Money matters


A fresh start for all mortgage borrowers


The economic outlook remains challenging but it


is not all bad news about mortgages. The New Year has started on a positive note as lenders have been rushing out cheaper and cheaper deals as they struggle to acquire business to meet their lending targets.


Mortgage rates are competitive for all borrowers but more


notably for those with higher levels of equity or larger deposits. There is a real opportunity for borrowers to lock into a medium to long term fixed rate that is lower than the average standard variable rates (SVR) to reduce outgoings and provide future certainty of payments.


With five-year fixed rates as low as 2.99% and 10-year fixed


rates as low as 4.29%, why would any borrower want to remain on a typical high street lender’s SVR of 4.79% over the longer term?


Borrowers could consider a remortgage, not only to reduce their borrowing costs but also to release equity to pay for much needed home improvements. Many people are deciding to stay put and improve or extend their current homes so the additional funds will help modernise a kitchen or bathroom, freshen up the décor and hopefully increase the value of the property.


Parents may also use this opportunity to provide a helping


hand to children by gifting them a deposit for their first house purchase. First time buyers can obtain a good mortgage with only a 10% deposit and with house prices expected to increase


by 18% over the next 3 years, now could be the time to get a foot on the ladder. Look out for the affordable home ownership options such as First Buy, New Buy or Home Buy offered by developers and housing associations.


Older borrowers have different requirements and may still be trying to repay a mortgage before they retire. If this situation affects you it is important to seek advice. Consider remortgaging to a flexible scheme that allows for overpayments or offsetting bank accounts. Both methods help reduce the outstanding balance and the remaining term.


The good news is that some lenders will now agree advances


up to age 75 providing you can prove pension income in retirement. They don’t all take the traditional age specific approach. So retirees can now consider obtaining a mortgage to extend the term and take longer to repay the debt or even moving to a new home as well.


Residential property also provides a sound investment opportunity for those in retirement as rental yields in Kent are competitive and sustainable. Retirees could consider using part or all of their pension lump sum as a deposit and raise a ‘Buy to let mortgage’ which are also available up to the age of 75. The amount you are allowed to borrow is assessed using the expected rental yield rather than income. Normally this form of investment is intended to achieve capital appreciation whilst the rent will help boost income in retirement.


For advice on all mortgage arrangements it is important to seek independent financial advice.


Supplied by Invicta IFA


Have you reviewed your finances recently?


Invicta Independent Financial Advisers can help with all your financial planning enquiries. We are a local business offering a friendly but professional service to individuals and small businesses. Our specialist areas include:-


• Mortgages • First Buy/Shared Ownership


• Income Protection


• Life Assurance • Business Assurance • Pensions & Retirement Planning


• Annuities • Savings & Investments • Trusts & Inheritance Tax Planning


Telephone: 01622 662636 Email: enquiries@invictaifa.co.uk www.invictaifa.co.uk


Address: Invicta IFA, 1st Floor Falcon Court, 73 College Road, Maidstone, Kent, ME15 6TF


• Equity Release


Registered Office: The Granary, Hermitage Court, Hermitage Lane, Maidstone, Kent, ME16 9NT. Registered in England No. 3330755. Invicta IFA Limited is authorised and regulated by the Financial Services Authority.


The Financial Services Authority does not regulate taxation and trust advice. There may be a fee for mortgage advice, the precise amount of the fee will depend upon your circumstances but we estimate that it will be £395. Your home may be repossessed if you do not keep up repayments on your mortgage.


To understand the features and risk of an Equity Release plan please ask for a personalised illustration.


Mid Kent Living 33


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