Lady holds heads in hands

Should I get Life Insurance?

If you own, or are planning to own, your own home, you should consider acquiring a life insurance policy. Most lenders will require you to have one in place to obtain a mortgage.

Even if you don’t own your own home, life insurance gives your family a financial safety net if you were to die unexpectedly. 

No one wants to imagine a time they won’t be around to look after their loved ones. By finding an affordable life insurance policy, you can be assured that your dependents will receive a lump sum after you die. The money can be used to pay off a mortgage, rental payments or any outstanding debts.

What are my life insurance options?

There are two types of life insurance – fixed term and whole of life insurance. A fixed term policy last for a certain number of years. If you die during this period, your dependents will receive a pay-out depending on the terms of your specific policy.

A whole of life policy lasts for the insured person’s lifetime, assuming that premiums are paid regularly. Premiums for whole-of-life insurance tend to be higher than for fixed term policies.

For either policy, your premiums will depend on your age and health status.

Some employers offer group life insurance which offers a lumpsum to the family of an employee if they die while employed by the company.

What are the benefits of life insurance?

The main perk of life insurance, of course, is the security and peace of mind. Knowing that your family won’t have to face financial stress is a reassuring feeling. Nevertheless, only a third of UK adults have a life insurance policy, and less than 50% of mortgage holders.[1]Perhaps one of the reasons so many people seem to put off life insurance is that they are not fully aware of the benefits.

Life insurance comes with some tax benefits. The money that your dependents receive with not be subject to income or capital gains tax. However, if your dependents receive more than £325,000 they may be subject to inheritance tax at 40%.

Some insurance companies pay a refund to life insurance holders who live past their life insurance coverage period, such as AXA Wealth. Others like Vitality offer discounts on gym membership and sports clothes as part of their life insurance packages.


[1] 60% of UK adults don’t have any form of life insurance – Harbour Wealth Limited

Family of four

Getting started with a UK private pension

Planning for your retirement can be daunting. But the sooner you take steps to secure your financial future, the more certain you will be of a comfortable retirement.

What is a private pension?

Alongside your state pension, you can also begin saving for a private pension. They are a way for you and your employer to set money aside which can be accessed when you are older. The state pension is a regular payment made to those above pension age. How much you get depends on your National Insurance contributions, the maximum current amount is £179.60 per week.

To guarantee you an adequate income when you retire, many people choose to invest in a private pension. Pension providers invest pension funds in investments hoping to generate profit. You should be aware that the final amount of your pension can go up as well as down, depending on the level of risk of the investments.

Most are defined contribution pension schemes; your employer may provide one or you can start one yourself with a provider independently.

Do I need a UK private pension?

No, but it is advisable to consider starting one if you have not already done so. 

The main reason is because you can benefit from tax incentives. You can also generally access 25% of your pension pot tax-free. Most pension contributions are tax free, as they are taken out of your salary before tax is applied.

I am interested in starting a UK private pension, what should I do?

It is worth calculating how much money you need for your retirement. Citizens Advice estimates that the average retirement lasts between twenty and thirty years.[1]

If you have an employer, are over 22 and earn more than £10,000 annually your employer should have automatically enrolled you in your workplace pension scheme. Some employers will offer workplace contributions, where they pay a certain amount into your pension pot, alongside your direct contribution from your salary.

If you are self-employed, or want to top up your pension savings, you can set up a personal or stakeholder pension. To do so, you can seek advice from a financial advisor or approach a pension provider directly. The sooner you start paying in, the sooner you can benefit from savings for your retirement.

Are there other ways to save money for retirement?

Yes, some people may invest in property or other assets. However, due to the tax incentives and the contribution of your employer (if eligible) private pensions remain an attractive option.


[1] How much pension you’ll need – Citizens Advice

Couple moving house

How do I get a self-employed mortgage?

Lenders make the mortgage application process a little more onerous for the self-employed. Self-employed workers are perceived as being high risk borrowers, and so there can be a few extra hoops to jump through. Demonstrating to your bank or building society that you have enough income is the goal. However, this can be done by gathering the right paperwork.

Who is considered self-employed?

For the purposes of mortgages, anyone who is company director, contractor or sole trader. If your income results primarily from your business, you are likely to be viewed as self-employed.

Can a self-employed person access the same mortgage deals as anyone else?

Yes, you will go through the same application process as any other borrower. You should be able to access the same interest rates. Mortgages are usually granted based on your income, the size of your deposit and your credit score.

However, you are likely to be asked for more proof on income than an employed person, and some lenders may have strict criteria.

What documents will I need for a self-employed mortgage application?

All mortgage applicants will need to show:

  • Passport or driving licence;
  • Utility and council tax bills;
  • Up to six months of bank statements;
  • Proof of deposit in a bank account;
  • A life insurance policy.

Self-employed people will also need:

  • SA302 form, which can be filled out on the HMRC website;
  • Something to demonstrate proof of income, such as certified accounts;
  • You may need to show dividend or salary payments if you are a company director, or evidence of upcoming contracts if you work freelance.

To put together the accounts, you may need the support of an accountant. Be aware that some lenders may ask to see additional documentation depending on your circumstances.

How much I can lend for a self-employed mortgage?

On average, lenders will usually offer up to 4.5 times your annual income, although some banks may be willing to lend a little more depending on the size of your deposit.[1]

How can I find the best deal for a self-employed mortgage?

Seek out independent financial advice. An accredited mortgage broker[SR1]  will be able to advise you and suggest lenders who can get you the right mortgage for your circumstances.


[1] How Much can I Borrow for a Mortgage if I’m Self Employed? (onlinemortgageadvisor.co.uk)


Is now a good time to get on the UK property ladder

For first time buyers, now is a challenging time to get on the UK property ladder. Latest figures published in April show that average property prices hit a record high of £254,606 in March.[1] In the year proceeding February 2021, prices rose by 6.9%.[2]

The housing market is booming, spurred in part by lockdown and government intervention. 

The Chancellor of the Exchequer announced in his March budget an extension of the stamp duty holiday until the 30th June for England and Northern Ireland, which will transition out between 1st July and 30th September.[3] A new scheme to help first time buyers secure guaranteed 95% mortgages is also on the horizon.

What is the future for house prices for those looking to get on the UK property ladder?

Property price rises are great news for existing homeowners, but they do mean more expense for those looking to buy.

The sharp rise in house prices was not expected. Forecasts for 2020 had predicted that prices would fall. However, with the extension of the furlough scheme and the tax incentives announced by the government, it is likely that prices will continue to rise, at least in the short term. 

The longer term picture is harder to predict. When the furlough scheme ends, economists are anticipating increased difficulties for the economy, and this would likely affect house prices negatively. New buyers should be aware of this possibility. Those overstretching to buy a property which they need to sell quickly if they experience an unforeseen drop in income will suffer if prices do fall.

Should I buy now?

Spring is traditionally the season when many new homes come on the market as people are keen to sell before a lull during August. 

House prices and the housing market vary a great deal across the UK. Whether or not it is a good time to buy is dependent on your circumstances. Many lenders have tightened their criteria recently. One side effect is that it has become more difficult to find a mortgage with a low deposit.

However, if you have enough capital for a deposit, particularly that magic 10% or more figure, it could be worth taking the plunge. It’s worth talking to a financial adviser to discuss your options and see what mortgages are available.


[1] Average price of UK home jumps to record high of £254,606 in March | Housing market | The Guardian

[2] Annual UK house prices up 6.9% in February in ‘surprise’ increase | Evening Standard

[3] Budget 2021: stamp duty holiday and 95% mortgages – Which? News

Tips to improve your credit score after bankruptcy

When you undergo a bankruptcy, you don’t only have to deal with your strained financial conditions, but it affects your credit score as well. When your credit score is poor or bad, the consequences are not good because you might face troubles like getting a rented house and often fail to get bank loans for purchasing a new car or a house.

Improve your credit score

Do you know a bankruptcy can remain on your credit score for several years? Thus, it is extremely important to improve your credit score. Is there any way to fix the credit score after a bankruptcy? How will you improve the poor state of your credit? Luckily, there are some real and practical means to improve your credit score and get back on a better financial track.

If you are really serious about improving and fixing your credit score after a bankruptcy, why don’t you take the following steps?

  • Check what your credit score is and then review the credit report. You should firstly obtain a copy of your credit report and check it properly so that there aren’t any mistakes or errors.
  • Do you know paying bills on time is one of the easiest and simplest ways to fix your credit score after a bankruptcy? Almost 35% of your credit score depend on your payment history. Therefore, make sure that you are paying all your bills (electricity, phone, internet, gas etc) on time.
  • Don’t indulge in unnecessary expenditure. You must understand your limits and therefore purchase things accordingly. Buy only those items and products that are extremely essential. Curtail down your expenditure on luxury items.
  • There are several credit repair services available today. Before you enroll yourself to any such services it is important to investigate properly because they are quite expensive and instead of repairing your credit score you might end up in worst condition.
  • You have to make sure that you keep your credit card balances low. If you can keep your credit card balance low without exceeding the limit, there is every possibility in the improvement of your credit score rapidly.
  • If you are applying for a new credit card account, you have to be very cautious and careful.
  • Don’t rush to fix your credit. Go slow and rebuild your credit score. If you rush on things there are possibilities of making errors and mistakes. Don’t invite new problems and it is recommended that you gradually and slowly achieve the credit score that you have been longing for so long.

Be patient and follow the above mentioned steps to fix your credit score. You have to understand that you cannot improve your credit score overnight. It will take months and might be even several years to fix everything. By following the guidelines you will be inviting a better and improved financial condition and exceptionally good creditscore. That day is not far away when you will be free from all kinds of debts and poor credit score will be history.

Pensions and What You Should Know

You’ve worked most of your life and it’s time to reap the benefits. There are several different ways to maintain income throughout retirement and one of those is via a pension. A pension is simply a vehicle in which you receive distributions on a variety of calculations and variables. Pensions have been around for decades, and it’s important to understand the various types.

Keep in mind that pensions from the government all the way down to independent pensions, they all will operate differently, meaning the distributions will vary person to person.

State Pension

First is the state pension, which as you can guess is paid from the government. For the full details of how the pension operates, you can view a detailed PDF document here.

At a high level, there have been 3 different kinds of pensions.

  • Graduated Pension
  • State Earnings-Related Pension Scheme
  • State Second Pension

In order to be eligible for these pensions, you had to make National Insurance contributions. Also, other factors include age and how many years you’ve been employed. A comparison across other countries include Social Security in the United States.

Job Related Pensions

The second and more well-known pension are operated through an employer. Known as a defined benefit, these are funds used to pay long-term employees through employee contributions. Distributions are calculated through various factors that include years worked, average earnings and other proprietary data points.

One of the things to consider with employer pensions are they are not guaranteed to be distributed. Meaning you’re relying on your employer to properly handle and manage those funds. A simple Internet search will yield underfunded and cancelled pensions due to lack of oversight or simple ignorance.

While these can provide solid distributions, it’s wise to have a backup plan in case the company suddenly files bankruptcy.

Hedging Pension Benefits

To hedge against potential pension failure, you can simply look to the stock market. While pension funds are invested in the open market to generate yield, you can take the same measures by putting money away in an investment account.

Have a second nest egg at work will alleviate the risk a bit by ensuring you have retirement income being generated from two sources. Be sure to talk with a financial professional before making any investment decisions.

With uncertainties such as Brexit and geopolitical issues, it’s important to understand at the very least how pensions work. If you’re enjoying the benefits of a healthy pension plan, keep in mind that while they work well, it’s never certain the plan will be around tomorrow. Proper risk diversification is a proper way to protect yourself from unseen circumstances. 

Make garden improvements without breaking the bank

At this time of year, there is nothing better than being able to sit in the garden and enjoy the sunshine, but it is much nicer if your garden is full of colour and flowers. Many people may feel as though they can’t make their garden look nice without spending money that they don’t have, but this doesn’t have to be the case. 

Thinking about where you shop for your garden products can be a great start. Although it might seem to be a great idea to simply go to a large chain store, because you know that they will have everything that you need, they will typically charge a lot more than smaller, independent garden centres, so you may find that you can save a lot of money from shopping there. You will also tend to find that you get a much nicer and more personalised experience, as the staff will have the knowledge and the time to sit with you and talk about what you need.

Another tip is that you don’t always have to buy things for yourself. If you have a friend with a nice garden that has plants that you would like for yours, you may be able to take a cutting from some of their plants and grow them in your own garden. You should be careful that you’re taking the cutting from the right place and planting it correctly, but as long as you do this, you should find that the plants are able to thrive.

If you find that there are certain plants that you like, and would love to have in your garden next year, then you should think about saving some of the seeds from the inside of the flowers. This would mean that you wouldn’t have to pay for the same thing again next year, and instead you could simply plant the seeds for free and look forward to watching them grow. 

Finally, what is a plant without a plant pot? You may think that you need to buy new every year, as they can often be damaged by the weather, particularly over the winter months, but this is not always the case. You may find that giving old pots a lick of paint can brighten them up ready for the summer. You could even try out some bright and vibrant new colours, and see what kind of an effect they can have on your garden. No matter what you choose to plant this year, you will certainly be able to enjoy the sunshine without breaking the bank. 

Savers – are you getting the best interest rates?

If you’re lucky enough to have money that you can put aside to save, then you should take a bit of time to stop and think about what you’re doing with it. A lot of people have no idea about what the best savings account on the market is, and as a result of this they’re not making the most of the money that they have. In actual fact, sometimes you’re losing money by never changing your bank accounts, and this is something that you could solve very easily.

First of all, it is important that you understand how much things have changed with interest rates. In the past, it used to be the case that ISAs and bonds would have the best rates, followed by savings accounts, and current accounts would have the worst rates of them all. This may no longer be the case, as a number of banks offer current accounts with introductory interest offers of perhaps 3% or even 5% as a way to secure new customers. Although this may only be on offer for a certain amount of time, it would be much better to opt for an account like this and then change again when the offer ends and a better one is on the market.

Another thing to think about is whether you will need to access your savings in the near future or not. If you’re not too sure, then you might lose money if you place them into a fixed term bond and need to remove it early, because it will be against the terms and conditions of the account. If you’re not absolutely certain that you won’t need the money, then an instant access ISA is a better option, despite the fact that the interest rates won’t be as good. 
There is no hard and fast rule about what the best savings account is, as new offers are coming into play regularly. For this reason, you should take a look online at the accounts that are on offer, and see which is the best for you. Thanks to relatively new regulations, you will now be able to switch bank accounts in as little as seven days, and all of your regular payments will be moved too, meaning that you don’t have to worry about it being a problem. Since it is so easy, it means that you will be able to make a new account every time you find a better offer – and you could make a lot of extra money for yourself by doing so.

Saving money on fuel around the home

With many people’s finances being stretched more than ever before, a lot of us are wondering what we can do to cut down on the amount of money that we spend on the bills each month. Our monthly fuel bills can often account for a large proportion of our budget, and this means that if we can cut back, we will have money left over for things we would prefer to spend it on. Luckily, there are several ways that you can cut back, meaning that you shouldn’t have to spend more than you need to.

Water

If you’re on a water meter, the costs may add up quickly if you’re not careful. It’s surprising just how much water can be wasted if you’re not paying attention. For example, do you find that you spend a lot of time in the shower, just thinking random thoughts? If this is the case, you are literally washing your money down the drain – so set a timer of no more than five minutes on your phone, and challenge yourself to finish your shower in this time. Try shutting off the water while you’re brushing your teeth, and don’t fill the sink with water every time you have something to wash up – wait until you have enough dishes to make it worthwhile.

Gas

Heating a home is never easy, and certainly never cheap, however if you make sure you’re heating it in the right way, it can help. See if you qualify for any government insulation grants, as this can help to keep the heat in your home. Also take a look at where you are heating. You might find that you regularly heat a spare bedroom that is never used. If this is something that you do, then turn off the heating in that room and close the door; you will save plenty of money. If you spend most of the day in one room, heat only that room, and perhaps switch the upstairs heating on for an hour before you go to bed.

Electricity

So many of our belongings are electrical these days that it can feel as though there is always something that needs to be charged – but did you know that by leaving your chargers plugged in, you are wasting money? If an appliance is not being used, always make sure you turn it off, as this can save energy. In addition, try changing the settings on your mobile devices including brightness and volume, so that they do not need to be charged as often.

By making just a few small changes to the way you live in your home, you should find that you can save money on energy bills and really make a difference to the amount that has to be spent each month.

The weekly shop: making your money go further

If you find that you’re spending too much, then you may be considering how to save money on your weekly shop. By thinking about a few hints and tips, you should find that you can stop wasting money, leaving you with plenty to enjoy yourself with at the end of the month.

Make meal plans

Most people get carried away when they’re food shopping, and will pick things up that they like the look of. This is fine, but if they don’t know when they’re going to use the items, they may find that they simply get thrown away at the end of the week because they have gone out of date before they could be used. To avoid this from happening, you should write down a list of all of the meals you’re going to be eating in the following week, and buy only the ingredients for those meals. Not only will this save you money, but it also means that less food would be wasted, which is great for the planet overall.

Don’t worry about brands

Many people feel that buying branded goods is the only way that they can assure the quality of their food, but this is not the case. No matter which type of food you buy in store, it will still have gone through the same procedure as all food to make sure that it is safe to be eaten. By eating unbranded or own branded products, you could cut a huge portion of your spending, without having to notice any difference in the taste of your food.

Make the most of offers

When you see that things are on offer in store, stock up if you can. If there are offers on staples like pasta and rice, that do not go out of date quickly, then you could pick up as much as you can reasonably store. Make sure that the deal is good, though, and that the product cannot be bought for cheaper elsewhere.

Shop around

If you always shop in one supermarket, then you might not be getting the best value for money. By alternating between different shops, you will see which products are cheaper and where, and this means that you can make the most of the cheaper things in each store when you go there. Other shops, such as high street value stores, may also have bargains, and these are things that you could make the most of when you’re out and about.

By being organised and making a plan, you should find that you are able to save money on your weekly shop without having to go without the things that you like. This means that less money will be wasted, and therefore more will be available for the things that you really love and need.