For non-married couples, it’s vital to make a Will to ensure that those they wish to inherit their Estate actually do so.

In the first change of its kind since 1926, new Intestacy rules come into effect from today that will change the way in which relatives inherit assets from someone who has died without a Will.

In short, particularly for non-married couples, it’s vital to make a Will to ensure that those they wish to inherit their Estate actually do so.

Please find below a summary of the changes:

Unmarried couples

·        No change - Despite pressure to allow people who
have lived together for a number of years to inherit some part of their
partner's Estate, the new intestacy laws still make no provision for ‘common
law’ partners – even those who have children with the deceased. The only way
non married partners can inherit each other’s Estate is to make a Will.

Married couples/civil partners with NO children

·        Old Law – Only the first £450,000 plus half of the remainder would go to the surviving partner. The other half would be split between the deceased’s blood relatives.

·        New Law - Married spouses are now entitled to the whole Estate if their husband/wife dies without a Will and they have no children.

Married Couples and civil partners WITH children

·        Old Law – Surviving spouse would receive; the first £250,000 of the Estate, all the deceased’s belongings and life interest in half of the remainder of the Estate. The deceased’s children would receive the other half.

·        New Law – Surviving spouse receives the first £250,000 of the Estate and any personal belongings. Instead of receiving life interest in 50% of the remaining balance, they now receive it as an outright payment. The remaining 50% goes to the deceased’s children.

Adopted Children

·        Old Law – Risk that adopted children would lose their inheritance if they were adopted.

·        New Law – A child of the deceased will inherit even if they are subsequently adopted.

Redefinition of ‘chattels’

The legal definition for chattels has now changed to include anything that is not; monetary, business assets or held as an investment.

If a person has no surviving children or direct descendants (great grandchildren etc)

The Estate will be inherited in this order:

•    Your parents

•    Whole blood brothers and sisters, or their children if your siblings have not survived you.

•    Half blood brothers and sisters, or their children if there is no surviving parent.

•    Your grandparents.

•    Your whole blood uncles and aunts, or their children.

•    Half-blood uncles and aunts or their children.

•    The Crown.

Who is going to pay your bills if you lose your income ?

With millions behind on their household bills, UK bill payers need to consider how they would cope if they were to lose their income due to illness or injury.

Research released this month by price comparison site, uSwitch, found that 4 million households in the UK are in debt to their energy supplier, while a further 2.6 million are struggling to pay monthly bills.

We're hearing more and more about how people are living beyond their means, and spending more than they have each month - but what if you didn't even have your current income?

For many people in the UK, their monthly salary is already not enough to cover the amount that they need to pay out each month.

But not even careful financial planning cannot take into account unexpected income loss from having to take long-term sick leave.

No one likes to think about having an accident, but these latest statistics should be a stark warning to everyone who has bills to pay and debt repayments to make each month to think about protecting their income.

After all, if you're already stretching what you have to the limit each month, how are you going to meet your financial obligations if what you have coming in is severely reduced?

Income protection is a simple solution – and one that is like having your sick pay last the length of your mortgage instead of its current limited time.

If this was something that was of interest feel free to get in touch (mark@themortgagemonkey.co.uk)

FCA hits out at lenders' inflexibility towards existing customers

The FCA has hit out at lenders failing to use the transitional arrangements it introduced under the Mortgage Market Review to waive affordability checks for existing borrowers and instead keeping them on more expensive SVRs.

Speaking recently, FCA mortgage and mutuals sector manager Lynda Blackwell said that transitional provisions had been put in place under the MMR that did not require lenders to undertake an affordability assessment on product switches where no additional money is being borrowed.

The transitional arrangements apply when borrowers do not increase the mortgage amount and have a good payment history.

The original intention of the transitional arrangements was to help existing borrowers who had become unfairly trapped with their lender due to the fact that the MMR rules introduced after they had committed to a mortgage.

Without the transitional arrangements many existing borrowers would potentially have been prevented from moving or transferring to a better deal.

But Blackwell says the FCA has heard of cases where borrowers are being refused the option of moving to a fixed rate on affordability grounds and then having to remain on the lender’s more expensive SVR.

She says: ”That is not what the MMR says. It is disappointing to see this happening because lenders have wanted flexibility with the transitional arrangements. In the future it would be really good to see lenders approaching this in the spirit intended and using the transitional provisions to help out those borrowers who need to move home, who want a better rate, but who find themselves trapped because of tighter criteria and stricter affordability checks.”

 

A quarter of Critical illness claims are made before age 40

People must consider taking out cover earlier in life as around one in four claims for critical illness (CI) occurs before the age of 40, research has found.

According to recent data, which looked at the percentage of life and critical illness claims
in the UK by age group –

8% of people aged 25-40 had a life insurance claim.

24% of people aged 25-40 had a critical insurance claim.

Other findings showed –

61% of people aged 40 to 60 had a life insurance claim.

70% of people aged 40 to 60 had a critical insurance claim.

Finally –

33% of people aged 60 plus had a life insurance claim.

5% of people aged 60 plus had a critical insurance claim.

So what does this mean ?

Based on this new data around one in every 12 claims for life cover in the UK occurs before the age of 40, which is probably higher than most people would expect.

For critical illness the number rises to 1 in 4 which shows that putting off buying cover
until we are older can be counterproductive.

This data shows the importance of putting cover in place as early in life as possible.
Policies such as Serious Illness Cover pay out on diagnosis of even early stage
cancers or less severe heart attacks.

Conditions such as these can sadly affect people of any age and cover is usually cheaper for younger people, so it makes sense to look at protecting yourself at the
earliest opportunity.

If this is something that you would want to look into further , please feel free to get in touch.

Thanks as always for your attention.

Borrowers may have to wait weeks for branch adviser meetings due to new FCA rules from 26th April

Borrowers could be forced to wait weeks for an appointment with lenders’ mortgage advisers after the Mortgage Market Review as firms race to get qualified staff in place.

Last week, a Nationwide business development manager warned that customers could expect waiting times of up to a month to see one of their mortgage advisers.

He also said that face-to-face meetings could take between three and three-and-a-half hours from 26 April,when the rules come into place.

Nationwide has tried to play down the concerns, saying: “Over the last year, Nationwide has increased the number of mortgage consultants available in branch. Availability of mortgage
appointments is in line with demand and the society expects no material change
to this post-MMR.”

But experts believe all lenders will struggle with the new non-advised sales ban, where all sales must be advised where there is any form of “interactive dialogue” with a customer.

Moreover, the new rules require lenders to capture more detail from the borrower to ensure they can afford their loan.

As a result it may well be that some clients feel they are more suited to going to a mortgage intermediary (broker) if they feel they want to move forward a lot quicker than a direct lender can
offer them.

Association of Mortgage Intermediaries chief executive Robert Sinclair says: “I don’t anticipate any issues in the intermediary world in that we have already been taking in the kind of detail required under the MMR for some time. The big change is in the direct world, because of the requirement to take more detail than they have in the past. There will be delays – that may be in getting an appointment or how long those appointments take.”

Let your home look after you

Many people in the UK who are approaching, or are already in retirement, have an insufficient pension pot to fund the lifestyle they want in retirement .

This can be down to needing to draw on savings historically, or perhaps lower than expected
investment return.

And yet those same people who may think there isn’t a solution actually already have one that
they don’t know about - because it is a more common phenomenon that those same people
have significant equity tied up in their properties that can be made available to
help in exactly this way through equity release.

The lowdown

Equity release is a way to unlock cash that is tied up in your home as equity,without needing to move, and it is available to over 55s.

You can either take a cash lump sum or an income, or you agree a maximum available pot that you can withdraw money from as and when you need it.

There are two main types of equity release scheme:

·        A lender will give you what's called a lifetime mortgage, where the interest is paid during
or after the property is sold.

·        A home reversion scheme is where the equity release provider will either buy all (or a
portion) of your home for a cash sum and you can live there rent-free for as
long as you choose.

What can you use the money for?

When you release equity you are free to spend the money on pretty much whatever
you like – be it perhaps to clear an existing mortgage, create a lump sum to generate income, a gift to a family member  to perhaps help with a property purchase, or to buy that Harley you’ve always wanted !

Pros and cons

Any plan taken out will have an impact on the inheritance you leave to your loved ones, so that’s why it is important to take the right advice so as fully understand the implications of any scheme you sign up to.

The benefits of releasing equity though are significant -

• Access cash that was previously tied up in your home
• You don't have to move area or downsize to access this money
• You get to stay in your home for as long as you want
• Option to pay nothing until after your death (or if you move into long-term care
  and the property is sold)
• Use the money to fund your retirement, to gift to your family or for any other
  purpose.

When you take advice , the types of areas that will be discussed will be  -

• With a home reversion plan the provider will own a portion of your home, and will
  receive that portion of the proceeds when the property is sold
• With a lifetime mortgage, the proceeds of the sale of your home will need to
  cover the mortgage owing ( although providers protect the estate with a 'no-negative-equity-guarantee'.
• It will reduce the amount left to your family or others when you die.
• Funds released can affect any means tested state benefits that are received.

Get the right advice

It is essential therefore that you think carefully about an equity release scheme by taking expert independent financial advice.

In addition you should take separate independent legal advice.

Talk to your family

And while it isn't compulsory, it is recommended that you speak to your children or the other beneficiaries of your will to inform them of your decision and the impact it will have on them in the future.

What protection do I have?

The majority of providers now adhere to the highest standards through their membership of the trade body, SHIP.

Safe Home Income Plans (SHIP) ensures its members' products have a number of customer safeguards built into their plans. These include a guarantee that you can live in your home for as long as you choose, that you can move home if your circumstances change, a 'no negative equity' guarantee and, importantly, that you're entitled to independent legal advice.

There is no doubt that more of us will turn to equity release as a means of funding our retirement in the years to come – the mammoth pensions gap makes this inevitable, but with the right advice, it isn’t something that should be feared.

For many years you have looked after your home - perhaps it is now time for your home to look after you.

If you did want to find out more about this, please feel free to get in touch with me at -  

mark@themortgagemonkey.co.uk

Thanks for your attention

Base Rate to rise in Spring of 2015

Base rate is likely to rise next spring, Monetary Policy Committee member
Martin Weale said today.

Speaking to Sky News Weale said once base rate rises, further increases
will be gradual.

He says: “I think it is very helpful that we try and explain the most
likely path for interest rates that the first rise will come perhaps in the
spring of next year, and then the path is likely to be relatively gradual.”

In the latest MPC’s minutes, published earlier this week the committee said
base rate is likely to be “materially” below the 5 per cent average set by the
Bank of England prior to the crisis in the coming years – even when the economy recovers.

Since August, the Bank of England has sought to give consumers an
indication of when base rate is going to rise through a policy of forward
guidance.

It stated that base rate would not increase until unemployment dipped below
7 per cent or there was an unexpected spike in inflation.

However, earlier this month, Carney changed how the bank uses forward
guidance  just six months after first
introducing the policy to the UK. Although he maintains the policy has worked
so far.

The overhaul of forward guidance sees the direct link with employment
dropped so the BoE can focus on a much wider range of indicators focusing on
absorbing all of the spare capacity in the economy. This will see the Bank
publish forecasts of 18 more economic indicators for the first time.

As well as unemployment, the MPC will monitor factors such as participation
in the labour market, average hours worked and the extent of involuntary
part-time working, surveys of spare capacity in companies, labour productivity
and wages.