Help to Buy ISA’s

Another boon for the first time buyer in Chancellor George Osbornes latest budget was the new Help to Buy ISA for first-time buyers which will allow the Government to top-up by £50 every £200 saved for a deposit from this Autumn. You can save up to £200 every month and the Government will add 25% on top. You can also start it off with an initial £1,000 which will have £250 added on top of it. The Help to Buy ISA offers relief on the money made towards a house deposit ,the minimum you need to have saved to get the bonus is £1,600 (so a £400 bonus), and the maximum the Government will contribute is £3,000 (which would means you will have saved £12,000).

But couples buying their first home together who don’t want to wait four and a half years to get the Government’s full £3,000 relief on a Help-to-Buy Isa should open an account each.  By doing this they can save the same sum in less than half the time - but both parties need to be first time buyers.

In many way this is equivalent to letting you save for a home deposit from your pre-tax income as the 25% on top is equivalent to the tax a basic-rate taxpayer would pay. To get a £3,000 top-up at the earliest opportunity an individual would need to save £1,000 from opening and £200 every month for 55 months. And a couple each saving the maximum initial deposit of £1,000, followed by the maximum monthly deposits of £200 would get the £3,000 top-up in 25 months.

The Help to Buy ISA will be available through banks and building societies and rates will be set by them and differ just as with other cash ISA’s so  you will earn interest like a normal cash ISA as well as getting the bonus at the end.

Your home could be at risk if you do not keep up your mortgage repayments

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

Buy-to-let versus a second mortgage

At Enable in Bishop’s Stortford our IFAs are often asked about buy to let (BTL) as opposed to a second mortgage as BTL loans are not regulated as residential mortgages because landlords tend to be viewed as business borrowers. This means you cannot use a standard BTL mortgage on a property that you or a relative will live in.

Before April last year, when the Mortgage Market Review (MMR) was introduced, about half of lenders that offered BTL mortgages also offered a 'regulated' BTL loan that allowed you to name family members as tenants. "The problem is that with a regulated buy-to-let loan you must declare how much rent your family tenant will pay", says Alistair Hargreaves, mortgage and protection consultant at adviser John Charcol. "Lenders worry that if your tenant is your child or parents this is not fixed and sometimes you may have to help them out with rent. With an ordinary tenant, if they can't pay you can turf them out but you're not going to leave your elderly parents on the street. Lenders consider this could put extra strain on people's finances and it's a risk they don't want to take."

With a buy-to-let loan, you can claim tax relief against mortgage interest payments, as well as the running and maintenance costs of the property. Second residential mortgages, on the other hand, can land you with a significant capital gains bill. Alistair Hargreaves, mortgage and protection consultant at adviser John Charcol, explains: "Say you bought a cottage in Saffron Walden for £300,000 for your older parents that in the next five years goes up to £450,000, at which point you need to sell it to pay for care costs. This is not your main home, so you will be hit with capital gains  for the increase in property value. The same could be said if you bought your student child a home while he or she was at university."

Some joint borrower, sole proprietor mortgages are offered by Woolwich. "This type of mortgage lets you put the property deeds in the name of the occupier, while you are still the mortgage holder for the purposes of having your credit file checked and being liable for the monthly payments," says Hargreaves. "This means that the property is sold only in the parents' name, so there's no capital gains liability."

Enable’s independent Financial Advisors can try and help you find the right deal for you.

Your home could be at risk if you do not keep up your mortgage repayments

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

Owning your home outright

As more and more people now own their homes outright, Enable’s IFAs in Bishop’s Stortford wonder what kind of effect this might be having on the market as a whole? To have that choice, of owning your home outright is a privilege that may seem inconceivable for younger generations, even though many people are paying down their mortgage debt rather than leave their savings to gather dust in a bank account. "Leaving money in savings is terrible at the moment," says Nick Hopkinson, director of property company PPR Estates.

Part of the reason behind more people owning outright is simply to do with an aging population who have owned homes through several generations. As Kate Faulkner, director of PropertyChecklists.co.uk, points out: "We have now had several home-owning generations, so people are inheriting homes outright, helping to pay off their debts or their mortgage early" which also contributes to the higher number of debt-free homeowners.

"Cashed-up owners", as Ben Podesta from Domus Nova estate agency describes them "create two opportunities for the sales market. One, they downsize, which means selling and buying – helping the movement of properties. Two, they give money to their offspring, which then have no need for mortgage or are able to buy a bigger first property." The famous 'Bank of Mum and Dad' phenomenon is completely intertwined with the increasing numbers of older, mortgage-free home-owners who are able to help the next generation. Some believe it is partly why property prices have continued to rise since 2000, as money from that equity allows younger people to afford the higher deposits required.

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

More essentials of pension planning...

With major pension changes on the horizon for pensions that will increase their tax effectiveness after April Enables’ IFA's in Bishops Stortford can help you get your pension arrangements in order.  Some of the things to consider before the changes come in to effect include making sure you have found all your old pension scheme entitlements. The government estimates that millions of people may have lost track of old pensions amounting to a staggering £3 billion. 

 And have you considered using 'salary sacrifice' for your pension contributions t is a well-established way of saving tax and NI while making a pension contribution, essentially you agree to take a lower salary, and the amount you have 'sacrificed' can be paid into a pension fund for you by your employer. The advantage is that both you and your employer pay lower NI so you save both tax and NI straight away – and have a potentially larger pension later on.

Another thing you may not have considered is paying into pensions for your children or grandchildren.  You can put money into pensions even if you do not pay any tax at all, or invest on behalf of someone who is a non-taxpayer – and still get tax relief. Anyone can put up to £2,880 into a pension fund every year and receive 20% tax relief from HM Revenue & Customs, taking the total going into their pension fund up to £3,600. Whether it is for your children, your grandchildren or a partner who isn't earning at the moment.  Another thing to note from the Budget it that from next year, the pension pot lifetime allowance is going to be reduced form £1.25million to £1million.
Enable’s IFA’s are happy to talk you through your 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

Flexible Saving with cash ISAs

In the budget Enable’s IFA’s also note with interest that the ISA Annual savings limit has been increased again this time to £15,240 and fully flexible ISAs are going to become available from the autumn. Fully flexible ISAs will  leave savers free to withdraw cash without losing the tax advantages, provided they pay it back into the ISA before the year end. This will mean savers can treat their cash ISAs a bit like a savings account, dipping into them if they need or want to. Danny Cox, chartered financial planner at Hargreaves Lansdown says however, "The average person pays less than £4,000 into a cash Isa each year. "From April, the allowance will be £15,240, so they can withdraw money and still have plenty of allowance left."  The new Help to Buy ISA for first-time buyers allowing the Government to top-up by £50 every £200 saved for a deposit has also been put on the table.

 There is some discussion however about what will happen when interest rates do finally rise meaning some of the benefits for savers will not be long term. Danny Cox says: "If rates rose to 4 per cent, basic-rate taxpayers with £25,000 of savings would breach the £1,000 allowance, while a higher rate taxpayer would pay tax on savings above £12,500." He says “this highlights the continuing benefits of cash ISAs, especially for 40 per cent and 45 per cent taxpayers, because you will never pay income tax regardless of how much interest you earn from them.”

It is also important to remember cash ISAs are issued on an individual basis, so couples can double up their allowances. Mark Wood, chief executive at JLT Employee Benefits, says remember: "This year's £15,000 cash ISA allowance is issued per person, so couples can save £30,000 together, "And from April 6, they can each save another £15,240 in cash ISAs, making a total of £60,480 in just a matter of weeks."  In the future, only a tiny number of wealthy savers need ever pay tax on their savings interest.

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

New changes to tax on savings...

Enable’s IFA’s in Bishops Stortford are keen on saving; small regular savings and compound interest is the bedrock of wise financial planning. So it is good to see that after six years of rock-bottom interest rates for savers they will finally have something to celebrate. In Chancellor George Osborne’s 6th Budget last week he announced that most people will not have to pay tax on the interest they earn on their savings in a year. He said basic rate taxpayers can receive up to £1,000 of “savings-interest” free of tax from April 6 next year, this however will fall to £500 for higher--rate taxpayers and will not apply to the 45 per cent band.

Essentially this means that most people with savings will not be paying any of the interest made on their savings to the taxman. His decision, to make the first £1,000 of savings interest tax-free should lift 95 per cent of savers out of tax and about 17 million savers are expected to benefit. Anna Bowes, director of rate tracking service Savings Champion, says current low interest rates mean basic rate taxpayers can build up large sums before paying any tax at all: "Savers could deposit more than £66,000 at a rate of 1.5 per cent from 2016 and take all their returns tax free or £33,000 in a fixed rate account paying 3 per cent."

There was also good news for non-taxpayers, with interest that is paid gross many banks and building societies currently automatically deduct 20 per cent tax of the interest paid on standard accounts and no-taxpayers have to complete form R85 to claim this money back. From April 2016, banks and building societies will pay interest gross without deducting 20 per cent tax so there is no paperwork to do.  If you want to look at your saving options Enable's IFA’s in Bishop’s Stortford are here to 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 does it mean to choose investment trusts?

Our experienced Independent Financial Advisors at Enable in Bishops Stortford tend to recommend more passive investments. But we also know that Investment trusts are a highly popular and well-established way of investing for wealth management. An investment trust is essentially a public limited company with shares quoted on the stock market. When you invest in an investment trust you as good as become a shareholder in that company, they tend to primarily invest in the shares of other companies but some contain bonds or other financial assets a common one being commercial property.

For some an investment trust is an excellent way of gaining access to the potential rewards that active management of a stock market investment can offer – without needing to constantly monitor and manage your portfolio. These trust pools your money with that of other investors and professional fund managers invest this in a wide range of different companies. So even if you only have a small amount to invest, you can gain exposure – cost-effectively – to a diversified and professionally-run portfolio of shares and your risk is also spread much more than if you were reliant on the success of one or even a handful of companies.

There are also some tax advantages when an investment trust sells shares, it is not taxed on capital gains it has made, unlike direct investment made by private investors. Historically over the longer term investment trusts have delivered but past performance is not a guide to future performance. The value of investments in the stock market can go down as well as up and you may not get back your original investment.  If you are interested in finding out more about investing your savings Enable’s IFA's are here to 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