seneca reid mortgage newsletter winter 2016

Are you considering remortgaging?With continuing uncertainty over the future of interest rates, you may be considering remortgaging to a lower rate of interest to save money.

But before you’re tempted to a new lender offering an attractive introductory rate, it’s worth considering the bigger picture.

Should I stay or should I go?Moving to a new deal could save you money. However, if you change your mortgage before the end of your current deal, you may have to pay an early repayment charge. It’s also worth factoring in legal, valuation and administration costs that may be associated with signing up to a new mortgage deal.

In some circumstances, you may find that over the long term, the costs of switching outweigh the costs of taking on what looks like a better deal.

Tougher lending rulesAs part of the Mortgage Market Review (MMR) in April 2014, the Financial Conduct Authority introduced new rules around mortgage lending. For instance, the lender must now take greater steps to ensure you can afford your mortgage not only now, but in the future if interest rates were to rise.

That means if you took out your current mortgage a few years ago, you may be asked for more information this time around. This may include details of how much you typically spend on things like travel, clothing, entertainment and childcare.

Changing the type of dealWhen looking at new deals, you may want to consider a different type of mortgage arrangement to your current deal.

For instance, you may decide that you would benefit from the option of payment holidays, or a more flexible repayment arrangement. If you have significant savings, you may want to switch to an offset or current account mortgage, where you use your savings to reduce the proportion of your loan on which you pay interest.

Updating your protection When changing your mortgage, remember to review your protection arrangements as part of the process. This could protect you financially if you become unable to meet your monthly repayments, should the unexpected happen.

Reviewing your protection needs is all the more important if you don’t have cover in place already, or if your circumstances have changed since you last reviewed your cover.

With so many areas to consider, it makes sense to seek professional mortgage advice. We can help you weigh up the financial benefits of remortgaging, choose the most appropriate deal, handle your mortgage application from start to finish, and ensure your loan is properly protected.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

A fee of £350 payable on engaging our services. We will also receive commission from the lender.

Seneca Reid Limited [email protected] 01279 874480

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If you’d like help choosing the right mortgage, please get in touch.

Issue 14 Winter 2016

Financial Viewpoint Your latest newsletter from Seneca Reid Limited

The news that average house prices in London have hit almost £500,000 has, unsurprisingly, led to talk of house price bubbles and potential crashes. But how worried should we be?

According to Land Registry, London saw an increase of 9.6% in house prices in the year to September - a rate few were predicting at the start of the year.

However, the picture for the UK as a whole is a little more subdued, with prices having risen by a more modest 5.3% in the previous 12 months, bringing the average UK house price to £186,553.

Rates remain steadyWhat happens next on house prices is hard to predict, as there are so many variables at work.

Although regulation is influencing the amount lenders are able to lend, competition amongst the major lenders is intensifying. And, whilst it seems inevitable that mortgage interest rates will eventually rise from recent historic lows, there are few signs to suggest any imminent changes.

Demand outstripping supplyEmployment rates are at their strongest since records began and earnings are, for the first time in many years, outpacing inflation. This, alongside the ever-growing population, is likely to continue fuelling a demand for housing.

Meanwhile, there remains a significant shortage of housing stock. Despite the pick-up in house-building levels in the last couple of years, many estate agents are reporting a lack of property coming onto the market with ‘for sale’ housing stock at an 11-year low.

One influence on the availability of homes for sale will be the recent tax changes affecting so-called ‘Buy to Let’ landlords, of which there are now an estimated 2 million. Whether landlords choose to sell-up, increase rents to cover their costs, or accept lower returns, the impact will likely be felt gradually over the next few years.

So what can we expect?Strengthening demand from would-be buyers, combined with constrained supply, suggests that the UK as a whole is unlikely to see any significant ‘correction’ in house prices in the near future. This view is shared by many forecasters, including estate agency Savills who predict continued, steady

growth of between 2.5 - 5% per year for the next five years.

Predicting the likely direction of central London house prices is far tougher. Estate agents in the capital are still forecasting growth in the year ahead, but there is no doubt that activity has eased back in recent months. With at least 20,000 ‘luxury’ homes currently under development or in the planning stages (a level far greater than the historic norm), a period of consolidation seems likely.

Is there a housing bubble – and is it about to pop?

If you’re looking for advice on funding your next property purchase, please get in touch.

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The Bank of England (BoE) last increased the base rate in July 2007 and interest rates hit rock bottom in March 2009. This has meant over 1.75 million UK homeowners have never faced a rise in the BoE base rate.

Mortgage payments around 18% of incomeDuring 2014 these first time buyers were spending, on average, 18.4% of their income on their mortgage. If the base rate is increased many homeowners may be in for an unexpected financial shock.

If you have a £100,000 repayment tracker mortgage over 25 years, even a small rise of just 0.5% in the base rate would mean your repayments would increase by £300 a year.

Take controlThere is still uncertainty around when the rates will rise but while rates remain low it’s a good idea to get ahead of the game by reviewing your spending habits and budget.

Filling out an income and expenditure form will help you identify where you can easily make savings if you have to. Charities like The Money Charity offer a free online form, or you can easily search online for templates. Simply gather together all of your bank statements and bills. Work out your total income and outgoings. Don’t forget to add in things such as Christmas or your car MOT. Once you know how much you have left over at the end of the month you'll be better prepared for any future surprises.

Fixed rateWhilst reviewing your finances you may also want to think about reviewing your mortgage. With a fixed rate mortgage, the rate (and therefore your repayments) will stay the same for an agreed period. This makes budgeting much easier because your payments won't change - even if interest rates go up.

1.75m homeowners unprepared for mortgage increase

Whether reviewing your personal budget or your mortgage we can help. Get in touch to find out how we can help you.

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A charity-led campaign is aiming to raise public awareness of the financial impact of long-term illness or disability.

Launched in October 2014, ‘Seven Families’ is using the examples of seven real families in the UK where the main breadwinner has been forced out of work by an accident or illness – and not received any related insurance pay out.

Seven Families is a charity that provides a tax-free income for one year to those seven people, to highlight the importance of planning financially for the unexpected. But it isn’t just about the money, each family will also have the opportunity to benefit from rehabilitation and counselling services typically associated with income protection insurance policies.

“It won't happen to me”Many of us think we'll never have to stop work because of our health, but 16% of the working-age population will suffer a disability that prevents them from working. An astonishing 300,000 people a year fall out of work and into the welfare system because of health-related issues.

“MS almost finished me”The Seven Fanmilies campaign is about real people and it has a simple message at its heart: income protection cover can make a huge difference to people’s lives when they really need it.

Daniel Pinder, who is currently being supported by the Seven Families campaign, was diagnosed with multiple sclerosis in 2009. Daniel was forced to give up work in 2014, aged just 50.

"Income protection is essential for yourself and family," he said. "I wasn't prepared to deal with the changes to my health, especially with regards to how it affected others as well as me. But the money has helped make a huge and positive difference."

Have you protected yourself and your family?Income protection cover will help provide an income if you are unable to work due to an accident, sickness or, in some cases, unemployment. Get in touch to find out we can help protect you and your loved ones.

‘Seven Families’ campaign highlights loss of income risk

You can find out more about the Seven Families campaign at www.7families.co.uk

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There have been several shake ups announced in the Buy to Let market recently that affect both landlords and tenants.

Tax reliefLandlords can currently deduct mortgage interest from their rental income before calculating how much tax they should pay.

From April 2017, tax relief on Buy to Let mortgage interest will gradually be reduced. The restrictions will be phased in over four years, resulting in tax relief only being available at the basic rate of income tax (currently 20%) from April 2020.

Landlords can also claim 10% of their rent as tax relief for wear and tear. From April 2016 the allowance is being replaced by a system that only allows them to claim tax relief when they replace furnishings.

If you are in the Buy to Let market, you may want to consider setting up a company to take ownership of the properties, as homes owned within a company structure are not affected by these changes. However,

the transfer will be treated as a market sale meaning it may incur capital gains tax and stamp duty.

Safeguarding tenantsThe Deregulation Bill looks to prevent ‘revenge eviction’ by prohibiting landlords from serving a no-fault ‘section 21’ eviction notice for six months following the issue of a local authority improvement notice.

The bill also requires all rented properties to have a working smoke alarm and, in some cases, carbon monoxide detectors. Failure to meet these requirements can result in a fine of up to £5,000.

Right to rentFrom 1 February 2016 all landlords will need to check their tenants have the right to rent a property in the UK. Those who let property to someone without the right to rent can be fined up to £3,000.

Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Buy to Lettax revamp

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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.


What’s the real value of financial advice?Financial advice is about what to do, and what not to do with your hard-earned money. It’s about planning and ongoing management, so that you can make the most of your income and any capital you’ve saved, in order to provide a certain lifestyle for yourself or your family.

At times this can be complicated - especially when it comes to investing. But with the help of a professional financial adviser, you can make the right choices with your financial planning.

Valuable, and accessible to everyoneThere may be times in your life when you are not sure what to do with your money. You may be buying your first home, looking to invest for the benefit of your children, or you may be approaching retirement.

The professional support and knowledge a financial adviser can provide will help you manage your finances more efficiently – and make sure you have protection in place that will maintain the lifestyle you’ve created if something unexpected happened.

Good financial advice will leave you knowing where you stand financially today, what goals you have for your money and greater confidence about the steps you must take to achieve them.

Getting to know youEveryone’s current situation and future objectives are different, so we'll start by finding out about your financial circumstances today, and what you want to achieve with your money in the future. We'll look at products such as mortgages, life insurance, savings accounts, investments and pensions and recommend what best suits you and your particular circumstances. Our recommendations will take into account:

● How much you can afford

● Whether you’re comfortable taking any risk with your money

● What tax you may be liable for

● Whether you want to save for the long or short term

The benefitsIt's hard to put a value on the peace of mind you get from knowing you have a dedicated professional to support you through some difficult and complex choices. But, with sound financial advice you can be confident the recommendations you receive will be the right ones for you.

If you'd like help making the right choice with your money, please get in touch.


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10 tips to help you sell your home

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It’s often said that moving home is one of life’s most stressful events - but the hard work starts well before the day of the move.

Careful planning and preparation can make a difference when it comes to impressing potential buyers. If you’re planning on selling your home, here are ‘10 top tips’ that might help you sell your property faster.

GardensSpend some time tidying up any outside areas. Clear drives and pathways, mow the lawn, clean any garden furniture and make sure any outdoor lighting works. The approach to your property will be your first chance to wow – or worry – your potential buyers.

Front doorFirst impressions count, so make sure the front door is clean and the glass is sparkling. If your front door is wooden, you may want to give it a fresh coat of paint – but remember to cover up or remove any metalwork before you start.

Clear some spaceCreating a sense of space is a real winner so make sure you have a good clear out. You could even think about moving some of your larger items into storage for a period before you put your property on the market. Watch out for over-stuffed wardrobes - buyers often check the amount of storage space.

Clean, clean, cleanClean everything until it sparkles. Pay special attention to the kitchen and bathroom: get rid of any limescale, clean tile grouting and hang fresh towels. Hiring professional cleaners could be money well spent.

Odd jobsMake sure you’re up to date with your to-do list of small jobs around the house that you’ve been meaning to get around to. Replace any broken light bulbs, fix the bathroom locks, replace washers on any leaky taps and oil squeaky hinges.

Freshen upA fresh lick of paint in a light neutral colour creates a perfect blank canvas and makes your home seem lighter and bigger. If you have any marks on painted walls that you can’t wipe off, dig out the paint and freshen it up.

KitchenThe kitchen is the most valuable room in a house so make sure it’s spotless. De-clutter surfaces of appliances, jars, pots and chopping boards and replace any tired old tea towels.

AromaClear drains, wash bins and open windows throughout the house. If you’re a smoker, make sure you do it outside in the days leading up to a viewing. Strategically place plants or freshly-cut flowers and, if you can bake fresh bread, cakes or brownies, do so just before a viewing. Where this is not possible, try brewing some fresh coffee.

PetsIf you have pets, consider leaving them with a friend for any viewings. Make sure you have one last vacuum to remove any pet hair, especially if you have a cat, as many people are allergic to their fur.

Go outAgents know their job so let them show your property. They will be best placed to answer tricky questions, highlight the great features of your home and know what to downplay.

By following some or all of these tips, you’ll be sure to present your property in its best possible light.

If you’re thinking about moving on or remortgaging, we can help you find the right mortgage deal.

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If you use social media, you may have posted a picture by the pool or a selfie from the slopes. Even if you haven’t, you probably know someone who has.

Did you know that sharing your current location or travel plans could void your home insurance?A quick swipe through your timeline will probably reveal the recent holiday details of friends and family – right down to the travel dates, departure airport and hotel location.

But have you ever stopped to think that posting this sensitive information on Instagram, Facebook or Twitter could be advertising your vacated property to criminals?

Should your social media take a holiday too?Maybe your break could be the perfect time to take a holiday from social media too.

If you suffer a break-in whilst on holiday, and had announced your travel plans on social media, it might lead to your home insurance claim being rejected. This is because the insurer might consider the homeowner has not done enough to guard against the theft by posting such information online.

Showing off your latest holiday on social media is tempting, but is it worth jeopardising your home's security for?

Protect your possessionsThe same advice should also be applied to your possessions – particularly those of high value. Showing off your latest expensive purchase online could also be seen as increasing your risk - and would at the very least leave you feeling foolish if you lost or had it stolen as a result.

Staying safe Insurers are reportedly considering asking home owners if they use social media when assessing their applications, as the risk of over-sharing becomes more and more common. If you do use social media, consider taking the following steps to reduce your risk:

1. Turn off location-based services on the social media accounts you use

2. Never share your home address on social media

3. Make your posts private so that only your friends and connections can see them

Over-sharing could invalidate your home insurance

Seneca Reid Limited Thremhall House, Thremhall Park, Start Hill, Bishop's Stortford, Hertfordshire, CM22 7WE.

01279 874480 [email protected] www.senecareid.co.uk

If you would like to discuss how you can protect your home and possessions, please get in touch.

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seneca reid mortgage newsletter winter 2016

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