is that a payment holiday will only be given if you confirm your tenant is having difficulty in paying their rent due to Coronavirus.

Other things to consider

If you decide to go ahead and request a payment holiday, the maximum time period allowed (under these conditions) is three months. The interest will accrue during the holiday period, and you’ll need to make up deferred payments in the future (this could be at the end of your mortgage term or by making overpayments in the future).

As we are led to believe, this will not affect your credit rating, but please check with your individual lenders.

You may not need to take this option and if you are still able to make payments now. I would continue to do so as you may need this option to be available to you in the future.

Our advisers are all here to advise and help clients through these difficult times as we are still operating at full capacity.

Retiring early doesn't have to be a dream

What do you think of when you hear the word ‘retirement’? Is it relaxing on a sun-kissed beach, cruising around the world or buying a holiday home?

Whatever your goal for retirement is, you’ll never achieve it if you don’t plan.

When people talk about planning their retirement they may think that pensions are the only answer. But that’s not always the case!

Some people may benefit from a pension while others may need to think about other investments to fund their life from the day they retire.

Retiring isn’t the scary step it used to be as long as you have a financial plan. And you really can retire early if it’s planned correctly and you regularly review your finances.

Here we outline some of the considerations to make. But remember, these are just a guide! It’s better to have a face to face meeting with us to share your aspirations. Then we can prepare a plan that’s as individual as you!

What you need to know about retiring?

If you decide to leave your business or give up your work early, then retirement could last for up to 30 years!

stimating the length of your retirement is a little difficult in that you can’t really know how long you have to live. So bear that in mind: will your retirement finances last long enough? If you haven’t made a plan then you really won’t know!

One of your goals may be to make provisions for your family so they receive an income and/or inherit unused money from your pension pot when you die. How will you know that is achievable?

Changes to pension laws 5 years ago mean you can access your pot once you’re 55. But without a plan, how do you know it will last your retirement if you start taking funds from it early?

The first thing we do is to ask you to share your goals, then we can work out what you’ll need financially to achieve it and how to put an action plan in place to make it happen.

What income do you have for your retirement?

Secure income: This includes your state pension, but also any defined benefit pension income and income from any lifetime annuities.

Flexible income: This can be income from savings and investments, renting property you own, paid work or a drawdown scheme, which is where your pension remains invested but you can opt to draw a flexible income from it.

Other assets: There are non-pension assets which could affect what you do with your pension pot, such as your home (downsize), other property you can sell or personal possessions such as antiques.
If you have outstanding loans, a mortgage or credit card debts it makes sense to pay them off to reduce your monthly outgoings. They may also eat into the income you were hoping to receive.

Taxes

One area you mustn’t neglect is taking taxes into account. 75% of your personal pension income is classed like any other income and is subject to tax (although not National Insurance!). For example, your first £12,500 is not taxed but between £12,501-£50,000 your income is taxed at 20%. The other 25% of your personal pension is entirely tax-free.

Again, this is something we take into account when planning your retirement finances, guiding you on what income to draw on and when in order to meet your spending needs.
Inflation

As you’re no doubt aware, prices tend to rise over the years. If your retirement income hasn’t kept up with those increases you may struggle to meet your expenditure.

When we have come across individuals who plan using their own spreadsheets, inflation is generally the one thing they forget to factor in, and yet it can have the biggest impact on their savings over the medium to long term.

What to do next!

If you’re serious about achieving the retirement you dream of, then speaking to us might be your best option. Our guide is a very brief outline so you know some of the basics before we start planning.

When you use Co-Navigate, we aim to hold you accountable. That may sound worrying, but don’t panic: we won’t make you feel bad! Being held accountable and regularly reviewing your finances together is the best way to ensure your goals are achieved.

Why not contact us today and start a conversation?

Coronavirus and the stock market fall

Whether you’re sick of hearing coronavirus (or COVID-19) on the news or trembling with fear and washing your hands 40 times a day, the threat of a global pandemic is very real. 

What that will mean for us in reality we will only know with hindsight. And as I have absolutely no medical training whatsoever, I am not going to speculate.

What you also might have noticed is the current drop in global stock markets, and this might also be making you slightly nervous.

If you’re a client of ours then you should know better than to worry, as we would have told you many times before that the stock market gets nervous when bad news happens. 

Negative news

We will have also told you many times not to watch the news, as it only ever paints a negative picture. The ‘and finally’ segment of positive news at the end of News at 10 disappeared when Trevor McDonald retired.

Why shouldn’t they worry? Because they invest with a plan and they don’t need to access their money for ‘X’ years into the future, that’s why.

And they are also invested in a globally diversified portfolio matched to their personal risk, not the FTSE 100.

And also because the stock market goes up and the stock market goes down. Since 2008 we have pretty much seen investment growth beyond anything you will have seen in your lifetime. 

What we are seeing now is a panic created by an external factor and nobody can predict how it will turn out. In this century alone, however, we have already seen:

  • September 11 attacks in 2001; the London terrorist attacks in 2005
  • The global financial crisis of 2008
  • The European sovereign debt crisis in 2011 (remember Greece being bailed out?)
  • A Chinese stock market crash in 2015 and, dare I say it, Brexit. All external factors that affected the stock markets

I read an article recently which stated:

“Returns are never free. They demand you pay a price, like any other product. And since market returns can be not just great but sensational over time, the fee is high. Declines, crashes, panics, manias, recessions, depressions.”

As far as markets are concerned this will be another dot on an investment chart eventually. My advice is to only worry about things you can change and forget about the things you can’t. In the meantime, ignore the news, wash your hands and follow the advice of the experts!

Jamie Bogle, Financial Planning Director, Co-Navigate

Couple relax after remortgaging with Co-Navigate

Remortgaging is something many homeowners do – but a recent study shows that not enough people who can remortgage take advantage of it.

It may be that they are unaware that they can remortgage or don’t know what it is. Or it may be a task that they have put on the back burner.

Either way, the study found that mortgage borrowers pay £14.5bn a year in unnecessary standard variable rates.

Put simply, if they moved their mortgage to a better deal, they could be paying less and saving more!

But if the thought of remortgaging sounds like too much hassle, then let us explain more about remortgages.

What is remortgaging?

The simple explanation about remortgaging is that it’s when you move to a new mortgage deal with a new lender.

Sometimes people stick with the same mortgage provider and transfer to a new deal – not quite a remortgage but the principle is the same.

Some mortgages can last up to 35 or even 40 years these days, but if you never look at your mortgage deal after the initial rate period you could end up paying more.

Over the lifetime of a mortgage that could be a lot of money. So, if that period has ended, we advise that, just like other areas of your finance, it’s best to review your situation.

We contact our clients at the end of their current deal, but if you’re not a client then we’d advise you review your mortgage deal.

Why would you remortgage?

First of all, while Co-Navigate recommends remortgaging, we don’t recommend it in every case.

Our ethos is in looking at your individual circumstances and needs, and if remortgaging isn’t going to be the best for you, we won’t recommend it.

There are many reasons why someone chooses to remortgage. These can include:

  • Current fixed/variable rate is coming to an endYou want a better rate than you are currently on
  • You want to make overpayments but your current deal issues penalties
  • You want to borrow more money to make improvements
  • You want to switch from interest-only to a repayment mortgage
  • Your home’s value has increased

What to consider

Before deciding to switch to a new mortgage deal, you may want to make some considerations.

Check any fees on a new deal. We would give advice to our clients if the fee was worth paying or not.

Are there an early repayment charges on your current deal? Again, we would know before advising our clients, but if you are looking independently make sure it doesn’t outweigh the benefit of switching.

Is remortgaging for everyone?

Remortgaging may sound perfect for saving money, but that isn’t necessarily always the case. There are a number of reasons why you may not want to remortgage. For example:

  • Your early repayment charge is large
  • Your mortgage debt is small, especially less than £50,000. It may not be worth switching lender simply because you are less likely to make a saving if the fees are high. In fact, some lenders won’t take on mortgages below a certain amount, for example £25,000
  • Your home’s value has dropped
  • You have little equity
  • You’re already on a good rate. You may be already on such a fantastic deal that it’s difficult to beat. Of course, you may need to review it again in the future
  • You have had credit problems since taking out your last mortgage.

As the Money Advice Service shows, remortgaging doesn’t always mean you get a better deal. If the fees that are more than the saving you make, for example, we will advise you.

What should you do?

If the thought of checking out the deals for mortgages leaves you feeling cold, then don’t worry.

You can contact us and let us take a look at whether remortgaging is best for you. We are an independent mortgage broker and have access to deals you may not find online or on the high street.

It’s worth reviewing your mortgage because you could end up saving money.

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

You may have to pay an early repayment charge to your existing lender if you remortgage