Firstly, we mean at normal retirement age which is now around 67 years of age. Though these estimates will hold good for slightly younger retirees.
According to research carried out by Loughborough University and the Pensions and Lifetime Savings Association (PLSA), workers who only manage to save enough for a retirement income that provides them with £10,200 a year (£15,700 for couples) will achieve a minimum living standard, those who managed to save enough for £20,200 a year (£29,100 for couples) will be able to live a moderate lifestyle during retirement and those who are able to save enough for £33,000 a year (£47,500 for couples) will be able to enjoy a comfortable retirement.
The study took all aspects of people’s lifestyles into account when deciding what constituted as a minimum, moderate and comfortable retirement lifestyle. The report found that a minimum living standard will enable a single retiree to spend £38 per week on a food shop, have a one week holiday and a long weekend in the UK per year, will not be able to afford a car and will have £460 per year for clothing and footwear.
A single person able to afford a moderate retirement will be able to spend £46 on a food shop each week, enjoy two weeks in Europe and a long weekend in the UK each year, and will have £750 to spend on clothing and footwear each year.
Meanwhile, a single person enjoying a comfortable retirement will be able to spend £56 per week on their food shop, enjoy three weeks in Europe every year and spend £1,000-£1,500 on clothing and footwear each year.
With no other income a couple would require savings in excess of £1Million to have certainty of a fixed level income of £47,500 without dipping into the capital. However, you will have a state pension and if you are both born later than 6/4/1953 this could be over £18,000 for a couple presently. This would mean needing £641,000 in savings. You could get away with less if you dipped into the capital amount, but don't forget inflation is the biggest eroder of wealth.
There is a lot more to this with everyone's individual circumstances. If you would like to discuss your retirement and pension and make sure you are on course, please contact us and we will be pleased to help and advise.
The Government are now considering to pile further pressure on landlords by imposing a 3 year minimum tenancy agreement. However, the tenant can leave anytime by providing a short notice of intent.
Many of the existing Buy to Let mortgage agreements contain stipulations that the mortgagor cannot provide tenancy agreement in excess of 12 months. These currently include Metro Bank, NatWest and Virgin Money. Though some lenders such as Coventry, Precise, Paragon and Aldermore will allow up to 3 years. So as independent mortgage brokers specialising in investment loans, we will be able to source you the most suitable mortgage, whatever the Government throw at us.
If this happens, this is just another thing to add to the list of squeezes already in place:
April 2016: Stamp duty surcharge of 3% came into effect on purchases of buy to let properties and other second homes.
April 2017: Mortgage interest tax relief gradually phased out and replaced with a new tax credit, which in many cases is less generous.
April 2018: Fines of up to £4,000 introduced for landlords who let out properties that do meet energy efficiency rules.
May 2018: First reading in parliament of the Tenants Fees Bill, capping deposits at six weeks rent and banning fees for tenants.
July 2018: This new consultation to propose 3 year minimum tenancy agreements.
We have always stated that investing in property is for the longer term and we believe it is still a worthwhile investment, but more care and professional planning has to be taken now from the start of such investments.
We have been advocating setting up bespoke limited companies for the serious property portfolio builder and high rate tax payers. Couple this will well sourced and suitable mortgages products, then there is still money to be made in this sector.
Please contact us for further guidance and mortgage sourcing.
For many years, mortgage companies have requested our self employed client's SA302 to provide proof of income to support a mortgage application. This form is issued by HMRC and simply confirms the income that has been declared on the individual's Self-Assessment Tax Return. It has been a point of contention that lenders have insisted on this form as far easier would be to provide a copy of the Tax Return and supporting schedules to a potential lender directly from our client's accountants, without the delay of waiting for HMRC.
Over the last year, we have seen that some lenders now accept a print out of an accountants Tax Calculation form together with a Tax Year Overview from HMRC online. Nonetheless, we have still have several lenders continue to request the SA302s.
From 4th September 2017, HMRC have announced that they will no longer issue a paper copy SA302 as many lenders have now agreed that they do not require them. I truly hope that this is the case, but I am concerned as to why I am still being asked to obtain the form SA302 from HMRC. Please click here to see a list of all the lenders that have agreed to accept an Accountants tax calculation together with a Tax Year Overview.
If you are self-employed or take a significant amount of your income as Dividends and are thinking about a mortgage, then we strongly recommend that you allow us to review this list and seek confirmation that the lender will not require a form SA302 to avoid any unforeseen delays in your mortgage application even if you miss out on a slightly better mortgage rate.
We have just added a page to our website looking at some options for children's savings. Please take a look.
Portfolio landlords with four or more mortgaged buy-to-let properties will have to meet new requirements
If you are a landlord building a buy-to-let property empire, watch out. Tougher lending rules came into effect from the 1st October 2017, which could make arranging the finances a little more arduous.
After the introduction of stricter affordability tests for all buy-to-let mortgages at the beginning of the year, the latest set of requirements from the Prudential Regulation Authority (Financial Conduct Authority) are targeting loans to portfolio landlords with four or more mortgaged buy-to-let properties.
Under these rules, mortgage companies will need to undertake a full analysis of the landlord’s entire property portfolio as part of the lending process.
Although this analysis can vary between lenders, it is likely to include factors such as the cash flow across the portfolio, the borrower’s experience in the buy-to-let market, any assets, liabilities or alternative sources of income, and even the location of properties.
So you might be looking to buy another property that looks great on its own but, if you already have a portfolio of 10 properties where the rent is only just covering the costs, you could find your application is rejected.
As well as putting a stop to some of the higher-risk buy-to-let lending, the additional work required to assess suitability could mean a longer application process. Some lenders already have good systems in place that enable them to assess applications quickly and efficiently, however, for others, the increase in the amount of information required could mean a longer wait for a mortgage decision.
There could potentially be increases in the cost of borrowing to cover the extra administrative burden, or maybe higher product fees.
There is also much uncertainty about whether some lenders will continue to operate in the portfolio landlord market. Although some, including Paragon Mortgages, have already stated they will carry on lending regardless of the number of properties, others are more reluctant.
For instance, Santander has announced it will only allow portfolio landlords to remortgage if there’s no capital raising.
It is essential you make sure you've got all your paperwork in order. We are helping client’s with spreadsheets of the their portfolios and ensuring their tax and income information is up to date.
Some lenders may also want to see your business plan outlining how you intend to run your property portfolio.
It seems a lot of work, but we are confident we will continue to be able to source the finance you need.
The average cost of a wedding is now £25,000. Now where do think some if not all of that money is coming from?
And, the Bank of Mum and Dad grows to become a £6.5bn UK mortgage lender – on a par with the 9th largest UK lender.
These are seriously big figures. Parents really do have to factor in these costs into their financial planning. Luckily, we at Lloyd Vine can help you with a financial plan that if you start early and use tax efficient investments will ease the pain. Plus if you are lucky enough to escape these costs, you can use your savings on yourself!
Beware of “free” travel insurance. Many people trust their banks, building societies & credit cards for travel insurance, which is often bundled in with their accounts. Many people think they simply have travel cover no matter where they go or their medical history.
Some credit cards such as AMEX come with travel accident cover, which is far inferior to the normal comprehensive cover.
Often you are paying for this cover within an annual fee for a credit card. Take Barclays. They offer account holders free worldwide family travel cover if you add the ‘Travel Pack’ to your account for £10.50pcm. Nationwide Flex Account must pay in at least £750 to qualify just for annual European cover and the Halifax Ultimate reward account holders pay a £15.00pcm fee for worldwide cover.
NatWest , for a fee of £12.50pcm (reward Silver Account) only allow Europe and so if you want worldwide cover you would have to upgrade and pay even more per month.
Such policies often have an upper age limit of around 70 years. Other plans place geographical limits. Their definitions could be different to yours. EG which countries are included in Europe?
Generally, the cover is basic and lacks features a normal comprehensive policy would include. What medical pre-existing conditions would invalidate a claim?
And as with any other insurances, if you buy it or it’s offered direct, it’s your responsibility to ensure you are covered correctly. Whereas you could arrange comprehensive cover through a professional insurance broker like Lloyd Vine with help on any personal issues you may require addressed. You will be surprised how reasonable the cost is. Further for those people with ailments cost and cover is no barrier to travel.
As the UK government continues to move the burden of state benefits back onto individuals, a change to ESA (Sick Pay) came into force April 5th 2017. After the 28 week Statutory Sick Pay period, ESA kicks in. If you are assessed and placed in the work related group, the benefit has gone down by over £29 to just £73.10 a week.
With the average UK salary over £25,000, individuals needing to claim are over £400 a week worse off on average. Only 10% of the working population have any form of income protection. You really do need to be concerned about this and establish what (if any) employee benefits you would have and how long you could survive without your main income.
Use our online immediate quote facility. Or please contact us. We can provide more options to help ensure the cover fits you and the cost is relatively low.
I thought it would be informative to share with you this guide provided by one of our many lenders, Kensington Mortgage Mortgage Company Limited.
Household savings have sunk to a record low - highlighting fears consumer spending levels are unsustainable in the wake of the Brexit vote.
The Office for National Statistics (ONS) reported the savings ratio sank to its lowest level since records began in 1963 in the final quarter of 2016. At the same time, it measured the sharpest drop in three years in real disposable income - falling 0.4% compared to the previous three months.
It is understood that 1 in 3 people are just one month away from financial disaster. How long could you last without your main salary or wages?
Most employers offer little or no sick pay and the statutory sick pay is so low, it would not support the average home. We can offer you bespoke income protection policies to cover loss of income due to accident and illness and right up to retirement age if necessary. Please call Adrien if you would like to discuss further: 02380601685