A taste of Summer from Somerset
What is a rio mortgage?
The articles are for information only and do not constitute advice
1st Financial Group Ltd is authorised and regulated by the Financial Conduct Authority
a quick guide for retirement gap years
Lottery wins & unexpected fortunes
Phil Higginson - Director
Sav is a real people person. He has great experience in interacting with people, which he has developed over the course of his career.
Jan joined 1st Financial Group in 2016 and has been an IFA since 2008. In her spare time she enjoys spending time with her family in the sun.
lottery wins and unexpected fortunes
Sav Savva IFA
your advisory team
Financial Adviser with over 25 years experience. His consultative style supports clients to achieve their financial goals.
INDEPENDENT FINANCIAL ADVISeR
Keen golfer and ex senior banker. Martin knows the industry backwards. With over 30 years of experience he is a seasoned adviser.
Amateur international explorer, Matthew uses his vast financial knowledge to ensure his clients receive appropriate advice.
Independent financial adviser
Congratulations, you have just won the Lottery! All your money worries are over…or are they? Most people will not win a lottery jackpot, but many of us will have to decide about what to do with a capital lump sum at some point in our lives, either from an inheritance, pension or other means. Here are some basic principles to keep in mind:
Reduce debt: Paying off debts early can save you a significant amount in interest payments over the long term. Credit cards and overdrafts are normally the first to be paid off as they have the highest interest rates attached to them. You may then wish to consider personal loans, car loans and mortgages. A word of caution though: remember to take into consideration early repayment charges before deciding to clear debts before they are due.
Savings: It is prudent to have access to funds in the event of emergencies. We generally suggest the equivalent of 3-6 months’ income for this purpose.
Pensions: Your pension is what will help to look after you financially in later life. Early contributions can help grow your final balance. There can also be beneficial tax opportunities to pension contributions of which you can take advantage. There are some restrictions to pensions and you will not be able to access them until you are over the age of 55: this rises to 57 in 2028.
Investing: When investing, make sure you are making use of your tax allowances by using tax wrappers such as ISAs. However, ensure you are comfortable with the investment risks associated with the potential return offered. An adviser should always assess your attitude to risk and capacity for loss and help select investments that match it. Many investments are designed to be long term in nature and cashing them in early can reduce the potential growth and value paid out. You should always remember that the value of investments (including property) and the income derived from them may go down as well as up.
Gifts: When investing, make sure you are making use of your tax allowances by using tax wrappers such as ISAs. However, ensure you are comfortable with the investment risks associated with the potential return offered. An adviser should always assess your attitude to risk, capacity for loss and help select investments that match it. Many investments are designed to be long term in nature and cashing them in early can reduce the potential growth and value paid out. You should always remember that the value of investments (including property) and the income derived from them may go down as well as up.
Take Financial Advice: Everyone is different, and it is important to make sure you receive advice that is personalised to your individual circumstances.
Call us to make an appointment to discuss your personal needs 01823 410 044.
Soussan has over 20 years experience in finance and recently qualified in Equity Release. She enjoys walking, cycling and crime dramas.
01823 410 044
1st Financial Group Ltd
Mark Weymouth - Director
mortgage and equity release adviser
Mark has a penchant for motorcycles and mortgages. He works diligently to ensure his clients get and stay on the best deals.
WHEN DO I NEED TO SPEAK TO ONE?
tips on Equity Release
how are they different from equity release?
A RIO mortgage is a retirement interest only mortgage. It may be helpful for homeowners who have interest only mortgages and debts. Currently they allow clients to extend the term of the interest only mortgage until the end of life, they sell their home, or go into care. There are key differences between a RIO mortgage and other equity release products.
RIO mortgages require interest payments to be made.
If the payments are not made on a RIO mortgage the home may be repossessed, in the same way as a standard mortgage.
For comparison, with a lifetime mortgage:
The lifetime mortgage does not have a repossession risk for non-payment, as no payment is legally required and it gives the homeowner right to reside guarantees.
The debt does not grow with a RIO mortgage.
The regular interest payments made on a RIO mortgage means the outstanding debt tends not grow over time.
For comparison, with a lifetime mortgage:
A lifetime mortgages debt grows year on year if you choose not to make payments. The affect of this may be offset by rising house prices, however this is not guaranteed.
Who are they for?
RIO mortgages, with regular interest payments, tend to be more for those on incomes that are unlikely to change, such as that derived from a defined benefit pension.
For comparison, with a lifetime mortgage:
You have the option of not having to commit to regular mortgage payments for the rest of your life and which allows for more flexibility.
RIO and equity release are growing in popularity. It is paramount that if you are considering one, you ensure it meets your needs and suits your circumstances.
We offer across the market mortgage advice. Call us on 01823 410 044 to have an obligation free conversation to discuss your circumstances and suitability for such products. 1st Financial Group does not advise on home reversion plans.
1. Have a clear idea of how the funds will be used.
2. Check the funds borrowed will not affect any means tested benefits.
3. Don't forget it can have an impact on your estate planning.
4. Ensure you have taken suitable legal advice and it suits your circumstances.
SPEAKING TO AN IFA
Jan Edwards IFA
Yesterday! The earlier you take advice the sooner you see the benefits. The use tax wrappers alone have real benefits.
Many people I speak to for the first time think IFAs are for the super-rich or that they only need to speak to one just before retirement. The reality is that in most circumstances clients become wealthier in the long term, better covered for eventualities and more likely to achieve the financial lifestyle they want if they see an IFA at an earlier stage.
16 to 25?
Putting money aside for a house deposit and building a portfolio for retirement does not have to wait until you are married or have left schooling.
Consideration should be given to making contributions to tax efficient investment vehicles, some have the facility to be topped up by the government.
Ready to buy or mortgage deal ending?
Taking advice when buying a home is almost always going to be beneficial. There are so many pitfalls, and the market moves so quickly even the most sophisticated buyer can find themselves in a unfamiliar position. Speaking to an adviser can help you navigate these.
Almost everyone is going to retire; what that retirement is going to be like is different for each person.
Ideally retirement for most means debts are taken care of, full home ownership, reduced expenses and a reasonable income. Putting off retirement planning may mean you are risk of not enjoying the retirement in the way you hoped for.
If you, or someone you know, could benefit from speaking to an IFA please don't hesitate to contact us; we are here to help.
rio mortgages what are they?
Last year, 43,875 Britons lost £236 million to push fraudsters, and this is on the rise. Push fraud is where fraudsters trick customers into transferring them money by pretending they are the customer’s own bank. Unfortunately, once the money is transferred into a new account it often cannot be recovered as banks do not have a legal obligation to refund this.
Fraudsters may use a technique called spoofing to make you believe they are legitimate. This can be very persuasive, so the current advice from the FCA is to hang up the call and then use a different phone to ring your bank’s fraud department and ask them to check the situation.
Sourced from: https://www.ukfinance.org.uk/authorised-transfer-scams-data-h12017/
critical illness insurance Explained
is the deposit 'mission impossible'?
Phil Higginson IFA
The deposit is your initial contribution to the purchase of the property. You will generally need a minimum of 5% of the overall purchase price for a deposit, the larger the deposit the greater the likelihood of securing a more favourable interest rate.
Most properties will be too expensive for one income, but not all. There are many suitable properties for first time buyers and single income households.
How can I get that much money?
ISAs: ISA (Individual Savings Accounts) that allow you to grow funds without paying tax. With the Help to Buy ISA the government will top up any contributions you make by 25%, up to the contribution limit of £12,000. So, for every £200 you save, the government will contribute £50. This means you can earn a maximum of £3,000 from the government. Help to Buy ISAs are only available until November 2019 and will not accept new savers after this date.
The savings shortcut: Pay tends to rise exponentially when starting work, but expenses tend to stay constant. If pay rises are put directly into an ISA, a deposit can be achieved much faster. For example, pay increasing from £15,400 to £30,000 could mean an additional £10,200 in the 2018-2019 tax year take home pay. If a significant portion of that can be placed into an ISA, a deposit for house purchase can start to look achievable.
Parental help: The bank of mum and dad can help first time buyers in a number of different ways. Our advisers can discuss this to suit individual situations.
If you have questions concerning mortgages or ISAs please call us on 01823 410 044.
Critical illness insurance is a protection product that pays a tax-free lump sum if the insured suffers and survives a critical illness* such as a heart attack or stroke.
A critical illness lump sum won’t make you better, but it will help you to concentrate on improving your health without worrying about how you are going to support your family or pay your bills.
*This is subject to the types of illnesses covered by the critical illness policy
some ways to get a headstart on the property ladder
bE AWARE OF PUSH FRAUDSTERS
scam net, on average, losses of £5,000 per victim.
Support for Mortgage Interest Payment (SMI) was previously a benefit for those who found themselves on benenfits to pay the interest component of their mortgage. From April 6th this year the DWP turned SMI from a benefit to a loan. Those who find themselves in a situation where they lose their job due to illness, or redundancy, and are eligible for it, will need to pay back the SMI component of the benefits they receive on death or when they sell their home.
Some key facts on SMI
· The maximum available under the scheme covers the interest element for the first £200,000 (£100,000 if a pensioner) not the capital sum.
· The SMI is secured against the property and will be recouped when either the recipient passes away or the home is sold.
· The maximum duration for which jobseekers can claim is 2 years.
· The SMI loan will accrue interest.
· If you have more than the £16,000 threshold in savings or investments you will be ineligible for SMI. The state expects you to live off your own money until it is reduced to below the threshold level.
The government’s decision to reduce benefits shows why protection needs must be reviewed to ensure hard earned gains are not lost over short-term issues.
MEET THE ADMIN TEAM
Sourced from ons.gov.uk March 2018
Jacob works as one of the administrative team for 1st Financial Group Ltd. He administrates the mortgage process along with the adviser and keeps clients informed of progress.
Working at 1st Financial Group Ltd
I love the fact that I get to help our clients with their mortgages and purchases. It is a great feeling to see how even a little change in their interest rate can make a real difference to their payments.
The exams are challenging; even harder than the ones at university! I receive full support from the team and advisers and the knowledge I gain from them also helps me in my work so that I can better serve our clients. I don’t think many people realise the depth of knowledge advisers have about mortgages, but trust me, it’s more than a Google search!
Getting on the property ladder
I bought my own home with my wife before the age of 25 and it was one of the greatest achievements of my life. Many younger people have given up on owning property, they don't need to despair, there are a number of ways to achieve this. Working at 1st Financial Group Ltd, I know that the IFAs and advisers here have the experience to help them that can cut years off the time needed to purchase a property.
What I have learned
Mortgages are important when you first get one but are easy to put on the backburner, when you have had one for a while.
I think that people need to ensure that their subsequent deals are as thought through as the initial purchase and our advisers are on hand to assist them with this.
Sourced June 2018 from https://www.moneyadviceservice.org.uk
SUPPORT FOR MORTGAGE INTEREST PAYMENT TURNED INTO LOAN
The lovely owners of Prockter’s Farm (where our office is based) had their annual BBQ for the businesses there.
It was great to catch up with our neighbours, and thank you to Jackie and Mark for putting on such a lovely spread.
Prockters farm bbq
With uncertainty arising from brexit, many people are opting to lock into longer term fixed rate mortgages. But what are they? A fixed rate mortgage is a mortgage with a locked in interest rate even if interest rates change during the period of the fixed rate term. They are usually for 2, 3 or 5 years. These mortgages are helpful for those who are concerned about interest rates rising. At present, many lenders are offering reasonable rates of interest for longer terms of up to 5 to 10 years. This, of course, is dependent upon a borrower’s circumstances and fixed rate deals are not a product to rush into. If interest rates lower, borrowers would not benefit during the fixed rate period.
SNAPSHOT - UK 2018
The 12-month RPI rate was 3.3% and the Consumer Price Index rate was 2.2% for October 2018 (ons.gov.uk)
GDP growth was 0.4% in Q2 2018 and 0.6% in Q3 2018 (ons.gov.uk)
House annual price growth slowed in Sep to 2% and further decreased to 1.6% in Oct. (Nationwide)
London house prices fell by 0.7% in Q3 (Nationwide)
South West house prices increased 1.9% in Q3 (Nationwide)
Fixed Rate take aways
1. Early repayment charges may apply with fixed rate deals.
2. Think about how your income may fluctuate over the fixed rate period.
3. Will you be able to obtain another fixed rate deal at the end of the term?
4. Always take advice to check if it is the right product for you.
fixed term mortgages
· Power of Attorney
· What kind of account to keep it in
· Roaming phone
· Online banking
Matthew Eaton IFA
Taking long holidays abroad after working
Matthew Eaton has prepared a checklist below for when considering or planning a retirement gap year.
1. Will this impact my benefits and tax treatment?
For example, 35 years of NIC are needed in most cases to obtain the new state pension in full(currently), so if you are at 34 years one more year of contributions can make a big difference. Government policy on benefits and tax changes often and sometimes subtly. Make sure you take advice.
2. Do I really have the money?
Make sure the income is there for the trip and you are not accidentally eating into a lump sum you may need to rely on later.
3. Am I appropriately covered?
Make sure insurances are suitable for the destinations and activities planned and that your current protection policies are reviewed against your itinerary. Some ongoing policies (such as life assurance) will refuse to pay out if you live outside assigned countries for set periods.
4. Who is looking out for me back home?
Make sure you are legally covered with a new Will and Power of Attorney in case you are out of contact for long periods and decisions are required.
5. What is my financial emergency plan?
The bank of mum and dad is not usually available for retirees on gap years! Ensure your emergency funds can pay for the entire trip and your insurance covers your repatriation if needed!
6. How am I going to pay when travelling?
As covered in our last issue, credit cards have legal protection but debit cards do not. Maintaining your credit score is still important in retirement so make sure your credit cards have auto-payment from a pool of funds for the trip (Internet banking overseas can be difficult). A backup card is important as it is easy to lose cards and very difficult to get new ones overseas.
7. Is letting my property a good plan?
Letting out your property over the period of travel can provide supplementary income. However, tenants can demand that repairs be made (additional expenses), lease terms may not match the period of travel and the tenants may move out early (leaving a financial hole if not prepared for).
Retirees’ circumstances mean they are often healthy and wealthy enough to make the start of their retirement journey something special. Taking the time to make sure your financial circumstances suit your journey ensures you have the best quality of life available to you during your retirement.
1st Financial Group Ltd are retirement experts and can help you make the best of your retirement.
QUICK OVERSEAS CHECKLIST
CONSIDERING OR PLANNING A RETIREMENT GAP YEAR?
The capacity to obtain insurance online has increased. Travel insurance can now be quoted and purchased through multiple online portals in a matter of minutes. This has now spread to almost all types of insurance, but you to be aware of hidden traps.
Whilst travel insurance can be reviewed simply, purchasing other insurances online can end up being more expensive than through an intermediary (who knows the market intimately). The cover and exclusions can be difficult to compare; they may not actually cover the insured for what they want or provide good value for money.
If you need long term insurance or have little experience of the product you are buying please ensure you take appropriate advice.
Hamilton Park, Taunton
South western images 2018
by 1st financial group
Fishing lake in the Quantocks, Somerset
Apple orchard, Somerset
Cider barrels, Somerset
First Time Buyers
Buy to Let
Help to buy
Right to buy
Inheritance Tax Planning
The contents in this magazine are believed to be correct at the date of publication (Jan 2019)
Every care is taken that the information is accurate at the time of going to press. However, all information and figures are subject to change. You should always make enquiries and check details and, where necessary, seek legal advice before entering into any transaction.
Some of the products mentioned are not regulated by the Financial Conduct Authority.
The information in this newsletter is of a general nature and does not constitute advice. You should seek professional advice tailored to your needs and circumstances before making any decisions.
All Content © Copyright 2001-2018 1st Financial Group Limited. All Rights Reserved. Registered in England and Wales No. 4206886.
Registered Address: 1 Prockters Farm, West Monkton, Taunton, Somerset TA2 8QN
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Koh Phi Phi island
Thatched cottage in castle ruin, Stogursey Somerset
Burrow Mump Somerset
Critical Illness Cover
Torquay Marina South Devon Coast
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