05/05/2023
Whenever I start to wonder where life and all is heading, I pause and try to put what is going on into context. Zooming out to see the context over the long term can often help.
“Now” is a good time to do that!
Many people are worrying about their budgets, what their mortgage payments might go up to when their existing products expire or even how to pay the winter bills that we all so look forward to each year.
Over the last decade or so we have successfully steered through one of the largest International financial crisis` ever known, a world wide pandemic that happens less than once a century, the largest war on European soil since World War 2…. and we have now endured some insanity in No.10 that has called into question who is at the helm.
The reality is that we are all, individually, far more resilient than we give ourselves credit for. We do get by, we do see the future ahead and want to make it happen.
In the world of lending we have seen at least four significant “end of the world” events since I began in the industry in 1985 locally. Oddly we are all still here and after an initial pause and period or natural concern we all decided life was too short and go on with things…
Houses were then bought, extensions built and dreams turned into reality because collectively “we” made it happen.
The main thing that people are concerned about are rising mortgage interest rates. However, despite the increases, when you do look at the long term we have simply returned to the average rates that the UK have paid.
It is a shock only because we have enjoyed very low rates for a decade but that could not continue. It is normal for rates to go up and down over time, static and low is not normal service.
The real change is how much we alp spend on other things when our mortgages became less costly. Other commitments and expenditure have used up our disposable income, nothing wrong in that, but what we all have to do is realise that some of that expenditure is now what lenders would call “committed expenditure”.
If we genuinely want to have a nice home, whether keeping what we have now or moving on to a new home, paying for it has to be our priority. For the first time in many years, we may need to “cut our cloth” to do that.
In other words effective budgeting and some basic honesty with ourselves as to what is essential expenditure. The simple act if getting your bank statement and without bias, listing essential and non-essential expenditure can be quite scary, but in a good way!
Most people will have the ability to free up money when they realise how much they spend on what are luxuries.
Start there and may of the fears about rates going up are less threatening and allow us to look to the future, now!
If you want or need to move home, by focusing the finances it can still happen, but at the loss of less important expenditure items.
What about those in later life with fixed or even diminishing pension income? For many it is harder as they may well over the years have already had to do the above process to make the ends of the financial string meet.
That is where later life lending can help. In the UK now the most common uses of Equity Release are;
• To pay off credit built up since the pandemic
• Pay for bills/boost lifestyle to a more acceptable level
• Pay of mortgages that are still being paid, but pension income will no longer cover them
One of the previous main uses was helping family on to the property ladder, but that has slipped downwards on the charts as people deal with more immediate issues in their own lives.
By owning their own-home they have options and that is great news!
Options that can help repay that existing Interest Only Mortgage when the term is soon to expire, options to provide financial relief or even a nice boost to enjoy in retirement.
Yes, rates have increased but like all things if you are prudent and borrow what you need it is still a very sensible and viable option to consider.
As an adviser I will never arrange anything that I am myself convinced is safe for my client to take on as a commitment. I am not a salesman and know people need help and advice to make the right decisions and the internet is not always the best way to do that.
If you'd like to book in for a free mortgage consultation, please contact me:
T: 07495 590160
E: [email protected]
