Is this the time to remortgage?

Rising house prices and mortgage regulations are making it harder for first-time buyers, but if you already are a borrower there has probably never been a better time to look in to remortgaging. "The appetite for remortgages began to gather pace in the second quarter of 2015, with an increase in the value of applications of 14 per cent year on year.” Said Martin Richardson, director of business development at Leeds building society, and "The value of remortgage applications started to accelerate rapidly during late summer, soaring by almost 60 per cent in August compared with a year earlier.”

These figures are being driven by a couple of key factors – the remortgaging market offers relatively low risks so lenders are happy to address this area of the market meaning that compared to last year, there are now 300 more remortgage products to choose from.  This competition has a positive knock-on effect, with the price of the loans having fallen in recent months. In some cases there are even some excellent fixed-rate deals are available, whether you've got equity of 40 per cent or 10 per cent in your home.

Enable’s experienced IFA’s in Bishop’s Stortford are regularly discussing how the combination of very low interest rates, and the wide choice of remortgage products, especially for those who are interest- only borrowers make it an interesting time to consider change.

Your home may be repossessed if you do not keep up repayments on your mortgage. 

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Helping the kids save

When parents ask Enable’s IFA’s in Bishop’s Stortford to help them save for their children one of the easiest ways is through a simple trust or "bare trust”, but some argue that this method often gives the child too much control over the money. When they reach 18, they have full rights to the income and capital and they can decide where to invest that money. "The child has no say in the investments before this time, but when they're 18 they can blow it on whatever they want," said Patrick Connolly of Chase de Vere.

Another option is a "discretionary trust," as the name suggests the trustees have discretion over how to use the money, and you can stipulate an age restriction. But unlike a bare trust, where the child can use their own tax-free allowance, the rules are different for discretionary trusts. With a discretionary trust, the first £1,000 of investment growth is only ever taxed at the basic rate. Any growth above this is taxed at 45pc. Any increase on the original amount you invested, after costs and any losses is taxable. On top of this, if you dispose of shares the trustees will be able to use an annual capital gains tax exemption of £5,500, so capital gains could become an issue.

To be as tax-efficient as possible it makes sense to structure investments towards "growth" rather than "income", so that you limit the dividend income - and therefore the tax. If you need help working out if a trust fund is right for saving for your child Enable’s experienced IFA’s in Bishop’s Stortford can help.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

What’s your life expectancy?

More and more people are receiving their 100th birthday cards from the Queen these days according to the Office for National Statistics. Enable’s experienced IFA’s in Bishop’s Stortford note that back in 1981 only 2,420 got a card, and if you go back to 1901 you would have been lucky to have made it to age 50.  But a girl born in 2011 has a one in three chance of making it to 100 and the odds are only slightly lower for a boy at one in four.

The problems posed by an ageing population are obvious with fewer people of working age and more people in retirement, which means that tax increases are necessary as the pressure on the welfare state grows. The Kings Fund think tank predicts the number of people aged between 65 and 84 will increase by 39%, between 2012 and 2032 and the number of 85 pluses will soar by 106% while the number of people aged 14 to 64 will increase by a tiny 7%.

This can pose real challenges for pensions as Dr Ros Altmann explains: " With all the developments in healthcare, medicine and working practices, people are living longer and staying healthier, being able to live well with illnesses that people used to be disabled by or die of. But that means retirement is lasting longer too - so your pension savings have to cover you for many more years than you might have expected when you started." Enable’s IFA’s in Bishop’s Stortford can help you make plans.




Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

The 4pc rule for drawdown

Another question central to financial planning and often discussed by Enable’s IFAs in Bishops Stortford relates to amounts to draw down on savings.  For pension savers now that retirees have greater control over their assets and are not required to buy an income-paying annuity it is important to work out how to draw income. Generations of investors have pondered the problem, and some claim to have developed strategies that solve it.

One “rule” widely used by pension’s savers in America is the 4pc rule.  It is not a magic formula but it could be considered well respected and popular with many financial advisers here in Britain. The idea is that 4pc is the maximum amount that can be safely withdrawn from a pension each year over any 30-year retirement. Although in this period your portfolio’s capital value might fall as well as rise, your income payments – starting at 4pc of your initial capital and increasing yearly in line with inflation thereafter – will always be met, at least for those three decades.

This number was based on work undertaken two decades ago by an American former financial planner, William Bengen, and designed purely to help pensioners maximise their retirement savings while minimising the risk of running out of cash. The theory was given the thumbs up by another academic paper a couple of years later, which put the chances of success at 95pc. This assumed that savers would split their pension portfolios into two, with half in shares and half in bonds.  Both studies arrived at their conclusions following analysis of US stock market and bond returns over almost 100 years. If you want to talk about where this American model might work for you Enable’s IFA's would be happy to talk things through.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

What age should you plan to retire?

Enable’s IFA’s in Bishops Stortford often find themselves discussing when people would like to plan to retire. In recent years the government has steadily increased the state pension age to 68 and it could go higher. Pensions minister Steve Webb said “working past 65 will benefit individuals and the state, on the one hand giving people more time to build up sufficient pension funds, while keeping a lid on the bill for the state pension, which is expected to quadruple by the mid-2060s to £420 billion from £98 billion this year.”

Pensions expert Ros Altmann however suggests that working late into life even to 80 is unfeasible but that individuals should no longer expect to retire at 55 which is currently the earliest age at which pension funds can be accessed. On average people are actually retiring earlier than they did in the 1950’s. ‘In the 1950s, the average age of retirement for men was 67,’ says Altman. ‘At that time life expectancy was much lower than it is today, yet people are retiring earlier. This means that lifetime income is lower, especially as they often start work much later too, and they have less chance to save for a good later life income. ’It is only since the 1980s that ‘an expectation had developed that people should aspire to retire in their 50s’. ‘This is simply not sensible or sustainable, especially as life expectancy has risen significantly, general health has improved and the physical demands of most types of work have eased.’

Perhaps for younger generations the idea of a ‘retirement age’ will be an outdated concept with individual choice, and importantly economic means, determining when a person stops working. If you need help planning your pension Enables IFA’s in Bishop’s Stortford can help you look at the options.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Are you part of the lost generation of savers?

Recently Enable’s IFA’s in Bishops Stortford noticed articles drawing attention to “A lost generation of savers aged 35-to-45” - some believe that are going to be the worst prepared for retirement.  This is the swathe of people stuck between “millennials” and “babyboomers.” Babyboomers have retirement sorted out owing to historically more generous workplace pensions and defined benefit (DB) schemes that pay out a multiple of years worked and a percentage of final salary as income for the rest of an employees’ life. And the younger generation of millennials are saving early thanks to auto-enrolment, so they should be in a strong financial position when they reach retirement with decades of savings behind them.

But Holly Mackay of Boring Money, has warned that those aged 35-to-45 are not saving enough considering the reduced amount of time they have until retirement. Her survey found that of the 35-to-45 age group, just 22% were saving into a private pension. ‘There is a lost generation of 35-to-45 year olds who are rubbish with money,’ she said. ‘You have the swotty millennials who are saving money and planning, and the babyboomers, [but those in the middle] assume that the job is done because they are making workplace contributions but the contribution rates are too low.’

Jamie Jenkins, pension expert at Standard Life, agreed that there is an emerging ‘lost generation’’ he also said, “that prior to auto-enrolment, the Department for Work and Pensions estimated 10 million were not saving for retirement and now, despite more people saving, there are between 10 million and 13 million people who are not saving enough even with auto-enrolment.”  Enables IFA’s in Bishops Stortford know that the only solution for those who fall into this gap between the two generations is to save more into workplace pensions now, top up later, or work longer, we can help you talk through saving more.


Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Understanding the New state pension

Enable’s IFAs in Bishops Stortford have been keeping tabs on Pension minister, Ros Altmann since she launched a drive to explain the changes under the tagline ‘our state pension is changing.’ Alongside your other pensions or savings effective from April 2016 will be the new state pension.  It will move from the current ‘two-tier’ system, which is made up of ‘basic’ and ‘additional’ rates to the ‘single-tier’ flat rate pension of no less than £151.25.

Enable’s IFAs know that many people will be basing some of their financial decisions on the likely state pension amount they will receive. Back in July it was revealed that just one in three will receive the full flat-rate state pension - 100,000 fewer than expected, according to government figures. The Labour party accused the government of an “unacceptable failure” in transparency with people over their state pension entitlement.

Altmann admitted that the job of explaining the new state pension ‘hasn’t been done well enough,’ but said ‘Huge efforts have been put into reforming the mind-blowingly complicated state pension system that exists today into something that, over time, will be clearer and fairer for everybody,’ ‘But the job of explaining to people how the reforms will affect them hasn’t been done well enough.’ ‘People need to understand, so they can make the right decisions about saving and preparing for later life.’

If you need help making the right decisions about savings and pensions to prepare for later life, Enable’s independent Financial Advisors in Bishop's Stortford can help you think it through.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Off shore bonds

If you are in the fortunate position to have more than one lump sum to invest and have the ability to defer paying tax on growth and withdrawals, you might have been wondering about offshore bonds and the benefits of “gross roll-up”.  Essentially this means gains are not subject to tax at source, apart from an element of withholding tax. So taxation is deferred until the bond is surrendered, in full or in part.

Another advantage of off shore bonds is 'top slicing relief’, which can in some circumstances reduce your higher-rate tax if there has been a gain at the time of a 'chargeable event. In the broadest of terms this means that the total gain made by the bond is divided by the number of years the investment has been held and referred to as the 'slice’. It is this that can then be added to your other income and tax is paid on it accordingly. If the slice was all within your basic-rate tax band, 20pc tax would be payable on the whole gain. If the whole slice is in the 40pc bracket, higher-rate tax would be payable on the whole gain. In cases where the slice crosses tax bands, the tax charged is a blended rate.

Off shore bonds may look attractive but before investing in them you should make use of your ISA and possibly pension allowances fully as an allowance is like an offshore bond, and ISA’s allow your funds to grow free of tax. Enable’s IFAs can help you find the best place for your savings.


Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Is a possible ISA pension a good idea?

Enable’s IFA's in Bishop's Stortford have spotted that the government is still thinking of tinkering with the structure of pensions as another consultation, we look at changes to tax relief offered on pension contributions and a more radical option to scrap pensions in favour of a pension-ISAs with a new tax regime.  Under the mooted plans pensions could be moved from the current system of taxation, as exempt-exempt-taxed (EET), which means contributions are tax-free and so is growth in the pension but withdrawals are taxed as income, to an ISA-style regime. ISA-style taxes are known as taxed-exempt-exempt (TEE): contributions are taxed but growth and withdrawals are tax-free.

At first glance it might look like a simplified way of taxing pension savings by doing it in the same way as ISAs are, but  Hugh Pemberton of the University of Bristol said over the long-term savers would lose out by up to 17%.  The main problem identified by Pemberton with the TEE system is the loss of compound interest on the tax relief paid.

Current Tax relief boosts pension contributions by the highest rate of income tax paid by the saver, so either by 20%, 40% or 45%, meaning more money is put in the pot at the outset. Then this tax relief is invested along with the rest of the contributions boosting the pot further. And the Investment returns made on existing returns is known as compounding – which Pemberton said “was described by Einstein as the eighth wonder of the world thanks to its ability to turn small sums of money into much larger sums over time.”


Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Pension Penalty charges

At Enable in Bishop’s Stortford our IFA’s know that over 200,000 retirees accessed their pension in the first three months of the new freedoms, and more are doing the same. A good 84% of people who did this experienced no exit charges for moving their money into drawdown and making use of the new pension freedoms. But that means that some 32,000 retirees were hit by penalties, some up to 5% of their pension pot.

The good thing is that these charges relate to older pensions. Laith Khalaf at Hargreaves Lansdown said it is the older contracts from the 1980s and 1990s that are more likely to have exit charges; modern contracts no longer allocate ‘capital units’. He continued: “Capital units’ were extra funds allocated to savers to cover the cost of commission paid out to advisers. Exit charges effectively claw back of these extra units when a pension is transferred. Capital units are no longer allocated as advisers are not allowed to receive commission in this way anymore.” Khalaf also added that even these pensions should be able to be transferred without penalty if they were held to maturity, typically age 60 or 65.  However, those wishing to transfer before the maturity date will have to decide whether the increased flexibility and accessibility of pension cash is worth the fee they will pay.”

Enable’s IFAs in Bishops Stortford can help you look at you existing pensions and help you find ways to provide for your retirement.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Making sure you have Independent Financial Advice

As experienced IFA’s at Enable in Bishop’sStortford we are clear that good financial advice is not free. We also acknowledge that there are a lot of DIY solutions available on line and you can work some things out for yourself, but if you're looking at getting a complex financial product that is a core part of your future financial stability, even the most cynical can see the value of paying for an adviser to make sure you have the right product for your needs. 

 

If you are not clear it is important to remember that generally there are two types of financial advice independent or restricted.  An Independent financial adviser or and IFA is 'independent' and that means that they are able to advise and sell products from any provider right across the market. By talking to and IFA about your needs you should get the very best advice and products tailored much more for you. In contrast restricted advisors can only recommend certain products or product providers.

 So if you're looking at complex financial products, it can pay to get advice. If you're not sure or not confident doing the research yourself talking to an independent financial adviser can really help. It is also sensible, even if you're going to use an IFA to read up on what you're hoping to achieve and what financial tools might be available before you meet your IFA. That way you'll feel more in control of the decision-making process.

 Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE    

Don’t stick your head in the sand with pensions

Enable’s IFAs in Bishop’s Stortford always recommend starting a pension as early as possible, some research by Retirement Advantage shows that even when people have saved, many still burrow their heads in the sand when it comes to the size of their pension pots.

Apparently as many as a quarter of people don’t know how much they have saved, and those that can estimate how much they think they have in a pension recon its just over £110,000, with a fifth having less than £50,000, and 12% think their pension ranges between £50,000 and £100,000.
 

Andrew Tully of Retirement Advantage thinks,“ retirees underestimated how much they would need in order to benefit from drawdown - and £100,000 may not even be enough to pay for retirement income.” He suggests a very basic calculation to try and work out how much you need in you’re pension pot. ‘Ask yourself what income you would like in retirement, people may say £10,000 a year, and if you expect to live for 20 years, then do some basic arithmetics, the figure you need isn’t going to be less than £200,000.’ It can be a bit of a surprise for some people.
 

Another tricky issue is that no one knows how long they are going to live, so even if this simple equation could be wrong if you end up living for 25 or 30 years in retirement. Enable’s IFAs in Bishop’s Stortford can help you look at what you might need in retirement and how to work towards saving it.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE