BUYING YOUR FIRST HOME – WHERE DO I START?

BUYING YOUR FIRST HOME – WHERE DO I START?

Nick Hepburn, Financial Adviser

Buying your first home is very exciting but can also be quite stressful.  I know this from first-hand experience, having bought my first property last year as well as helping other First Time Buyers as an adviser.

A good place to begin is to work out your budget and look at how much you think you can afford for the monthly repayments. If you have previously rented a home, you may have an idea of what you are able to afford based on the rental payments.

Historically, a lender would simply offer a mortgage amount based upon a multiple of your income, but nowadays it’s more about affordability.  Lenders will look at your outgoings as well as your income (bills, credit cards, other loans and debts) and work out the disposable cash you have each month.

This can get tricky and the criteria for each lender will vary, which is why it can be sensible to take advice from a qualified mortgage adviser.

There are mortgage repayment calculators available online to help give you a better understanding of how much a lender would be willing to lend and what the monthly repayments would look like.  Most lenders will offer these so a good place to start would be with who you hold a bank account with. Other high street banks like Barclays and Santander offer a good calculator.

WHAT DEPOSIT WILL I NEED TO GET A MORTGAGE?

There are many different mortgage products available on the market and, typically, you will need a minimum deposit of 10% to get a wide range of choice.  There are lenders who offer lower deposit mortgages but, as you might imagine, these often have higher interest rates.

The general rule is, the bigger the deposit, the better the interest rate and the lower your monthly repayments will be.  So if you have the opportunity to push the deposit up a bit, (possibly asking family to help), it could be very beneficial.

PROTECTION – DO I NEED PROTECTION WHEN TAKING OUT A MORTGAGE?

One area that is vital to consider when buying a home is protection.  How would you make your monthly mortgage payments if you were unable to work?  How would your family cope financially if you died?  Protection comes in many forms, from life assurance and critical illness to income protection, with options to cover almost every possibility.  It’s my job to make sure you have the right protection in place for your circumstances, just when you need it.

You wouldn’t buy or rent a home without home or contents insurance. You wouldn’t buy a car or holiday without insurance. So why would you not want to protect yourself and your family against death or serious illness?

Life can be complicated and unpredictable. Insurance exists for a very good purpose to help you maintain what you have in times of hardship and provide security for your loved ones.

FINALLY A FEW QUICK TIPS

  • Check your credit file – you can obtain copies of your credit file from credit reference agencies such as Equifax, Experian and TransUnion, or all three on Checkmyfile. No need to pay for these and can often sign up for a free trial.
  • Don’t miss payments or make late payments – this may result in you losing your home. If you’re struggling to pay, contact your lender to make them aware, as they may be able to offer a solution.
  • Keep other applications to a minimum in the months before applying for your mortgage – too many new commitments will leave a footprint on your file that can impact your chances of obtaining a mortgage.
  • Budget for additional fees – including solicitor fees, moving costs and a shopping trip to IKEA

Once you’ve done all that, you can enjoy life in your new home!

If you or anyone you know is looking for a mortgage or a re-mortgage, I’m here to help.  You can contact Four Oaks Financial Services on 0121 323 2070, or come direct to me at nickhepburn@fouroaksfs.com

 

Moving Forward at Four Oaks!

Moving Forward at Four Oaks!

Gemma Randle, Practice Manager

Four Oaks Financial Services is made up of various departments whose primary focus is to ensure that our clients receive a first-class, professional service.  Our Practice Manager, Gemma Randle, explains some of the ways our company has been developing recently, all of which is aimed at maintaining and enhancing the service we provide.

‘’We are always looking at innovative ways to build and maintain effective processes within the company.  Throughout our departments, the focus is always on delivering the very best experience for our clients; we strive to be the support needed to provide the right outcomes in a timely manner.

Four Oaks Financial Services continues to invest in back-office infrastructure.  We’ve recently introduced a leading telephony system which has allowed the departments and our clients access to new communication technology.  For instance, when our clients call through to the office, they can now speak with their Financial Adviser through a direct extension number, even if the adviser is on their mobile phone out of the office.  Pleasingly, this has had very positive feedback from advisers and clients alike.

Like many other companies during the pandemic, we quickly had to adapt our systems and processes.  We invested heavily in our IT systems so we could continue to operate effectively while our Financial Advisers and support staff were working from home – something we had never had to consider before 2020.  We were very keen to ensure that our clients could still have face-to-face meetings, although they had to be carried out via video link rather than in person.  Trust me when I say this was as big a learning curve for our advisers as it has been for our clients!  The changes remain in place so that we can continue to offer our clients the option of video meetings, though happily our advisers are now able to see clients in person again.  Our support staff are pleased to be back working in the office, though we do still have some hygiene measures in place.

We continue to invest in the training and development of our excellent team of people. Recently we implemented a programme to uplift the skill and knowledge of our Financial Administration team as well as helping and supporting them to undertake financial examinations, providing them with continuing career opportunities at Four Oaks.

As Practice Manager, I’m responsible for the smooth day to day running of the office. This includes making sure our company remains compliant by working within, and keeping up to date with, policies and procedures. This includes our staff completing a First Aid at Work course and a Fire Safety course. The safety and well-being of our staff and clients alike is always our top priority.

I am proud to be the Practice Manager of Four Oaks Financial Services, and I’m excited to tell you that there is more to come throughout 2022. We work hard to provide a financial solution for our clients, but behind the scenes you can see how important it is to us that we are a family-friendly, caring company too.’’

Essentially Mortgages and Essentially Wealth Magazines Quarter One 2022

Essentially Mortgages and Essentially Wealth Magazines Quarter One 2022

Check out our latest quarterly magazines with lots of tips on getting the best deals tailor made for you!

Essentially Mortgages Q1 2022 has a very interesting article on what 2022 has in store for the housing market and advice on taking a mortgage out in retirement plus many more hints and tips on Mortgages.

Essentially Wealth Q1 2022 has a look at new regulations to prevent pension scams and how we can spot them and also, a guide to how we can inflation-proof our savings.

If you keep your money in the bank it’s safe….isn’t it?

If you keep your money in the bank it’s safe….isn’t it?

Ashley Reeves, financial adviser writes;

Ashley Reeves

While money held in a regular bank account or cash ISA is guarded from many risks that other financial instruments are exposed to, it is subject to one often overlooked factor, inflation risk.

You may well have seen reports in the press recently that the cost of living is rising.  After many years of very low levels of inflation, this is certainly an issue that’s starting to cause concern with our clients.

There are many factors that can affect the rate of inflation, which I won’t go into here, but essentially it leads to a rise in the cost of goods and services over time.

The Office for National Statistics uses a metric called CPI (Consumer Price Index) to measure the rate of inflation. This looks at the average cost for a ‘basket’ of goods and services that the average UK resident will use. It does not include rent or mortgage costs. To take an example, while utility prices have increased by up to 12% at the end of 2021 (bbc.co.uk), the other items in the basket have increased by a smaller amount, leaving the CPI inflation measurement at 5.4% (Dec 2021) (ons.gov.uk).

At the current level of 5.4%, this is already much higher than we have been getting used to, and particularly with rising energy prices, we may well see even higher rates of inflation in the coming months.  On the flip side of this, we haven’t seen any significant rises in the interest that is being paid out on bank and savings accounts, including funds held in cash ISAs.

For many people living on a fixed income, these will be worrying times.  But if your wages rise roughly in line with inflation, then immediate costs, such as food, rent or mortgage, bills and car costs aren’t particularly affected by inflation. As the money is paid out very close to the time you receive it, then inflation doesn’t have time to increase the costs in the time between receiving and spending.

However, let’s look at a scenario where a couple are aiming to earmark some funds for future spending on a special holiday.

Peter and Mary are due to celebrate their 25th wedding anniversary in five years’ time and have recently received a lump sum of £15,000 from a relative.  The holiday they are looking at would cost exactly £15,000 today, so they put the money into a cash ISA with a view to holding it to pay for the holiday in five years.

They find a relatively good deal on a cash ISA, which offers 0.96% interest per year (Oak North Bank, Jan 2022). In five years, their £15,000 will be worth £15,733.96, assuming the interest rate remains unchanged throughout the period.  At first sight, Peter and Mary are pleased with the increase in the value of their money and look forward to splashing out on their holiday.

However, sadly the cost of the holiday is likely to increase over the five years. Let’s assume no factors other than inflation will affect the cost of the holiday. Inflation currently sits at 5.4%, so let’s assume that rate will remain stable throughout the five years.  The holiday will now cost £19,511.66.

Peter and Mary find themselves £3,777.70 short for their holiday of a lifetime and will now have to make the unpleasant decision whether to buy a cheaper holiday or use funds from elsewhere to make up the difference.

So, what if Peter and Mary had come to speak to me at Four Oaks when they first received the £15,000?

After deciding that we can work together, we would have undertaken an in-depth fact find, where we discover all of Peter and Mary’s incomings and outgoings and find out what their goals are.

Now that we know that Peter and Mary are looking to use their £15,000 to pay for a holiday in 5 years’ time, we can advise on the best course of action. Knowing the effect that inflation may have over the investment period, we can choose a fund that will suit Peter and Mary’s attitude towards risk and reward, but that will also offer the potential for growth that will match the rate of inflation.

If that fund performs better than expected, Peter and Mary will have some surplus funds which they can leave invested or use elsewhere.

If the fund performs worse than expected, they may still be left short on their holiday, but with regular reviews through the investment term, they will have been kept updated on the progress of their funds and will have been able to prepare for the shortfall.

Offsetting inflation is important for any funds that are earmarked for use in the future, so contact me for a free initial meeting and find out how I can help.

 

 

 

  • Investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA managers.
  • Tax treatment varies according to individual circumstances and is subject to change.
  • Stocks and Shares ISAs invest in Corporate bonds; stocks and shares and other assets that fluctuate in value.

 

Welcome to Gareth!

Welcome to Gareth!

Gareth Stubbs, Financial Adviser

We are delighted to announce that Gareth Stubbs has joined our team of advisers at Four Oaks Financial Services. After spending many years in senior management roles in the construction and manufacturing industries, Gareth decided it was time for a career change and wanted to pursue a career that interested and excited him. He already had a degree in economics and qualifications in management accountancy, so was drawn to financial advice, having always had an aptitude for figures. Following a conversation with MD Martin Ward, Gareth decided to study for a Diploma in Professional Financial Advice. Having passed all his exams with flying colours, Gareth became a fully qualified financial adviser last year and is now keen to start helping his clients achieve their financial goals, through his knowledge and life experience.

Gareth is married to Beckie, who is a Director of Four Oaks Legal Services, and he has two adult children, as well as two rescue Podencos.

Outside of work, Gareth has many hobbies. He is a keen member of a local cycling club and has been fortunate to ride many of the famous mountain climbs around Europe, as well as completing Lands End to John O’Groats. He is also a longstanding member of Lichfield Running Club, participating in many events including the Fours Oaks Financial Services Lichfield Half Marathon and 8 London Marathons, as well as ultra runs in the Lake District.

Gareth is also a long-suffering West Bromwich Albion season ticket holder, but doesn’t want to mention that……

Demystifying Pensions

Demystifying Pensions

Carl Hobbins, Financial Adviser

The majority of people spend their whole working life allowing their employer to deduct income from their pay packet and in turn pay this money into a ‘default’ pension scheme, along with some employer contributions. The minimum employer contribution under current employment law is 3% of pensionable earnings, along with a minimum 5% from you, as the employee. This is fantastic, as at least 3% of your pension contributions aren’t even made by you. Some employers pay more into employees’ pension schemes and some even offer ‘matching contributions’ whereby the more the employee pays into their pension scheme, the more the employer will too.

 

People spend whole careers with the peace of mind that they have a ‘pension’. As a qualified Financial Adviser, I often ask friends, family members and clients alike, what type of pension do you have? Where are your pension monies invested? Who manages the pension fund? What’s your risk appetite when choosing your pension investments? Typically, and understandably, there are some blank faces to these questions with the usual response being “I’ve got several pensions. One from my employment with X company, then I moved to Y company and now I think I have a current pension with Z company”.

 

I also meet equally as many self-employed clients, many of whom have that typical entrepreneurial spirit that led them down the self-employed path in the first place. “I’ll just buy a buy-to-let property later down the line and use that income for my retirement”. “I’ll sell my business in the future”. “I can’t afford the contributions right now, so I’ll do it when I’m earning more”. These are the same types of clients I see later in life when often, none of this panned out. If those regular pension contributions had started many years earlier, they would have gone a long way by now.

 

A pension is a tax efficient wrapper. Think of a pension wrapper as a ‘vehicle’ to store your retirement savings in. But what sits under the bonnet of that vehicle is the underlying investment (the engine of the vehicle) that your cash is exchanged for each month/year. The underlying investment is pivotal in your retirement savings journey. It is very easy to obtain a pension, but it gets trickier when deciding where and how to invest the money within it. Have you ever received professional advice as to where your pension monies are invested and if it’s the most suitable strategy for your personal financial plan? Do you even have a financial plan?

 

When advising clients, I like to think of myself as a life planner. How can I effectively advise a client before understanding what’s important to them and their family and what their end goals are? I can then recommend a personalised financial plan for them, having established their attitude to financial risk, their capacity and need to take risk and the time horizon for their investment. Once we have a bespoke financial plan, we can then finally move onto the actual financial solutions that are most suitable for them. We need to understand your very individual circumstances and aspirations to be able to advise you properly.

 

I meet many clients later in their working life who approach me to ask, how much is enough in order for me to retire? How long will my money last? Will my money run out? Can I afford to retire early? I take the same view of pension planning as with anything else in life; always start with the end in mind. Getting solid financial advice earlier in your life puts you in the driving seat for the journey ahead, gives you peace of mind along the way and results in eventual financial independence.

 

Contact me today on 0121 323 2070 to discuss your financial future.

Welcoming Ashley Reeves to Four Oaks FS!

Welcoming Ashley Reeves to Four Oaks FS!

Ashley Reeves Financial Adviser

We are delighted to announce that Ashley Reeves has joined our team of advisers at Four Oaks Financial Services.  After deciding to study for his Level 4 Diploma and passing in 2019, he is now taking the plunge into his first advisory role.

Before joining us, Ashley spent the last 10 years working as a sales manager. He feels that his background in customer services, along with his BA (Hons) in Banking and Finance and his recent studies will stand him in good stead for his new adventure.

Ashley offers advice on savings and investments, pensions, mortgages, and protection. His experience from friends, family and colleagues in the past has led him to believe that, generally, people don’t have enough knowledge about their own financial situation and what possibilities exist for them. He would like to use his expertise to help his clients get the best from their circumstances.

Ashley says “Joining Four Oaks was really a no-brainer. After a speculative phone call to see if they were looking to take on any new advisors, the process of going through compliance and training ready to get started has been a pleasure. The whole team at Four Oaks have been incredibly helpful and supportive. I can’t wait to get out there, meeting clients and making their money work harder for them”.

Away from financial services, Ashley enjoys walking his miniature schnauzer with his girlfriend and, also the odd round of golf. His search for a hole in one continues……

Welcome to the team, Ashley!

Essentially Mortgages and Essentially Wealth Magazines December 2021

Essentially Mortgages and Essentially Wealth Magazines December 2021

Check out our latest quarterly magazines with lots of tips on getting the best deals tailor made for you!

Essentially Mortgages Nov 21 looks at how lockdown may have worked in your favour and also explains some of the confusing jargon that can be used when deciding which mortgage is best for you!

Essentially Wealth Nov 21 has tips on self-care for the self employed and when to consider making an ‘early inheritance gift’ to loved ones.

 

 

Pension Planning at 40… – What have I learnt reaching this milestone?

Pension Planning at 40… – What have I learnt reaching this milestone?

Matt Rogers, Financial Adviser

When is the best time to start saving for your future?

As Financial Advisers, this is a question we will be asked by our clients. In short, it is never too late to invest in your future however, the younger you start the better.

Having recently turned 40, this is quite a poignant subject for me personally. It doesn’t seem five minutes ago since my 30th birthday and in another ten years’ time, I will be at an age where I could potentially be looking at accessing my pension within the next five to ten years.

When I was a young adult in my first full time job, my father tried to instil in me the importance of paying into a workplace pension. At the time I thought ‘why the rush’? I have another forty plus years before I need to think about retirement. However, this was one of the best lessons I learnt and has always stayed with me.

Worryingly, many individuals are most probably of the same mindset that I was in back in my early twenties as in fact one in five Britons say they have no form of private or workplace pension. – (according to a recent survey by comparison site finder.com) – Source Financial Mail on Sunday 02/10/21

 

Being financially independent in later life makes life easier for both you and your family.

The ideal time to start paying into a pension is between the ages of 20 – 40 years old. Even small contributions into a pension can make a huge difference as any money that is put aside early has time to snowball into something much bigger.

If you pay the money into your pension yourself, or if it is taken by your employer from your pay packet, you automatically get 20% tax back from the government as an additional deposit into your pension pot.

If you are a higher-rate tax payer you can claim an additional 20%, while top-rate tax payers can claim an additional 25%.

If you are self-employed, you would need to set up your own private pension but you are still able to benefit from tax relief on contributions. However, only around 15% of the 5 million self employed people in the UK are currently saving into a private pension. (Source: Financial Mail on Sunday 2/10/21)

In addition to tax relief on pension contributions, the pension fund benefits from tax-free growth just like an ISA.

Don’t wait to start your pension – The cost of delaying!

If your present age is 30, with a retirement age of 65, by starting to pay now, you could receive a pension:

  • 31% higher than if you waited 5 years and made the same monthly payments
  • 76% higher than if you waited 10 years and made the same monthly payments
  • 21% higher than if you waited 5 years and made the same single payment
  • 47% higher than if you waited 10 years and made the same single payment

These figures are based on a Stakeholder Pension and assume a yearly investment growth rate of 5% with fund charges of 1% each year.

Tax rules can change. The value of an investment is not guaranteed and can go up as well as down depending on investment performance (and currency exchange rates where a fund invests overseas). You could get back less than you invested.

Source – Cost of Pension Delay Calculator – Scottish Widows

Many people in their 50’s think they have left it too late to invest into a pension when in fact, this is not the case. The fact that you can take money out of your pension from the age of 55 means that once you reach your 50’s and 60’s, you don’t need to lock your money away for decades to benefit from the tax advantages.

If you’ve reached your 60’s with no money set aside for your retirement, you’re not alone. Around 17% of those aged 55 and above admit to having no pension investments. (Source – Financial Mail on Sunday 02/10/21).

However, there are steps that you can take. Check that you have no pensions that you have forgotten about from former employers. It’s important that the performance and allocation of these investments are reviewed regularly as new funds may be available that offer greater growth potential.

Older pension policies potentially have higher fund charges and if your attitude to risk has changed, the funds may need to be moved to investments that better meet your needs and may benefit from lower fund charges.

Make sure that you are receiving the full state pension to which you are entitled. You may be able to top up your state pension by making voluntary contributions.

So, what can you do to start saving for your future now?

The easiest way and one which I still do now is by setting up a direct debit. By setting up a direct debit to go into a pension, you effectively ‘pay yourself first’ by looking after your future self before spending on other outgoings.

The one thing I would like you to take away from reading this is that it’s never too late to start saving for your future and it is part of my job as a Financial Adviser to help you plan and achieve your retirement goals and objectives.

It doesn’t matter if you have left building a nest egg until now, the important thing is to not put it off any longer.