Mortgage warning for homeowners

Homeowners whose two-year fixed rate mortgage deals are about to end have been warned they could see a bill shock if they fail to act.

Fixed Rate Mortgage

In September 2017, the average two-year fixed rate mortgage rate hit its lowest ever level at 2.17 per cent, according to Moneyfacts.

Borrowers can still swap to deals almost as cheap as that now, but those who do not remortgage and instead fall onto their lender’s default standard variable rate risk monthly payments rising substantially.

Today’s average standard variable rate sits at 4.89 per cent, and a shift to that from 2.17 per cent would see the average mortgage’s monthly mortgage payments jump by 26 per cent – adding £175 – as monthly payments rose from £680 to £855, according to Compare the Market.

The benefits of searching out a new mortgage deal promptly are shown by the fact that at today’s average two-year Fixed Rate Mortgage rate of 2.44 per cent, a homeowner with a £130,000 mortgage with 20 years left would only see bills rise £11 a month to £691 if they moved to that from 2017’s average rate of 2.17 per cent.

Moneyfacts finance expert Darren Cook said: ‘Borrowers who may be arriving at the end of their current two-year deal will probably have a high motivation to remortgage.

‘But they may need to look carefully to find a rate similar to the one they may have negotiated two years ago.’

Homeowners were warned not to be lulled into a false sense of security by the low interest rate environment, as lender’s default rates are considerably higher than new deals.

Compare the Market’s Mark Gordon said: ‘Rolling onto a standard variable rate mortgage can cost you thousands of pounds.

‘We may be in a “lower for longer” rate environment now, but that doesn’t mean interest rates will remain at rock bottom forever.

‘For those people on a standard variable rate mortgage, the additional costs should be a wake-up call.

‘Not only could your mortgage get more expensive if the base rate rises, but SVR mortgages tend to be much more expensive than fixed rate deals available.’

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For more information go to Brighton Mortgage Broker – The Finance House

Research from the Trade Union Congress (TUC) reveals that 1 in 12 UK workers are not getting their legal Holiday leave entitlement.

Holiday leave entitlement

The analysis estimates that 2.2 million employees are not getting the minimum paid Holiday leave entitlement they are due. And over half of this number (1.2 million) are not getting any paid leave at all.

Workers are losing out on nearly £3bn worth of Holiday leave entitlement a year. 9.2% of female workers and 7.2% of male workers are losing out.

The sectors in which workers are most likely to lose out are agriculture (14.9%), mining and quarrying (14.7%) and accommodation and food (13.9%).

Which sectors are missing out on their Holiday Leave entitlement

The sectors with highest numbers of staff losing out are retail (348,000), education (342,000) and health and social care workers (291,000).

Working people are entitled to a statutory annual minimum of 28 days paid leave (pro rata and including public holidays).

The main reasons people are missing out are:

• Workers being set unrealistic workloads that do not allow time to take leave.
  
• Employers deliberately denying holiday requests and managing out people’s leave.
  
• Employers not keeping up to date with the law.
  
• Minimum holiday entitlements are a vital part of reducing overwork, says the TUC. People who work excessive hours are at risk of developing heart disease, stress, mental illness, strokes, and diabetes, which also impacts on co-workers, friends, and relatives.
  

The TUC wants HMRC to be granted new powers to clamp down on employers who deny staff their statutory Holiday leave entitlement. This would include the power to ensure that workers are fully compensated for missed holidays.

The government has recently consulted on enforcing holiday entitlements but has yet to announce any plans. The TUC says ministers must guarantee all UK workers can take the holidays that they are entitled to.

TUC General Secretary Frances O’Grady said:

“We’re now in peak holiday season. But while many workers are away enjoying time off with friends and family, millions are missing out. And that puts them at risk of burnout.

“Employers have no excuse for robbing staff of their well-earned leave. UK workers put in billions of hours of unpaid overtime as it is.

“The government must toughen up enforcement to stop bosses cheating staff out of their leave.”

For more details go to https://www.tuc.org.uk/
For details on our free mortgage finding service click here

The Bank of England’s Monetary Policy Committee has voted unanimously to maintain the Bank of England Base Rate at 0.75%.

Bank of England Base Rate

 A lot of the MPC’s minutes concentrated on continued Brexit uncertainty, with the Committee stating that “entrenched Brexit uncertainties and slower global growth have led to the re-emergence of a margin of excess supply”.

The Committee also commented on that Brexit-related developments are making UK economic data more volatile, the GDP has fallen by 0.2% in Q2 and now expected to increase by 0.2% in Q3. The Committee judges that underlying growth has slowed, but is still slightly positive, and that a degree of excess supply appears to have opened up within companies.

For mortgage advice go to www.thefinancehouse.co.uk/

For more information on the BofE click here

Life Insurance for tenants not considered by UK renters

A study by Sainsbury’s Bank has found tenants are significantly less likely to have Life insurance for tenants or critical illness cover than homeowners.

Life insurance for tenants

Only a quarter of renters (26 per cent) are likely to have Life insurance for tenants or critical illness policy in place compared to almost half of homeowners (41 per cent).

But despite being less likely to have life insurance or critical illness cover, 54 per cent of renters are more concerned than homeowners (48 per cent) about the financial implications should they pass away before old age. One in five (21 per cent) of renters living in private accommodation worry about this situation on a weekly basis compared to 16 per cent of homeowners.

Survey for Life insurance for tenants

According to the government’s English Housing Survey, in the past 10 years, the number of households renting privately with children has risen by almost 800,000 to nearly 1.6 million.

Renters should consider what their partner or family would do if they unexpectedly needed to cover housing costs such as rent and other monthly outgoings if one partner was to become seriously ill or pass away.

According to Sainsbury’s Bank, based on the average weekly household expenditure in the UK (£572.60) the average renting family should have £687,000 worth of life cover as a financial safety net.

The survey found the top reason renters do not have Life insurance for tenants is they believe they don’t have enough equity or money to have a life insurance policy (29 per cent), in comparison to homeowners (11 per cent). Nearly one in five of renters (18 per cent) haven’t got round to it yet and 14 per cent said they had no dependents.

According to Sainsbury’s Bank, major life events are the top reasons people decide to buy protection products. Buying a house is the main reason people chose to purchase life insurance (34 per cent), followed by having a child (17 per cent) and getting married (12 per cent). Unfortunate experiences, such as becoming ill (9 per cent) also prompt people to take out a policy.

Karen Hogg, head of insurance at Sainsbury’s Bank, said: “As more people are raising families in rented accommodation, we need to shift our thinking in terms of life and critical illness cover only being relevant for people with a mortgage. That’s just not the case. All people need to consider what protection their partner and children may need should anything happen to them, including how to cover rent, bills and household essentials.

“Our research found that people are more likely to worry about the financial implications of their passing rather than taking action to alleviate any concerns and protect themselves for the future. Taking out a life insurance policy can help give you peace of mind and ensures you have the financial protection in place.”

For more information click here or ring 01273 857 024

Or check out Wikipedia here

Last minute ideas seem to be how everyone works nowadays.

Research from national building Society’s Payday Saveday marketing campaign shows that procrastination is costing humans about £449 every 12 months. Almost £30,000 (£29,200) during their lifetime. The country wide ballot of 2,000 adults within the United Kingdom suggests that 57% were hit financially by putting off things to the last minute. Almost 2 in 3 (63%) self-perceive themselves as procrastinators. Adults have paid the price – literally – usually by leaving it to the last minute.  To get presents(50%), not putting cash into a financial savings account (38%) and last minute holiday planning (30%).

Last minute ideas

Technology has a large influence on our habit of us putting things off until later.  Checking phones (24%), looking at the TV (22%) and surfing social media (20%) are the top things humans do to procrastinate. On the other hand, deadlines coming up (36%) and encouragement from other people (26%) snapped people out of procrastinating.

We get wiser as we get older with Last minute ideas!

Better news is that we get wiser as we become old with regards to making plans. 2 in 5 (40%) of those aged fifty five or older describe themselves as procrastinators.  Compared to 87 per cent of 16-24s and 78% of 25-34 year olds. But only 32% adults of fifty five and older say they have been caught out leaving matters too late.  Compared to 71% of 25 to 34-yr olds. Men are worst at leaving matters to the last minute, which costs them, on average, £571 a year, compared to only £325 pa for women.

The research also discovered that saving money was top of the list of habits that people would really like to discover (35%). Before having a healthy diet (33%), taking exercise (32%) and getting up earlier(32%). nearly half (48%) of people aged 25-34 wanted to discover ways to save cash regularly – the most of any age group.

Nationwide’s studies many felt guilty about delaying activities. Over 1 in 3 people (36%) regret delaying exercising. Next was saving money (29%) and eating a healthy diet (29%).

For more information go to Brighton Mortgage Broker – The Finance House
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Moving Home can be costly and stressful.

Moving Home

Summer is normally the most common time of year for moving home. Research uncovers the real expense of moving home over the UK, revealing glaring differences between towns. Research from Barclays Mortgages indicates the typical upfront cost of moving home in the UK, including estate agent, conveyancing and surveyor fees, land registry, EPC and SDLT, is £7,641, plus the buying price. On top of that, the average unforeseen costs can total £1,690, home movers are paying up £9,331 in costs.

The most frequent unexpected costs consist of purchasing new furniture that wasn’t the right size for the new home (43%), decorating (34%) and takeaways for the first few weeks after moving when the kitchen isn’t working correctly. (26%). The research also revealed that almost half (47 per cent) of homebuyers admitted to not being prepared for moving financially, underestimating the overall costs involved. This has resulted in 54 per cent admitting to needing to lean on family members for financial support to deal with the unexpected costs of moving – putting additional strain on a family.

Actual cost of moving home

Actual cost of moving home can be quite large here are some things we forget.

You have the keys, time to have spares cut.

Liverpool buyers will pay only £2,787 to move home, but £22,417 in London.

Estate agent fees as expected are the most of course, a seller in Oxford pays £5,783 but £1,780 in Glasgow.

HMRC removed stamp duty for 1st-time buyers on the first £300,000 of a purchase up to £500,000, this can actually make it cheaper for buyers looking for a lower priced property.

Stamp duty can equally cause a financial headache for those looking to move. In London, where the average house price is currently £482,200, housebuyers will pay an average of £14,110 in stamp duty.

Those looking to buy in the north, say in Liverpool, where the average house price is £123,000, may avoid the fee completely, with most properties below the current threshold of £125,000.

Also home insurance costs can be about £107 and a recommended survey, could be another £550. You can find a RICS surveyor in your area here

An EPC is a legal requirement which adds another £90 on average.

On top of these expenses, many home buyers are hit with other fees, like childcare, self-storage, decorating and pet-sitting fees.

Don’t forget to take into account

Van removals service, Transport between properties, fitting costs for new technology (eg Wi-Fi, TV etc), Costs for changing utility providers, furniture, bedding, kitchen utensils, Cleaning costs for rented properties, storage space, Post redirection costs, Childcare on the day you move, Parking costs, Decorators, Pet-sitting, Council tax costs.

If you require a mortgage for your new home, we are independent, free and whole of market. For more information click here

Want to use the HM Land Registry’s digital ‘Sign your mortgage deed’ service.

Soon you might not have to send your Mortgage deed back to the lender with an original signature.

Digital Sign your mortgage deed

This new digital service is available to eligible re-mortgage customers only, who can sign their mortgage deed whenever and wherever they are.

It removes the need for an original signature and witnesses to be present when the documents are signed, making it quicker and more straightforward, as follows:

1. Verify your identity
   

If you already have a GOV.UK Verify account, you can use this same account to sign your mortgage deed.

If you have not used GOV.UK Verify before, you must create an account, which takes only about 15 minutes.

After you have verified your identity, a code will be sent to your mobile phone. Use this code to sign in and view your mortgage deed.

1. Digital Sign your mortgage deed  
   

Check all the details on the mortgage deed. Once you are happy that everything is correct and want to sign your mortgage deed, tap on the ‘Send my code’ button to request a second code that will be sent to your mobile phone.

By entering this second code, you will be electronically signing your mortgage deed.

If there is more than one person signing the mortgage deed, the second person will also need to sign the mortgage deed in the same way. They should follow the original link sent by the conveyancer or lender.

1. What happens next
   

Your conveyancer or lender will then continue to process your remortgage.

If you have any queries, you should contact your conveyancer, lender or broker.

When you’re signed in, they’ll be able to confirm your identity and then digitally sign their deed online.

You will need to talk to your conveyancer or broker to see if you’re eligible for this new service. If you aren’t, you’ll need to sign the paper mortgage deed instead.

Lenders currently able to use the Sign your mortgage deed service include:

• Atom Bank
• Clydesdale Yorkshire Banking Group
• Coventry Building Society
• Metro Bank
• Molo Finance
• Nationwide and The Mortgage Works
• Platform (a trading name of the Co-operative Bank)
• Principality Building Society
• RBS and NatWest
• Skipton Building Society
• Santander
• West Bromwich Building Society

For more information see a Brighton Mortgage Broker

Leasehold houses

The Government has announced several changes to leasehold houses in England, to address matters which have arisen with unfair conditions, rising ground rents and leasehold houses.

These include prohibiting new leases for houses meaning that new-build houses will have to be sold as freehold, apart from shared ownership properties, community-led development, National Trust land and excepted sites on Crown land.

Methods have been introduced to ensure residential freeholders have the same rights as leaseholders on private and mixed tenure estates, such as the right to challenge the fairness of estate rent charges.

Governments new measures.

The Government have proposed new measures to provide a more consistent process when leasehold properties are sold. For example, it should take no more than 15 days to provide leasehold information to a prospective buyer and there is now a maximum fee of £200 + VAT for producing a leasehold property enquiry pack (LPE1) to prospective buyers. Ground Rent should be reduced in future leases to £0 (‘peppercorn’), except for retirement properties, community-led developments and financial lease products such as equity release.

The changes on leasehold houses have been announced in order to prevent freeholder landlords from making a commercial profit from leaseholders. Any costs for the upkeep of a property are intended to be covered in the service charge. The Government proposes that there is no transition period for the banning of the sale of new leases for houses once the legislation is brought into force.

They also will give leaseholders the ability to apply to the First-tier Tribunal for a refund of any incorrectly paid ground rent, at any point. Freeholder landlords will also be subject to a civil penalty of £5,000 per property for illegally charged ground rents, and the Government has indicated they will potentially introduce higher charges for repeat offenders in the future.

For more information on Mortgages go to https://thefinancehouse.co.uk/ and https://www.gov.uk/leasehold-property for more information on leasehold houses.

Just as digital technology has allowed people to customise the way they listen to music or read the news, mobile banking and contactless use is now transforming the world of payments, as consumers take advantage of the ever-widening range of payment choices available to suit their needs and lifestyle.

The latest UK Payment Markets report found that almost half (48 per cent) of UK adults used mobile banking in 2018, up from 41 per cent the previous year. The number of bank payments made using online or mobile banking in 2018 grew to two billion, up from 1.6 billion in 2017, as consumers and businesses increasingly choose to bank using their phones, tablets or computers.

By the end of 2018, an estimated 8.5 million people were registered to buy goods and services using mobile payment services such as Google Pay, Apple Pay and Samsung Pay. This means that one in six (16 per cent) of the adult population are now registered for mobile payment services, up from just two per cent in 2016.

Debit cards or cash?

Having overtaken cash in 2017, debit cards remained the most frequently used payment method in 2018, accounting for nearly 40 per cent of all payments. Almost the entire adult UK population (98 per cent) now own a debit card and by 2024 debit cards are forecast to account for half of all payments in the country. The continued increase in debit card use has been in part driven by the growing popularity of contactless payments, which rose to 7.4 billion payments in 2018, an increase of 31 per cent on the previous year. The figures also show that older customers are increasingly embracing the convenience of this technology, with over three-fifths (61 per cent) of over-65s making contactless payments in 2018, up from 50 per cent in 2017. Overall 69 per cent of adults in the UK now use contactless payments, and no age group or region falls below 58 per cent usage.

Is cash still used?

Cash remains the second most frequently used payment method in the UK. It was used for 28 per cent of payments in 2018 and is forecast to still be used for one in ten payments in a decade’s time. However, the growth in contactless and mobile payments has meant consumers are choosing to pay less with cash, with overall cash payments falling by 16 per cent in 2018 and one in ten adults (5.4 million consumers) opting not to use cash at all. At the same time, many consumers value cash as a method of helping to manage their day-to-day finances, and this is expected to continue in future. UK Finance is working with the recently established Joint Authorities Cash Strategy Group (JACS) to help ensure cash continues to be available to those who need it.

Stephen Jones, Chief Executive of UK Finance, said:

“The same pick ‘n’ mix approach people now take when it comes to music, television or the news is expanding into payments, as consumers take advantage of new technologies to pay in a way that suits them.

Speed and convenience of mobile banking and contactless use.

More and more customers are now opting for the speed and convenience of paying with their contactless cards, or using mobile banking to check their balances and make transfers while on the move. This rapid rate of technological change is set to continue over the coming decade, as people embrace the ever-widening number of ways to pay and manage their finances, depending on their needs and lifestyle.

However, technology is not for everyone and cash remains a payment method that is valued and preferred by many, so maintaining access to cash will be vital to ensure no customer is left behind.

We are working with the Joint Authorities Cash Strategy Group (JACS) and wider stakeholders, to ensure all customers have a choice in how they pay for goods and services in future.”
The Finance House is an Independent, whole of market free Brighton Mortgage Broker. For more information on how we can obtain the best mortgage for you, go to The Finance House

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Bank overdraft fees

The FCA has confirmed it is introducing reforms to fix a dysfunctional overdraft market and shake up Bank overdraft fees.

These changes will make overdrafts simpler, fairer, and easier to manage and will protect the millions of consumers that use overdrafts. Particularly more vulnerable consumers. The changes represent the biggest overhaul to the overdraft market for a generation.

Banks and building societies will no longer be allowed to charge fixed daily or monthly fees for overdrafts. In addition, there will no longer be higher fees for unplanned overdrafts than for arranged ones. The new rules will be in force by 6th April 2020.

Under the new measures, which were first proposed in December, banks will also be required to charge a simple annual interest rate on all overdrafts. Overdraft advertisements will need to come with that rate clearly displayed, to help consumers compare various products.

The FCA has announced that it is changing Bank overdraft fees :

• Stopping banks and building societies from charging higher prices for unarranged overdrafts than for arranged overdrafts.
  
• Banning fixed fees for borrowing through an overdraft – calling an end to fixed daily or monthly charges, and fees for having an overdraft facility.
  
• Requiring banks and building societies to price overdrafts by a simple annual interest rate.
  
• Banks and building societies to advertise arranged overdraft prices with an APR to help customers compare them against other products.
  
• Issuing new guidance to reiterate that refused payment fees should reasonably correspond to the costs of refusing payments.
  
• Requiring banks and building societies to do more to identify customers who are showing signs of financial strain or are in financial difficulty. To develop and implement a strategy to reduce repeat overdraft use.
  

Research on Bank overdraft fees

Extensive FCA research with consumers showed that they also wanted to see the cost of borrowing set out in pounds and pence alongside an APR and interest rate.  UK Finance have agreed to implement this alongside the FCA’s remedies.

Andrew Bailey, Chief Executive of the Financial Conduct Authority said:

“‘The overdraft market is dysfunctional, causing significant consumer harm. Vulnerable consumers are disproportionately hit by excessive charges for unarranged overdrafts, which are often ten times as high as fees for payday loans. Consumers cannot meaningfully compare or work out the cost of borrowing as a result of complex and opaque charges. They are both a result of and driver of poor competition.

“Our radical package of remedies will make overdrafts fairer, simpler and easier to manage. We are simplifying and standardising the way banks charge for overdrafts. Following our changes we expect the typical cost of borrowing £100 through an unarranged overdraft to drop from £5 a day to less than 20 pence a day.

“The decisive action we are taking today will give greater protections to millions of people who use an overdraft, particularly the most vulnerable.”

How much do Banks make from Fees

In 2017, banks made more than £2.4bn from overdrafts – with 30% alone coming from unarranged overdrafts.

Previous research showed those aged between 35 and 44 were most likely to have some form of overdraft and suffer from excessive Bank overdraft fees. About 10% of all 18 to 24-year-olds had exceeded their overdraft limit in the previous 12 months.

Responding to the Financial Conduct Authority’s announcement, Eric Leenders, Managing Director, Personal Finance at UK Finance said:

“The banking industry is committed to helping customers manage their money and we will be working closely with the FCA to implement these rules.

The industry is working on a voluntary agreement to make the cost of overdraft borrowing easier to understand for consumers which will be implemented in April 2020. This will build on the range of measures already introduced by the industry, such as text alerts which have been shown to reduce overdraft charges by 25 per cent.

Overdrafts can provide a convenient way for customers to smooth their short-term cashflow, and there is a highly competitive market in the UK with over 96 products on offer.

We would always urge customers to speak to their bank and arrange an overdraft in advance to ensure payments are honoured.”

https://thefinancehouse.co.uk
For more information on the reform of Bank overdraft fees, go to: https://www.gov.uk/government/news/new-overdraft-alerts-as-cma-banking-rules-come-into-force