By Mark Humphrey
The podcast currently has 24 episodes available.
Today I’m speaking with Sara Sheppard, founder of SLS Wills and More to discuss why it’s SO important for you to have a will.
Will writing is not offered as a service under my business proposition and any queries would be referred to a suitably qualified third party.
However, I have approached an expert to give an insight into this important subject. Please note that Will writing is not regulated by the Financial Conduct Authority.
Sara is vastly experienced and an expert in her field, with over 30 years in the industry and sits on the Society of Will Writers Professional Standards Board as an associate member
04:15-06:23
What happens if someone dies without a will?Rules of intestacy will determine how your estate is distributed.
- Assets held in joint names will pass to the other surviving party automatically. However, assets in a sole name or property held as tenant in common – would be subject to the rules of intestacy.
If there is a spouse or civil partner and children, the spouse or partner would receive first £270,000 of the assets (as of the rules in March 2022).
Anything above this amount, would be divided into two equal shares –
Therefore the house could end up being jointly owned by spouse and children, which can be particularly complex if children are below the age of 18.
- If single, your assets could pass to your parents, or siblings, or if you don’t have either, it could pass to people you don’t know about after following bloodlines (possibly even at cousins 3 or 4 times removed!).
06:25-10:52
What are the key reasons to have a will?- You have control over what happens to your assets – tempered with the fact that you must make provisions for those financial dependant on you, for example, you can just cut out your spouse and children without a very good reason!
This is also why it’s wise to get advice when setting up a will and not just doing yourself without guidance. Use an expert, like you would with a mechanic for your car.
A will is one of the most important documents you’ll ever prepare and naturally you won’t be around to make any corrections at that point.
- Wishes for your funeral
- Wishes for who would look after your children. Without a will, THEY COULD END UP IN CARE – they wouldn’t automatically be looked after by your family!
Things happen more often than you think and as a married couple, something could happen to both of you – for example a car accident and neither of you survive
10:53-12:47
How often should we review our will?- Recommend every 3-5 years, or
- On a lifechanging event, such as:
o Moving Home
o Birth of child or Grandchild
o On Retirement
o After inheriting money
o Divorce
o Death of a family member
You can change as often as you like, provided you have mental capacity.
12:48-14:06
How does Marriage impact our current Will?Marriage automatically revokes any existing will, so a new will would need to be written or if you passed away, you would be intestateThis is particularly relevant for blended families, with children from different partners and can get very complex and without a will in place could...
It might sound like a really simple concept, and ultimately it is - is something affordable?
In a mortgage context, the concept of affordability is a relatively new term and concept.
Historically - income multiples determined how much you could borrow.
Background
In the early 2000s, lenders used to lend you 2.5 x your combined annual income if applying for a mortgage as a couple or 3 x your income if applying alone.
With the explosion of house prices in the last 25-30 years, there is a need to have greater flexibility when it comes to affordability.
Regulation in this industry has increased during this time, initially by Financial Services Authority (FSA), and more recently renamed the FCA (Financial Conduct Authority).
As a result - affordability was introduced – which goes a step further than simply looking at income multiples, which was quite a crude measure of how much you can borrow.
Whilst many lenders still use income multiples that sit behind their calculations, there's very much more emphasis placed on the affordability on a monthly basis – i.e. how much is coming in each month and how much is going out.
In very simple terms, affordability is what’s left after deducting your outgoings from your income.
IncomeIt’s rarely this simple though as there are so many different types and parts to your income.
In the simplest example, you might be an employee with a fixed basic annual salary.
However, you might have additional income such as:
If self-employed, you could be a sole trader, a limited company director, contractor or Limited Liability Partner (LLP). We saw in episode 21 how lenders may use different income depending on your set up and their own internal rules.
You may receive other types of income such as; child benefit, tax credits, child maintenance etc
Lenders often have a different approach to each other too – which explains why you may be offered differing mortgage amounts from different lenders.
OutgoingsMany different forms of outgoings and again may be treated in a different way by different lenders
Lenders will tend to use the Office of National Statistics (ONS) data, when they factor in a lot of these, so that will tend to take an average.
Lending DecisionsLenders will balance two main things when deciding whether to grant your requested mortgage:
They'll look at all sorts of data that they've got for people in similar situations to you historically, along with viewing the conduct of your credit agreements on your credit file before reaching their decision
As with affordability, credit risk policy will vary between lenders – explaining why some may provide different decisions
“DEFINITELY NOT A SILLY QUESTION” Feature
Q – I’ve got a loan I intend to repay before my new mortgage starts. Will this affect the affordability calculation?
A – It may do, depending on the lender. Most lenders...
“I’m self-employed, is it harder for me to get a mortgage” is a question that I'm often asked, and being self-employed myself too, I can see it from both sides.
In this episode, I’ll be discussing how it does tend to be more involved and there are more things to consider when you're self-employed, but it certainly isn't impossible, and with a bit of help you can navigate the requirements and get the mortgage that you need
02:06-03:26
It's important to make a distinction between the different types of self-employment - the two that we're going to discuss today will be:
Sole traders / partnerships
Limited Company Directors
There are other forms of self-employment that we’ll cover in another episode:
What income can be used for the mortgage?
It depends upon the business set up (i.e. sole trader/partnership or Limited Company) and we’ll explain both in detail.
One thing to be aware of - lenders will use figures that are disclosed to HMRC, so for those of you that don't disclose everything to the taxman, you can't have it both ways, income that is declared to the taxman essentially will be the income that will be usable from a mortgage perspective.
03:27-09:01
Sole trader / Partnership.You'll either be doing your own self assessments each year, or you'll have an accountant that does it.
Your financial year will be in line with the tax year(the fiscal year) which runs from the 6th of April through to the 5th of April.
Self employment is quite different from being an employee where you have a set basic salary each month (and therefore easier for lenders to understand what you get paid now and going forward).
Being self employed, your income can be very up and down, and so lenders are making a judgement on your future income by looking at your track record - usually your last two years, possibly the last three.
As a sole trader, lenders look at your last two (possibly three) years’ Net profit figures.
Not your turnover or total income, your net profit which comes after taking into account all of the expenses
Ordinarily, lenders will look at an average of your last two years figures, although if your latest year is lower, they'll tend to use that lower figure instead of an average.
They may also ask more questions, if it's quite a significant drop, to understand why that's the case, and more often than not, it might be a one-off capital expense (e.g. vehicle or equipment) which may give the lenders comfort that your profit next year will again be higher
HMRC Documents
It depends on when we are in the year when applying for a mortgage, which determines which tax returns are required
For example - If we're in July 2022, most lenders would be fine accepting your tax return which ran to 5th April 2021 as your latest year. They appreciate you may not have completed your April 2022 return yet!
However, once we get to October 2022 – your tax returns for the period ending 5th April 2021 are now 18 months old and most lenders will want your 5th April 2022 tax return as the latest year.
Worth bearing in mind and getting organized if mortgage time coming around.
Whilst your 5th April 2022 tax return isn’t required by HMRC until the end of January 2023, in our example, if lenders want it – this could be the difference between getting your mortgage and not!
Lenders didn’t historically ask for business bank statements every time, but since the beginning of the...
So many of us have a mortgage and see it as a millstone around our neck, something that holds us back and can impact our lifestyle.
I say the opposite, that our mortgage can flex around our lifestyle
Your lifestyle and priorities will change as you go through different stages of life, whether you’re young and single, right through to having a relationship(s), possibly children, career aspirations, retirement planning etc
Think of an imaginary set of scales with the following on either side:
Naturally, the balance changes as you go through life as your career and income change, alongside your lifestyle.
When it comes to owning your home, your needs will change along with your life-stage and lifestyle and having some flexibility will really help you to maintain this balance.
A Mortgage – is a necessary vehicle to help us own our own home - None of us dream about getting a mortgage, it’s the dream house and the lifestyle that we strive towards!06:27-07:27
What factors determine our monthly mortgage payments?
1. How much you borrow – Loan Amount
2. How long you repay the mortgage (term)
3. Interest rate
07:29-11:27
1. Loan Amount
When we think about the loan amount, you may think it’s set in stone – but you do have options that can help your lifestyle
• I can’t stress how important regular reviews are. All of our situations change over time, so speaking with a whole of market mortgage broker can help you understand your options.
• You might decide that you need a bigger house (maybe your family has grown!). Moving may not always be the cheaper option – there are a number of costs you’ll incur when moving such as stamp duty – so why not explore the cost of both extending and moving to help you make an informed decision.
• If you’ve got unsecured debts that are impacting your lifestyle due to their monthly costs, there may be an option to consolidate them into the mortgage for one monthly payment. You may end up paying more interest and securing a debt that was previously unsecured, but your advisor can talk you through your options to find the most suitable option for you.
Think carefully before securing your debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
• If you’ve got a significant amount in savings (earning very little interest) there are mortgages that allow you to offset interest on your mortgage by using these savings, which could save you money. Again your advisor could talk you through these options to ascertain whether they’re suitable for your situation
• If you have equity in your property and have been thinking of buying a holiday home – there might be the opportunity to increase your mortgage to help fund this. Again your advisor would be able to discuss your personal circumstances with you
11:28-15:38
2. Interest Rate
Getting the right deal for your circumstances is so important to ensure you’re not paying more than you need too.
Use a whole of market mortgage broker, who can look at the whole market to find you the most appropriate and competitively priced deal available to you, rather than just one or two – or even “your bank”
Review regularly, rates change as we’ve seen over the past few
It’s natural to follow your friends, family and colleagues when it comes to moving and we’ve all looked sideways at some point in our lives, yearning for what someone else has!
We also tend to get bombarded with lots of information and “advice”, whether from those close to us or even the news and social media - but how should we decide if now is the right time to move?
02:10-08:47
Things are outside of your controlWe can’t second guess what’s going to happen or any impact on the Housing market prices drop – should you wait?
My advice is to base your decision on the info you have about yourself and family, your situation and goals and try not to worry what might happen
What if you wait?
You might still be waiting in 2 years, 3 years, 5 years and putting your life and your plans on hold!
Also, things that may not go to plan with you and your health – you can take steps to protect yourselves and your love ones again the financial impacts of this. No reason to delay if you’re ready now.
08:46-10:20
Changing Jobs – within same firm or moving firmsUnderstand your options – a mortgage broker will help.
Many mortgage lenders won’t penalise you for changing jobs and often will take your new income into account if you’re starting the new role within 3 months – subject to seeing your new contract.
If your income is increasing, it may mean your mortgage options are greater than in your current role. Lenders tend to apply a sense of reasonability in terms of the job change being in a similar field and any income change being sustainable.
10:20-12:34
Maternity LeaveLenders don’t discriminate if you’re on maternity leave. If you intend to return to work after your leave – most lenders would want a letter from your employer confirming your return to work date, terms (hours per week and salary) and be happy to include your income in their affordability assessments.
Lenders will also want to understand any childcare costs going forward – to ensure they’ve taken into account
12:35-15:35
DEFINITELY NOT A SILLY QUESTION FeatureQ - My friend says it’s better to buy in the spring – is that right?
A – No, there’s no one “best” time of the year to buy. Our situations, requirements and dreams all unique and as explained throughout this episode – the right time to buy or move home is when it’s the right time for you. There are times of the year, Spring being one of those, where more homes go up for sale – but it doesn’t mean it will suit you or your family situation.
REMEMBER:
1) Always SEEK ADVICE for your own circumstances, and;
2) A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments
15:37-18:56
Need to save up for a bigger depositThe smallest deposit is 5%, so with any less, you’d need to continue saving, unless family may be able to assist with a gift to boost your deposit. Have you asked them?
Understand the numbers – a mortgage broker will help.
Don’t just assume a 10% deposit is needed (for example) if you don’t have this yet.
Your mortgage broker could compare buying now with a 5% deposit now (if feasible) with waiting to save a larger deposit and buying in the future.
If you’re renting, saving more may take quite some time if you don't have much spare income and house prices may have increased in this time, so takes you even longer to save your 10% deposit
Example of my clients in 2018...
Things to know about Leasehold properties!
Vikki Herbert, Solicitor and Partner at Thackray Williams Solicitors joins me today to discuss some key things you need to know if you’re considering buying a leasehold property
Vikki has over 20 years experience in her field and specialises in Leasehold Enfranchisement Matters and anything related to a residential lease
02:39-05:09
The difference between a freehold and leasehold property –
o Freehold Property – you own both the land and the building. Most houses are freehold. There are some leasehold houses, although this is no longer allowed and new houses must be freehold
o Leasehold Property – essentially a long-term let – you rent the building that sits on the land. Flats are leasehold.
05:10-05:27
Discussions around topical issues/considerations with leasehold properties
05:28-11:17
Ground Rent - leaseholder pays the freeholder to rent the ground from them
o This is a fixed rent that’s clearly set out in the terms of the lease
o Increasing Ground Rents – lenders require that increases are reasonable i.e. broadly in line with inflation (Retail Price Index / RPI).
o Good conveyancer/solicitor will check out the detail to ensure everything's in order
o Try and get as much info on ground rent, service charge and the length of the lease upfront from the selling agent – it can be checked out
11:20-14:01
Service charge
o The charge paid to the freeholder or management company to maintain common/communal parts and structure of the building (roof, stairwell, gardens etc) and to provide buildings insurance for the whole building
o It can change from year to year.
o If buying a property, looking back at service charges from previous years can give a good indication of how costs may vary and what maintenance/works have been done.
o Speaking to other leaseholders (flat owners) in the building may also give a good sense of how well the freeholder treats the leaseholders
o Expensive Service Charges can be challenged as freeholders are obliged to charge “reasonable service charges”.
14:02-17:30
“DEFINITELY NOT A SILLY QUESTION” Feature
Q - Is it harder to get a mortgage on a flat near shops or commercial premises
A – Potentially yes, but it all depends on a number of factors: how close, what types of shop / commercial premises, what the local area is like. Essentially the lender wants to know how the proximity may affect the future saleability of the flat, which also has an impact on it’s value.
As we’ve said many times, all lenders have a slightly different approach to each other, some are more accommodating than others when it comes to this. You may also find that you’re required to put down more of a deposit than for a similar flat that isn’t close to commercial premises, which lowers the risk to the lender.
A Whole-of-Market Mortgage broker will be able to help you as they’ll understand the stance of lenders from across the market – so be able to quickly identify who may and may not be able to help.
REMEMBER:
1) Always SEEK ADVICE for your own circumstances, and;
2) A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments
17:32-20:37
Obtaining consent from freeholder / management company
Depending on the wording of...
With a number of 5-year fixed mortgage rates available at under 1% during 2021, many borrowers have been tempted to take a long-term fixed rate, but is this right for you?
Today I discuss why it’s important to take everything into account when deciding upon the most suitable mortgage product for you – you’re unique and what’s right for someone else may not be right for you!
All of our situations, hopes and goals are unique to ourselves – not a one size fits all
Never a right or wrong answer to what type of rate we should have – we must make decisions based on the information and options we have available to us when making a decision.
03:01-05:19
Main different types of rate:
Fixed Rate
Variable rate
05:20-13:09
Things to consider – which can be closely intertwined with eachother. A whole of market mortgage broker will be able to help:
o Expanding or contracting family
o Childcare requirements changes
o Desire to live within a school catchment area
o Potential Increase in Salary
o Possible Relocation
13:10-15:40
“DEFINITELY NOT A SILLY QUESTION” FeatureQ - “Why did my best friend manage to get a better rate on his mortgage, even though we live on the same street?”
A – There are so many factors that affect the rate you’re on, even with the same lender. When you took the mortgage, the size of your deposit / amount of equity, type of rate e.g. 2 year fixed versus a 5 year fixed rate.
REMEMBER:
1) Always SEEK ADVICE for your own circumstances, and;
2) A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments
15:43-17:23
LOWEST RATE ISN’T ALWAYS BEST!!! – Lenders offer products, some with fees and some without no fees. It may be more cost effective for you over the term of your product (for example over a 2 year fixed rate period) to have a slightly higher rate with no fee, as opposed to the lowest rate that has a fee (such as £999) attached.
17:24-23:28
Fixed rateso Gives peace of mind that monthly payments are fixed for a set period of time e.g. 2, 3, 5 or 10 years
o Tied to that product & lender for that set period and potentially have to pay charges/penalties to come away
o If rates across the market drop – your rate won’t as it’s fixed
o At the end of your fixed rate, you can organise another mortgage rate – although you’d have to access the rates that are available at that time
23:29-26:03
Tracker Rateso Can go up or down
o There may be products with no early repayment charges/penalties for repaying early or switching to another lender.
Discounted...
“Budgeting Advice with Lucy Wallington”
Lucy Wallington, the founder of Budgeting & Planning, joins me today to discuss some top tips to help you budget and focus towards achieving your money goals, whether that’s saving for your first home, next home or even that wedding you’ve always dreamed off!!
Lucy has over 30 years of experience in management roles in the retail industry and draws parallels between running the finances in her retail stores to running the finances in her household.
Budgeting plays a huge part in both, which led Lucy to start her business - Budgeting & Planning, providing budget planners for those in “every season of life”.
03:52-06:27 - It’s common for people not to be confident with their finances. Often this stems from “not being good at maths at school” and remains with people throughout life as an excuse not to take control of your money.
Important to get a grip on your finances. Know what money’s coming in and what’s going out
06:28-09:19 - Start with the End Goal in Mind – It’s important to understand what you’re trying to get from life and even harder to achieve it if you don’t know what it is!
We’re all different, our goals might be – dream 5 bed forever family home it may be 2 holidays a year, it may be linked to hobbies
Be intentional and don’t sleepwalk and amble along.
09:20-14:40 Tips for First Time Buyers Living at home, saving for a deposit:
o Put income and outgoings for each of the next 12 months
o Include before and after e.g. expected move date
o This at-a-glance view of your finances will give you clarity
o Have separate Bank Accounts:
1. Salary goes into bill account for all direct debits etc, then transfer:
2. Spending money into a 2nd current account – everyday spending
3. Surplus into savings account – do not touch unless it’s an emergency!
22:30-25:15 “DEFINITELY NOT A SILLY QUESTION” Feature
Q - What Bank Statements will I need to provide when I organise my mortgage application and in what format?
A – Banks tend to want to see your latest 3 months statements from each of your current accounts even if you have several. They want to see your income (salary etc) and expenditure (direct debits, credit commitments etc). They require this in a PDF file format, which you can obtain from your online banking. If you’re unsure how, a quick google search will help explain how to obtain your statements from your bank.
REMEMBER:
1) Always SEEK ADVICE for your own circumstances, and;
2) A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments
25:15-34:56 Budgeting Tips for First or Next Time Buyers, already paying a mortgage or rent
Print your last 3 bank statements and get 3 highlighter pens (or download into a spreadsheet)
Welcome to today’s episode - Use a trusted Mortgage Broker or DIY
It’s a common consideration – often driven by a number of different things like “we’ve always banked with ABC Bank, so we thought it was best to go and see them and get a mortgage”, or "I thought it might cost me more if I use a broker!".
It’s a topic I’ve been keen to talk about on the podcast as I’ve seen it from all 3 sides:
I use the term trusted Mortgage Broker – this is very important along with them being Whole of Market – i.e. can organise mortgages with lenders across the whole market.
We have another podcast episode that talks about choosing the right mortgage broker for you and choosing one that’s can support you through your mortgage life – but for now, I think it’s obvious why you’d want a GOOD one!
Let’s consider your situation now, you need to organise a mortgage to buy your first home, buy your next home or remortgage at the end of your current rate.
Do you:
1. go straight to your bank, or
2. find another bank to help, or
3. do you use a mortgage broker
Consider the question again in a slightly different way
What’s precious to you?
TIME | MONEY | LOW STRESS LEVELS | NO HASSLE | FEELING SUPPORTED NOW and Future | PEACE of MIND
Benefits of using a broker
Time
o After an initial call – often under an hour – they’ll get some docs then go away and research your options and report back.
Money
"DEFINITELY NOT A SILLY QUESTION!" Feature
Q - How easy is it for me to book a diary with you as a mortgage...
I discuss - Moving home, where do you start?
It’s likely that this has been on your mind for some time and now you’re getting motivated to take steps to make that move a reality.
Often it’s the case of needing more space for a growing family, maybe moving areas for a job move or to get your children into a particular school.
Whatever the reason, it should be a really exciting time, the thought of new beginnings and a fresh start. It can be daunting though and understanding what to do and in what order can help make things as smooth and stress-free as possible.
It’s likely that you won’t have moved for quite some time, so it’s possible that you can’t remember the process from last time, and even more likely that things have changed.
We spoke before, back in episode 1 about buying for the first time and where to start. In reality, things aren’t too different to then, only that you now have a home to sell too.
If you’re considering renting out your current home and buying a new residential home – don’t worry we’ll have an episode to discuss this (also known as a let-to-buy scenario), but for now, let’s assume you’re selling and buying.
It’s so important to break things down into smaller chunks – which I why I can’t emphasise enough that you should view selling your home and buying your next one as TWO SEPARATE TRANSACTIONS.
Yes, you’ll most probably need the proceeds of your sale for your deposit on your new home, but they really are two different things.
You’ll also need to do one before the other – selling your home is usually the hardest part and finding a new home (depending on what you’re looking for) a fair bit quicker and easier!
04:40-10:28
1. Get help from a Whole-of-Market Mortgage Broker asap and put a plan in place from the very start.
i. Buying and Selling costs
ii. Deposit
10:28-13:57
2. Speak with Estate Agents – at least 2 or 3
13:58-22:20
No Silly Questions...
The podcast currently has 24 episodes available.