For more information contact your financial advisor at Thameside Associates on 01932 223870
Page 1 of 4
Thameside Associates
HOME FINANCE NEWS
November 2018
MORTGAGE APPLICANTS GETTING YOUNGER
PROTECTION POLICIES PAY OUT RECORD £5BN
IS IT TIME TO STRESS TEST YOUR FINANCES?
MORTGAGE APPLICANTS GETTING YOUNGER
There’s good news for homebuyers. The UK’s first-time buyers are getting younger, according to research from the Clydesdale and Yorkshire Bank.
The majority of mortgage applicants over the last 12 months were aged 36 to 40, compared with 2012-2013 when most were in the 41 to 45 age-bracket.
The research also shows that in the last year alone, 30% of first-time buyer applicants were aged 26 to 30 years old, and 22% were aged 21 to 25.
With rents rising, the financial benefit to home ownership is clear. Interest rates are historically low, and even allowing for the recent small rise in the base rate, mortgage repayments can cost less than rent, leaving home buyers better off.
Your home may be repossessed if you do not keep up repayments on your mortgage.
PROTECTION POLICIES PAY OUT RECORD £5BN
New figures released by the Association of British Insurers show that the insurance industry paid out a record £5bn in protection claims in 2017. This represents an increase of more than £340m year-on-year.
Protection insurers paid out nearly £14m every day in claims on policies such as income protection, critical illness or life insurance. These products provide a financial lifeline, helping people get back on their feet following an injury, illness or bereavement. The amount paid out as a result of critical illness claims passed the £1 bn mark for the first time.
In addition, insurers helped nearly 5,000 people insured under group policies get back to work after a period of sick leave.
As with all insurance policies, conditions and exclusions will apply.
IS IT TIME TO STRESS TEST YOUR FINANCES?
The recent rate rise was a timely reminder that the current very low interest rates are unlikely to last forever. Although the Bank of England predicts that further interest rate rises are likely to be small incremental steps, it makes sense to review your household expenditure now, to ensure you’ve budgeted for an increase in costs such as mortgage repayments.
Many homeowners have already taken advantage of competitive 2, 3, and 5-year fixed rate deals. Unsurprisingly, this type of deal made up 90% of mortgages taken out in the first quarter of the year. If your current deal is coming to an end, or it’s been in place for a while, this could be a good time to review your mortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
WHY MORTGAGE HOLDERS NEED INCOME PROTECTION
If long-term sickness, accident or ill-health were to strike, homeowners could find themselves unprepared and facing financial difficulties, according to a report from insurer, Royal London.
Figures show 42% of mortgage holders have no life cover in place. In addition, 71% have no protection plans if they were to be diagnosed with a critical illness, 81% don’t have income protection.
Renters vulnerable too
Those who rent their home are likely to be hit as hard as homeowners if their income was interrupted. Their day-to-day outgoings are probably very similar to the homeowner, with household bills and rent still needing to be paid if they were unable to work.
The reason given for not buying cover was often the cost involved, or that the insurer wouldn’t pay a claim. However, the cost of cover is often much less than people think, and figures from the Association of British Insurers show that overall 97.8% of protection insurance claims were paid in 2017.
Interestingly, 20% of full-time working people recognise the need for cover, but have yet to take out a policy. Don’t let inertia get in the way of getting the protection you need.
As with all insurance policies, conditions and exclusions will apply.
EQUITY RELEASE MYTHS DISPELLED
Many people aged over 55 have released some of the value, the equity, that’s tied up in their homes. If they purchased their property a few years ago, they are likely to find that it’s risen a lot in value. If they don’t want to downsize to release the cash, equity release is a way of giving them access to their money while they continue to live in their home.
Homeowners might worry that equity release isn’t regulated, but the Financial Conduct Authority regulates the market, and the Equity Release Council has put in place strict product standards. Others are concerned that they won’t be able to leave a legacy to their families, but part of the value of your property can be ring-fenced for your beneficiaries.
No negative equity
Another fear is that equity release might leave their loved ones with a debt to pay after their death. However, there are ‘no negative equity’ guarantees in place that mean that the amount charged will never be greater than the value of the property. Worries about being forced to move out are also unfounded. You have the right to live in your home as long as you want.
A lifetime mortgage is a long-term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate.
Thameside Associates
Contact us
Email: contact@thamesideassociates.co.uk
Website: www.thamesideassociates.co.uk
Office: 01932 223870
Address:
Terminal House Station Approach Shepperton, Middlesex TW17 8AS