mortgage newsletter - summer 2021

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the changing shape of mortgages | new normal for home insurance | savings during lockdown | furlough and income protection

>> the changing shape of mortgages

It’s fair to say a lot has happened in the housing market over the past year or so with a total shutdown and three national lockdowns all taking their toll on the economy. But as we continue to see the vaccine rollout and an easing of COVID restrictions unfold across the UK, what is the current state of the mortgage market and how can it benefit you?

More choice and low-deposit lending

One of the biggest changes to the mortgage market this year is choice. According to Moneyfacts, residential mortgage availability rocketed in May 2021 by 53% when compared to products in May 2020 showing significant growth in the market and eagerness from lenders to get people moving again.*

A significant contribution to this year-on-year recovery is found in the return of 90-95% loan-to-value mortgage products from all the major lenders. At the height of the pandemic and throughout lockdown these products were virtually non-existent. This meant hopeful first-time buyers in particular couldn’t afford the higher deposits to make it onto the property ladder. Fortunately, 90% of loan-to-value deals have now flooded the mortgage market again, with almost five times as many deals as last year.

95% loan-to-value mortgages are also back to stay with availability having nearly tripled from May 2020 figures (buoyed by the Government’s mortgage guarantee scheme and resumed lender confidence in the market).

If you, a family member or a friend have a small deposit and are unsure about what options might be available, you should arrange to speak to one of our professional Mortgage Consultants. We have access to a wide range of 90% loan-to-value products, (some of which are exclusive) and a number of 95% loan-value-mortgage deals to help anyone move with just a 5% deposit.

Record low rates and competitive deals to save money

With more choice comes more competition – which is great if you are looking for a mortgage deal to save money!

In order to remain competitive and attract new customers, lenders are frequently slashing rates on their current offers (typically 2 year and 5 year fixed deals are seeing the biggest reductions). With record low rates, if you are coming to the end of an initial fixed-rate period, now is the time to review your options and consider remortgaging on to a better product, potentially making noticeable savings on your monthly repayments.

The combination of low remortgage rates and the effects of Stamp Duty has also influenced a surge in remortgage activity. Many homeowners who have bought a property in a rush to beat the stamp duty deadline have benefitted from a rise in property prices and have seen their loan-to-value decrease and equity increase. This means they can now look to remortgage with access to even better rates due to being in a lower loan-to-value bracket.

In some cases, properties have been inherited and need to be remortgaged to release equity on the property to pay off any outstanding mortgage debt.

With the pace of change, it is important to speak to a professional to help make sense of the different options. Remember, attractive low rates aren’t the only thing to consider when searching for the ‘cheapest deal’. You need to look at the overall cost of the mortgage product, factoring in additional fees, lender criteria and the length of time (mortgage term) you wish to borrow for. Our professional Mortgage Consultants can help you understand the overall costs and find the best deal for your individual circumstances.

Demand for property still high vs. easing of restrictions

There were concerns that the changes to stamp duty in England would create a cliff edge for the housing market after the deadline had passed (having a knock-on effect on mortgage levels). Similarly, questions remain on whether further easing of COVID restrictions will spur many to seek out a much-needed holiday or reunion with loved ones over the summer months, putting their property plans on the back-burner. The tapering off of the furlough scheme may also impact people’s affordability and dreams of homeownership.

It’s very difficult to predict which way some of these changes will develop. Sentiment in the market is that the demand for property is still high and therefore demand for competitive mortgage deals will prevail.

The pandemic has created a fundamental shift in how we live and work. Many wish to adopt a more flexible ‘hybrid homeworking’ approach so may need more space for a home office or wish to move away from the city as commuting is no longer an issue. As restrictions ease some may want to move closer to loved ones following a long separation or get more space to entertain and some may want to release equity on their property and remortgage to a better deal (looking after their finances after a tumultuous year).

Whatever the reason and whatever the future holds, now is a great time to start considering your options as the mortgage market is teeming with possibilities.

To find out more about the current lending market or for a review of your mortgage and protection options, get in touch today on 01525 244 589

*Source: https://www.ftadviser.com/mortgages/2021/05/11/mortgage-availability-up-53-in-covid-recovery/

>> new normal for home insurance

What does ‘new normal’ mean for your home insurance?

Now we’ve got some of our freedom back, we’re doing a lot of making up for all the things we’ve been missing out on. So, it’s worth thinking about whether your home insurance covers you now that life is a bit different.

Change 1: Being out is the new staying in

• Cafes! Garden centres! Pubs! Museums! Anywhere but home seems like the most exciting place in the world to go, right now.

• We’re so keen to visit friends and family, our weekends are booked up for months already!

• We’re all discovering there’s more beauty on our doorstep than we thought, and because it’s easier to go on a staycation, you’re likely to go on a few.

All this time spent in the big wide world makes it important to make sure anything valuable you leave in your home or take on your trips, is properly covered. The Homeguard policy from Ageas is 5-star rated by the independent financial review body, Defaqto, so you know it meets their high standards. And, its personal possessions insurance covers your possessions for up to £2,500 wherever you are in the world, which is great if you make it abroad this year or are planning ahead for next year’s getaway!

Change 2: Getting used to going out will take time

We’re all a bit rusty at avoiding disasters outside, so be ready for more ‘Doh!’ moments – like spilling a drink on your laptop, leaving your phone on a train or sitting on your headphones. It's worth spending some time checking that you've got the cover you need away from the home. Your Homeguard policy can provide extra protection for specified items outside the home, so it’s worth checking you have cover in place for any valuable items. As with all insurance, terms, conditions, limitations will apply.

Change 3: Your home might be overrun

When you are home, you’ll probably be getting visitors, which can be chaotic at the best of times! Home insurance often has you covered if things get out of control and a mishap occurs – like Nan’s chicken korma suddenly going airborne and landing on your sofa. So, check to see if accidental damage cover is included in your contents cover policy.

For extra peace of mind, while everyone’s having a great time at your place, you might be surprised to learn that your home insurance can cover the personal effects of your overnight guests too.

Homeguard contents insurance provides cover of up to £1,000 for visitors’ personal effects, so if you were to have a house fire, and your visitor’s suitcase full of clothes were impacted, for example, you might be able to claim for this. Definitely something worth checking with your provider if you’re going to be hosting a lot!

Hopefully, that’s everything covered about how reopening can affect your insurance. If you do have any questions about home insurance, our Mortgage Consultants will be happy to help. Simply call 01525 244 589 or alternatively email customerservices@sequence.co.uk with your preferred contact number and/or email address in order for us to contact you.

>> savings during lockdown

Has lockdown boosted your savings?

It’s safe to say lockdown wasn’t easy. However, some of us arguably noticed a few surprising flipsides, such as the slower pace of life, time to appreciate the little things, or seeing your children more, which may not have been possible before.

There was an even bigger perk to come from less travelling, and barely going out. A lot of us were lucky enough to ‘accidentally’ save much more money than usual.

Two-thirds of the nation have spent less money overall since March 2020, Fidelity research shows.* This comes down to things like not going on holiday, not eating out and not meeting friends and family. Even working from home has proved cost-effective for many.

Save, spend or invest?

So if you’ve noticed an unintentional boost in your own savings recently, what should you do with that extra cash?

Firstly, we know you’ve missed out on a lot over the past year, and will no doubt want to make up for lost time. However, before you splash out on that hot tub, there are other things you could do with this money that could prove highly rewarding in the long run.

Now could be a really good time to think about how these savings could change your future – and where might be the best place for it.

How to make your money go further

There are many options available.

Investing is one of them – and you don’t need to be an expert. In fact, investing may be less complicated than you may think.

When it comes to your future goals, investing is considered one of the best ways to help you grow your money over the long term.

You do have to be willing to take some risk to your capital (in return for a chance of higher rewards) and be prepared to invest for at least five years. But through investing, you could have a better chance of achieving more returns over the long run.

There are many investment options out there – each with different levels of risk. Planning with an expert can help you decide on the ones you feel most comfortable with, that better matches your individual needs.

Boosting your retirement provisions

The money you’ve built over lockdown could give your retirement plans that extra boost. Especially when you think about the tax relief you can receive. In turn, this could help towards achieving the lifestyle you want in retirement.

Every time you top up your pension, you receive tax relief of at least 20%. Typically, you’re able to pay up to £40,000 a year into your pension and still benefit from tax relief. If you have a workplace pension you could think about topping this up – or perhaps consider setting up a new plan – to maximise these benefits.

Get started today

If you’d like to see whether financial advice could benefit you, then contact us today – we will be able to put you in touch with Skipton’s Financial Planning and Advice experts, who will provide you with a no-pressure free consultation - simply call 01525 244 589 today!

Skipton’s recommendations are likely to include stock market-based investments. These are not like bank and building society savings accounts as your capital is at risk and you may get back less than you invested. The value of your investments and any income from them may fall as well as rise. For Pensions and Investments, the tax treatment depends on your individual circumstances and prevailing legislation, both could change in future.

*Source: www.fidelity.co.uk/markets-insights/personal-finance/personal-finance/how-will-you-make-most-your-lockdown-savings/

>> furlough and income protection

Aviva: Furlough isn’t that different to income protection

“If you think about it though, furlough isn’t that different to income protection.”

Just as Covid‐19 has given us a world full of face masks, hand sanitiser and ‘super spreaders’, it’s also given people the chance to think about their personal finances. At the peak of the pandemic, furlough was a reality that hit over a quarter of the UK’s workforce.* The word ‘furlough’ (which originated in 17th century Germany and was used to describe paid leave granted to soldiers) was suddenly thrust into the mainstream, talked about in the news, amongst friends and became part of everyday conversation.

If you were to earn £30,000 per year and were put on furlough at 80%, your monthly earnings would be £2,000 before tax. With income protection, you could be covered for 65% of your earnings, £1,625 per month – but this would be tax-free.

The concept of income protection can be a tricky one (with only 20% of people having a good understanding of what it actually covers).** This is where our recent experiences and familiarity with the word ‘furlough’ can help explain income protection more effectively. Simply put, income protection is like a “personal furlough scheme that you set up for yourself in case you’re unable to work due to illness or injury”.

Some of the features of this ‘personal furlough scheme’ include:

Benefit Guarantee

If life has taught us one thing over the last 12‐18 months, it’s that the unexpected can and does happen.

Benefit guarantee is there to help make sure that if your income reduces, your monthly income protection benefit doesn’t necessarily need to, so you can continue with the lifestyle you’re accustomed to without necessarily making cutbacks.

Aviva’s Income Protection+ (IP) has a £1,500 per month benefit guarantee. This means that providing you are working for at least 16 hours a week before you are incapacitated and have a monthly IP benefit of £1,500 or less – even if your wages or hours go down – your IP benefit will remain the same.

For those with a monthly benefit of over £1,500, Aviva does things a little bit differently from most other insurers and offer an enhanced benefit guarantee.

In addition, Aviva wants to be fair to all their customers so they’ve not singled out any specific occupations for their enhanced benefit guarantee.

Hospital Benefit

We are all acutely aware of the amazing job everyone in the NHS has done over the last 12‐18 months, but what many of us may have feared from the pandemic is being so ill that we need to be admitted to hospital. Correct as of 10th August 2021, 500,691 patients had been admitted to hospital due to Covid‐19.***

The hospital benefit that Aviva offer as standard on their Income Protection+ product pays out £100 per night if you are hospitalised for at least 6 consecutive nights. Aviva understands, however, that some may still incur or have a loss of income whilst in hospital which is why they backdate the payments to day 1 and will continue to pay the benefit for up to 90 days.

Whilst they can’t remove any fears around ending up in hospital, the hospital benefit can help by offering a financial buffer.

Speak to one of our Mortgage Consultants for a personalised no obligation quote to discover how Aviva’s Income Protection+ product has been designed to protect against the unexpected - simply call 01525 244 589 today!

*Source: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/articles/comparisonoff

urloughedjobsdata/march2020tojanuary2021

**Source: The Association of Mortgage Intermediaries, The new protection challenge November 2020

*** Source: https://coronavirus.data.gov.uk/details/healthcareviva

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME OR PROPERTY.

*The rate quoted is valid at 22/07/2021 and is a 60% LTV mortgage, with a fixed rate of 0.94%% until 30-Nov-2023 followed by HSBC's Standard Variable Rate, currently 3.54%, for the remaining term of the mortgage. APRC 3.4%. (The rate may be withdrawn at any time and this email does not constitute an obligation for lenders to grant a loan). Source details from Twenty7tec.

†£100 Recommend a Friend incentive. Every time you recommend a friend who successfully completes a mortgage with us we will pay you £100 in the month following the legal completion of the new mortgage, provided they have advised the Customer Service Team or Mortgage Consultant at the outset.

Sequence is a trading name of Sequence (UK) Limited which is registered in England and Wales under company number 4268443, Registered Office is Cumbria House, 16-20 Hockliffe Street, Leighton Buzzard, Bedfordshire LU7 1GN. VAT Registration Number is 500 2481 05.

For activities relating to regulated mortgages and non-investment insurance contracts, Sequence (UK) Limited is an appointed representative of Connells Limited which is authorised and regulated by the Financial Conduct Authority. Connells Limited’s Financial Services Register number is 302221.

Summer 2021 Lifetime Members Newsletter

MS/SEQ/5514/08.21