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Many fixed mortgage deals will be approaching the end of their term this October.
So it’s a good idea to review your buy-to-let mortgage.

With interest rates still at low levels and demand for rental properties increasing around the country, investing in a buy-to-let (BTL) is a popular choice for many.

Buy to let basics

A BTL mortgage is a specific type of product for those who want to buy a property with the intention of renting it. Because of this, there are different terms and rules around a BTL mortgage (compared to a regular mortgage for a property the buyer intends to live in.)

• With a BTL mortgage, the anticipated rental income is taken into account when the lender calculates how much you can borrow.
• A BTL mortgage could suit investors with enough equity to put down a deposit of at least 20% of the value of the property. But some lenders could require up to 40%.
• Your credit record is closely scrutinised with a BTL mortgage, as with a regular mortgage application.
• Interest rates for BTL mortgages are usually higher than a regular mortgage.

Things to remember

If you have a BTL mortgage already and its fixed interest rate term is coming to an end, you may be thinking about switching products or providers to gain a better deal.

Here are some other things to look out for:

• Examine all of your options into the type of product to suit your investment going forward. A financial adviser is best placed to help you with this.
• Don’t forget to research any fees and charges around changing your product too. As these could be higher than you expect.
• When changing products, you may be asked about your property’s rental income history. This is to assure any new lenders that you are able to keep up with mortgage payments.
• Show that you have sufficient savings to cover any gaps in rental periods when your property could be unoccupied.
• For your own peace of mind, having a cushion of savings available to cover any essential repairs is important.

If you are looking to remortgage your BTL property or are thinking about transferring your mortgage to a different provider, our advisers can help you find a product that best suits you.

Key takeaways

• Many fixed mortgage deals will be approaching the end of their term this October. So it’s a good idea to review your BTL mortgage.
• Buy-to-let mortgages come with different terms and rules than a regular mortgage.
  It’s important to research all of your options when changing BTL mortgage products. A financial adviser is best placed to help you with this.

 

Some buy to let mortgages are not regulated by the Financial Conduct Authority.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

Make the most of your tax allowances by using the different types of ISAs that are available.

Individual Savings Accounts (ISAs) were first introduced in 1999 and are a tax-free way to save into a cash savings or investment account. There lots of different types of ISA available, but the right one for you will depend on your financial goals. We explain how they work so you can choose the one that is best for you.

Cash ISA

A cash ISA works in the same way as traditional savings account but you won’t have to pay tax on any of the interest you earn.

For the 2021-22 tax year each person has an ISA allowance of £20,000. To take out a cash ISA you have to be a UK resident and over the age of 16. If you don’t use the allowance before the end of the tax year you will lose it and you’ll have to start anew on 6 April.

Some cash ISAs are instant access while others have a fixed rate. You can only open one cash ISA per year. However you are allowed to transfer to another cash ISA or a stocks and shares ISA with another provider if you want to.

Stocks and shares ISAs

With a stocks and shares ISA you can hold a variety of investments such as shares, bonds and funds. Just like the cash ISA you can save up to £20,000 a year tax free, but you get to choose what investments you put inside it, so it’s worth getting financial advice. You also have to be 18 or over to be eligible.

Stocks and shares ISAs provide an option for people looking to avoid the erosive impact of inflation on returns. Over time there is the potential for better returns with an investment ISA over cash, although the risks are also greater.

If you want to invest in a stocks and shares ISA you need to be comfortable with the possibility of making losses and prepared to invest for the longer term.

Lifetime ISA

The lifetime ISA (LISA) can be used by first-time buyers to fund a deposit for a property or taken tax-free at the age of 60. As well as paying interest, LISAs benefit from a 25% bonus from the government to encourage saving towards a home or retirement.

The maximum you can put in each year is £4,000, which comes out of your £20,000 ISA allowance. The LISA can only be opened by anyone aged 18–39, but you can keep saving in one until you are 50.

With the LISA, you can get a bonus of up to £1,000 a year up until you are 50. If you open one at the age of 18, this means you could end up with a maximum bonus of £32,000.

However, there are some restrictions with a LISA. You have to keep your money in a LISA for a minimum of one year before you can withdraw it and if you take your money out before you are 60 and you don’t use it to buy a home, you will have to pay a 25% penalty.

Junior ISAs

If you’re looking to put some cash aside for your kids, Junior ISAs (JISAs) are a great way of doing so. These accounts are available to anyone under 18. And they tend to offer much higher rates than adult accounts, but there are some restrictions.

Like the adult accounts, you won’t pay any tax on your interest. In the 2019–20 tax year you can save or invest up to £9,000 in a JISA. You can save for your child either in a cash JISA, a stocks and shares JISA, or a combination of the two. JISAs can be opened by parents with children aged under 16 and then by children themselves when they are aged 16 and 17.

Innovative Finance ISA

If you invest with an innovative finance ISA (IFISA) the company offering the ISA will use the money to lend to borrowers or businesses – known as peer-to-peer lending. You’ll be offered a rate of interest from the borrower when paying back the money you’ve invested.

You can invest up to £20,000 a year in an IFISA and any interest earned will not be taxed. You can earn higher rates of interests than with a traditional savings account. However they are a much riskier option than a cash ISA, as the borrower could potentially default on their loan.

Our financial advisers can help you and your family find the right product to suit your needs and financial situation.

An ISA is a medium to long term investment. This aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Key takeaways

• Stocks and shares ISAs and innovative finance ISAs are riskier than cash ISAs. Consequently you could lose money, so make sure you get financial advice if you are considering either of these options.
• You can save up to £20,000 a year tax-free in an ISA. However if you don’t use your full allowance, you’ll lose it when the new tax year starts.
• If you’re saving for your first house you could get a government bonus of up to £1,000 a year. This is to put towards a deposit if you pay in the annual maximum of £4,000.

 

Figures from some of the country’s biggest insurance providers have shown a sharp rise in claims of accidental damage during the lockdown.

With many millions still working from home, the chances of accidents and damage to property have inevitably gone up. Halifax Home Insurance reported a rise of 35% for claims. This was between July and September 2020, compared with the same period in 2019.

Types of accidents included damage to computers and other electrical items, broken windows and water leaks. With trips abroad cancelled, children at home for the holidays and many people still working from home, appliances were used a lot more than normal, along with central heating systems.

Millions paid out in home insurance claims

One Insurance provider paid out £33 million in home insurance claims in 2020, with 15% going towards accidental damage claims. General claims not related to accidents accounted for 25% and were mostly related to appliance and pipework damage.

The biggest rise in claims related to damage to computers and electrical equipment because of spillages. As working from home turned many of us into amateur office managers, the usual health and safety measures within a normal office environment were not easy to replicate – especially with children and pets in the picture.

Admiral reported its accidental damage claims increased by 28% since the lockdown started in March 2020, compared to the previous year. Damaged laptop claims increased by 31% and claims around damage caused by home renovation also rose.

Check your accidental damage coverage

It’s a good time to see what your home insurance policy includes when it comes to covering accidental damage to your property.

1. Check that you have the accidental damage cover in place. It’s often offered as an optional extra to your home insurance.
2. Check the limits and exclusions on your accidental damage cover. Make sure there is enough to cover any new gadgets or equipment you bought during lockdown.
3. If you have made renovations and upgrades to your home during lockdown, try to calculate the extra value they bring to your home to ensure your home policy covers it.

How to avoid accidental damage in your home

Sometimes, accidents just happen, but there are ways to reduce the likelihood of an accident. For example keeping drinks away from computers, or tidying cables to avoid tripping.

With many homeowners installing wooden flooring, it’s worth keeping rugs secure with non-slip backing. Remember to encourage children to be aware of risks in the home when they are playing.

And it’s always a good idea to have your insurers’ telephone number and the policy details handy for when you need them.

Along with helping you check the small print in your accidental damage policy, your financial adviser is here to help you find insurance plans that work best for you and your family, to make sure you’re best protected.

Key takeaways

• During lockdown in 2020, more claims for accidental damage were made compared to the previous year. This was a result of working from home.
• Laptop damage, water leaks and damage to appliances and windows were common reasons behind the claims.
• Check your accidental damage coverage to make sure you’re properly covered. So you can take steps to try to avoid accidents in the home.

 

Nations experiencing a surge in the Delta variant of the coronavirus are in a race between vaccinating a majority of the public and getting ahead of the new strain in order to lift restrictions with confidence. The US, UK and EU are experiencing spikes in the rates of infections and there is some worry from economists about Europe’s previous positive outlook experiencing a setback due to the rapid spread of the variant across the Continent.

The UK’s ‘freedom day’ did go ahead on 19 July, albeit with businesses and local authorities given the ability to apply their own mandates in areas like mask wearing. The government’s aim to push on with the full reopening of society was boosted by the news from the Office of National Statistics (ONS) of a 356,000 surge in payroll figures for June. This is still below pre-pandemic levels, however.

Uncertainty about the Delta variant led to a volatile period for stock markets towards the end of the month. But fears were alleviated by the expectation of ongoing support from central banks as well as strong corporate earnings in both the US and Europe. In better news for UK markets, London overtook Amsterdam as the biggest share trading centre in Europe. This marks the first time London has taken the mantle since the conclusion of the Brexit transition.

The United Nations estimates that the financial toll of the coronavirus pandemic on global tourism could result in a $4 trillion loss to the global economy. Poorer countries are likely to be hardest hit, mainly because of low vaccination rates.

Inflation and consumer spending continue to rise
On both sides of the Atlantic, a surge in the growth of prices has given economists renewed concern about overheating economies. US consumer prices rose again in June and the inflation rate in the UK hit 2.5% in the same period (which is the highest level since 2018). The Bank of England’s monetary committee believes this is still a temporary phenomenon of strong growth, and expects things to fall back to pre-pandemic levels.

House prices in the US rose by over 14% in the year to April 2021, signifying the fastest rate of growth in 30 years. The American job market continued to regain ground, too, with a further drop in jobless claims in June and July.

China’s surge in stocks and bonds
Focus turned to China, following news that its economy expanded by 1.3% in the second quarter. This was mainly a result of retail sales, a growth in manufacturing and increased investment. The country’s exports also rose in June, along with GDP growth of 7.9%. Global holdings of Chinese stocks and bonds surged, as reported in July, by around 40% to more than $800 billion over the past year.

This is seen as a result of investors purchasing assets at a high rate, even accounting for the tense economic relations between China and the wider international community. China’s crackdown on tech companies like ride-hailing app Didi Global, which has listed its shares in the US market, is an example of causing an air of uncertainty for investors.

Key takeaways

• Countries experiencing a surge in the Delta variant of the coronavirus are in a race between vaccinating the public and lifting restrictions with confidence.
• London overtook Amsterdam as the biggest share trading centre in Europe.
• Economists are concerned about overheating economies with inflation spiking higher on both sides of the Atlantic.