In a fixed-rate mortgage arrangement, the interest rate is fixed for a pre-determined period of time, 2, 3, 5, and 10 years are commonly available, but other options do exist. The monthly mortgage payment will not change, no matter whether the Bank of England or the mortgage provider raises or reduces interest rates. For the borrower, the advantage of a fixed rate deal is that they know exactly how much their monthly repayment is going to be each month and for how long.
In some instances, the interest rate charged on a fixed-rate mortgage can be higher than the interest rates charged for other types of mortgages. The borrower may also have to pay an arrangement fee to set up a fixed-rate deal. Usually, once a fixed rate arrangement comes to an end, the lender's standard variable rate applies.
In a Standard Variable Rate (SVR) mortgage, the borrower’s monthly repayments are based on the prevailing rates of interest their lender charges and not the Bank of England (BoE) base rate. In other words, it is entirely the lender’s decision on the rate of interest they charge the borrower.
Although the rate of interest charged in an SVR mortgage can be heavily influenced by changes in the Bank of England base rate. Whenever the bank raises or lowers the base rate, the lender can do the same, or ignore the change altogether. On occasions, the lender may increase or decrease their rates of interest even if the BoE has not changed theirs. The rate of interest charged on SVR mortgages can often range from 2% - 5% above the base rate - or more.
As SVR mortgages do not involve any special financial inducements, they can be more (or less) expensive than other types of mortgages. And unlike fixed-rate mortgages where the rate of interest never changes, SVR borrowers can never be certain when their monthly repayment may change.
Whether you are looking at consolidating your debts, raising money for home improvements, looking for a better monthly payment than you currently have, or want to restructure the terms of your current loan - we can help.
Remortgaging can help your financial health in many ways. In simple terms, remortgaging involves moving your current mortgage to a new arrangement, arranged either with your existing lender or with a new lender.
Many borrowers choose to review their mortgage every few years in order to take advantage of the new rates on offer. Those who remain on the same deal for the full term of their loan could lose out by paying more money than they need to. They could also miss out on the chance to finish their mortgage term earlier than originally planned.
THE CORE REASONS TO CONSIDER REMORTGAGING ARE:
To avoid moving home
It can be more convenient and cost-effective to enhance your existing property, rather than move home. This can be financed by remortgaging or a further advance.
The prospect of buying your first home could be both daunting and confusing. Our aim is to guide you through the process from start to finish so that you understand exactly what the purchase entails and how much it will cost.
The mortgage market changes all the time, not just in terms of mortgage deals and regulations but also in the way lenders assess loan applications.
Some of the changes have been in the way mortgage lenders assess the suitability of all clients for the different types of loans on offer. They base this decision on a variety of factors, primarily:
Once your mortgage application has been accepted in principal, you may have the option of deciding how you repay the loan: on a ‘repayment’ basis, or on an ‘interest only’ basis.
Repayment mortgage
With a repayment mortgage, your monthly repayments cover both capital and interest on the loan.
As the term continues, the amount outstanding on the loan reduces so the full amount of the loan will have been repaid at the end of the term as long as you have made all your payments on time.
No other repayment vehicle is needed and it avoids the risk of investing (e.g. in the stock market).
If you remortgage, you may be tempted to extend the end repayment date in order to lower your monthly payments. However, this means that the amount you repay overall increases over time.
Most professionals carry professional indemnity cover. If you sell professional advice, your knowledge or skills, you may wish to consider taking out professional indemnity insurance.
If, for example, you made a mistake or are found to have been negligent in one or all of the services that you provide for clients, they may bring a claim for compensation against you. Professional Indemnity Insurance protects you against compensation actions by a client. Without this insurance, the financial security of your business could be threatened.
Most employers are required by the law to insure against liability for injury or disease to their employees arising out of their employment.
Employers are responsible for the health and safety of their employees while they are at work. If your employees are injured at work, or they become ill as a result of their work while in your employment, they may claim compensation from you if they believe you are responsible.
The Employers' Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims. Employers' liability insurance will enable you to meet the cost of compensation for your employees' injuries or illness whether they are caused on or off site. Injuries and illness relating to motor accidents that occur while your employees are working for you may be covered separately by your motor insurance.
A relevant life insurance policy enables employers to provide individual death-in-service benefits for their UK-resident employees who are aged 17 - 71 when the policy is established. The policy, which is applied for and paid for by the employer, pays out a tax-free lump sum if the insured employee dies — or is diagnosed with a terminal illness — whilst in the service of the employer.
Relevant life plans are however available only where an employer-to-employee relationship exists — i.e. employees of a limited company. For that reason, relevant life insurance is not available to sole traders, a partnership’s equity partners or equity members of a Limited Liability Partnership
Employees can use a relevant life policy to provide their own individual ‘death in service’ benefits in addition to those offered by their employer’s group life insurance scheme if such a scheme exists. The premiums paid to a relevant life policy and the benefits paid out, are not included in the employee’s annual or lifetime pension allowances. (Relevant life is a term insurance, so the policy has no surrender value.)
If you're unable to work because of illness or injury, under an employers group sickness scheme (Group IPI) salary is continued but is subject to tax and NI in the usual way.
The maximum amount of income you can replace through insurance is broadly the after-tax earnings you have lost, less an adjustment for state benefits you can claim. As with all insurance, it is important that you have the right type of policy which provides all that you need it to do for you.
Long-term income repayment policies usually come into play between the time when your employer stops paying sick pay, and when you collect your pension.
Shorter-term policies tend to be used to protect a mortgage, bank loan or other payment. These usually commence within a few weeks but stop entirely after 12 months or 24 months. Short-term policies often include unemployment and redundancy, unlike longer-term income protection cover which does not .
Recruiting, motivating and retaining able staff is a key preoccupation of many businesses. Getting the rewards mix right is an important ingredient in successfully managing such staff. Remuneration menus made up of pensions, life insurance, tax efficient bonuses and benefits are common in well-managed businesses. But they require careful planning and selection depending on the type of business and the type of staff who are involved. What motivates and retains staff at an internet start-up business or a bioscience research operation may require a different balance than at a manufacturing business with a substantial production line workforce.
If staff are the keys to successful businesses then well founded and managed reward strategies are vital. Taking the right advice early on means that the right moves can be made at the outset without having to make them as the business goes along. The result should be contented and efficient staff who are confident that they are getting the most appropriate deal for their time and their labour.
Quilter Financial Planning 