Self-Employed Mortgages in 2023

Securing a mortgage while self-employed can be an overwhelming task. Uncertainty over the cost-of-living crisis makes it a challenging environment, so start the new year on the right foot and understand the options available to you.

Self-employment in 2023

According to the Office for National Statistics (ONS) self-employment is on the rise, with the new year set to follow this steady growth. Between January and March 2022, self-employment increased to just over 4.2 million.

This number continued to grow through the year, increasing to 4.23 million in October. With numbers projected to gradually increase, now might be a good time to reassess the options available to you if you are self employed.

What is a self-employed mortgage?

The term ‘self-employed mortgage’ implies that there are different deals for the self employed. In reality, lenders offer a similar choice of mortgages regardless of your employment type, although dependant on your personal circumstances you may be offered a limited range of deals.

Self-employed borrowers can be viewed as more of a liability or risk, since their income isn’t secure. This is one of the reasons why lenders then require further information in order to prove that you, as a borrower, have a reliable income and can afford the mortgage payments.

What documents do you need?

Lenders will ask for a variety of documents, depending on your self-employed status. These documents could include finalised and certified accounts, HMRC tax year overviews, business bank statements or projected income figures and future plans. Lenders are looking at income and affordability, so whether you are a sole trader, freelancer, limited company or contractor these documents may differ.

Ultimately, mortgage advisers are here to help. Whether you are newly self-employed or have years of experience, there are options out there for you. For more information, contact us today and we can support you and provide the best outcome for your situation.

Green Mortgages: what you need to know

With the COP27 summit last month, the climate conversation is at the forefront of people’s minds once again. Reducing the impact, we have on our planet has become a key priority for homeowners up and down the country as we head towards the point of no return.

Lenders are aware of this and want to help you achieve that – while also working towards their own green targets. Green mortgages are one of the key methods you can use to help your day-today become greener. We look at what green mortgages are and how they can help you to go greener.

In simple terms, a green mortgage rewards you for buying or owning an energy-efficient home. Whether your home is energy efficient at the point of purchase or you make improvements to your home, a green mortgage could reward you for being active in the fight against climate change. Essentially, a green mortgage offers you preferential terms if you can demonstrate that the property you own or are hoping to own meets certain environmental standards. A property with a high energy efficiency rating is likely to qualify for a lower interest rate or cash-back incentive. On top of this, lenders may even increase the maximum loan amount – opening doors to different locations or property types. According to the Green Finance Institute, UK households account for around 20% of the country’s carbon emissions. This statistic alone demonstrates how everyday homeowners can make a real difference in the effort to reach net zero by 2050. What can green mortgages do for you?

So, how can a green mortgage benefit you? Well, there are several pros to taking out a green mortgage. Lenders will offer lower interest rates to encourage you to have a more energy efficient home. This means your monthly payments may be less than they otherwise would – helping you to save money and the planet simultaneously. Having a more energy efficient home would also help you keep your energy bills at a more manageable level – a benefit not to be overlooked amid a cost-of living crisis. A more energy efficient home takes less power to heat and therefore doesn’t cost as much.

As we edge closer to the government’s net zero target, eco-homes are becoming more desirable. As buyers are more frequently valuing the EPC rating of a home as a priority, having a home with a good rating could increase its overall value. Not only are you saving money through having cheaper monthly repayments – but your property’s value could increase.

If your home has an EPC rating of A or B, or you’re looking to purchase one that does, a green mortgage could be the product for you. To find out more, speak to your adviser to have any of your questions answered.

To discuss the options available to you contact Bill Somers Mortgage Services today.

First time buyers – what to expect in 2023

After nine years, the Help to Buy scheme is coming to an end. With the application deadline having already passed – the attention for first time buyers now turns to the available alternatives.

361,075 homes were bought with a Help to Buy equity loan between April 1st, 2013, and March 31st, 2022 – a £22.5 billion hole left to be filled by alternative schemes. So, what other schemes are out there and available to help first-time buyers get onto the property ladder?

First Homes Scheme

First launched in June 2021, the First Homes scheme is an initiative involving first-time buyers, key workers, and local people. The scheme allows those who fit the criteria to purchase a new build property at a 30-50% discount to the market value. When said buyers eventually decide to sell, that discount is passed onto the next buyer as well to encourage a continuing chain of opportunity for first-time buyers to buy affordable homes. The scheme is still in its infancy with only a handful of developments currently available. However, with the end of Help to Buy almost upon us – First Homes could see an increase in both availability and popularity as we head into 2023 and beyond.

Shared Ownership

Similarly to Help to Buy, Shared Ownership is a government scheme that allows prospective buyers to purchase a share of a property from a housing association and pay rent on the rest. As long as the share being purchased is between 25% and 75% of a home’s full market value, shared ownership could be a viable option for first-time buyers looking to purchase a home. Proportionate amounts of rent and mortgage repayments relating to the split of the ownership are paid to make the monthly payments manageable. Further shares of the home can be bought later down the line (known as staircasing) which would see the rent decrease as the landlord owns less of the overall property.

Lifetime ISA

On top of the schemes still available to help you buy a home, there are also government initiatives to help you save for one. When saving for a deposit for your first home, using a Lifetime ISA enables you to save £4,000 a year of your own money. The Government then add 25% of whatever you save for that tax year – meaning you could gain up to £1,000 extra every year. The money must then be used to either buy your first home or to fund your retirement.

Although the Help to Buy scheme is now coming to an end and there are no direct replacements yet, there are still initiatives in place to help you get on the ladder. If you’re considering buying your first home, contact us today to discuss the options available to you.

How you can save energy this winter

It is no secret that this winter is shaping up to be a struggle for so many households in the UK. With rising energy bills on the minds of millions – the cold weather has the potential to ask some difficult questions of us all. When do you put the heating on? When can you afford to?

Obviously, there are challenges ahead – but there are also ways to save energy here and there that can add up over the course of a few months. Below are a few tips to help you feel a bit better about the prospect of turning up that thermostat.

Keep out the cold

Although it may be an obvious solution, taking care of the draughty areas in your home can be one of the best ways to save energy. Draughts not only let in the cold, but also allow heat to escape – so it is no surprise that draught proofing could save you up to £25 per year. A chimney draught excluder could save you an additional £17 per year while also reducing your carbon footprint.

Upgrade your heating controls

Over 50% of your energy bill will go towards providing heating and hot water. Updating your heating controls can be the best way to manage your bills by reducing how frequently you use your heating. Room thermostats, programmers and thermostatic radiator valves can all help to reduce your costs when used efficiently. Maybe you only ever shower in the morning? If that’s the case – you can turn off the hot water for the rest of the day! Heating controls can save you roughly £75 per year.

Insulate your pipes

Pipe insulation can help to prevent heat from being lost from the pipes in your home. This helps to keep your water hotter for longer and therefore reducing how much energy is required to heat it. They’re really easy to install too! You simply place foam tubes around the exposed pipes between your hot water cylinder and your boiler – and doing so can save you around £10 per year.

Radiator Reflection

Radiator reflector panels are a cheap and easy way of saving energy. Instead of letting heat escape through an external wall, the panels reflect heat back into your home – reducing your overall energy consumption. Installing these panels could save you £19 per year.

But wait, there’s more

Maybe it is time to consider the bigger decisions available to you. Have your kids left home? Do you need all the space you currently have? If not, downsizing to a smaller property to suit your needs could be one of the most effective ways to reduce your energy consumption. Not only that, but downsizing could also see your council tax decrease significantly. If you think downsizing could be on your radar, or you would just like to discuss the options available to you, get in touch with your adviser to talk through any queries you may have.

Fixed vs Variable rates

It’s safe to say that there is a fair amount of confusion currently surrounding the mortgage market. Rates have been on the rise as inflation soars, but what does this mean for you? Perhaps you’re looking to secure your first mortgage or looking to renew?

Either way, it’s certainly a confusing time and it can be so difficult to know what type of mortgage best suits your situation. Do you go with a fixed rate mortgage to avoid further rises or a variable rate in the hope that mortgage rates fall again? We’ve outlined the pros and cons to help you make the best decision.

Fixed rate mortgages

Fixed rate mortgages do exactly what the name suggests. The interest rate on a fixed rate mortgage remains the same throughout the fixed term of your mortgage product – usually between two and five years. With a fixed interest rate, your monthly payments will remain the same for the duration of your product term. Once the product expires, you’ll automatically revert to the lender’s standard variable rate (SVR).

The biggest positive of a fixed rate mortgage is of course your payment remaining the same. This means that it is much easier for you to budget monthly as you will always know exactly how much money you’ll be paying every month. If you were to take out a fixed rate mortgage today, you would lock in your monthly payments based on today’s rates and would not pay any more even if rates rise within your fixed-rate product term – protecting you against your mortgage becoming unaffordable.

The downsides come into consideration when interest rates start to fall. You would then potentially be paying more than the standard variable rate until your product term expires. On top of this, fixed rate mortgages are also less flexible, involving Early Repayment Charges (ERC) during the fixed product term.

Variable rate mortgage

A variable rate mortgage is the exact opposite of a fixed rate. Both the interest rate and monthly payments are dependent on current mortgage rates and can fluctuate at any point throughout the term of your mortgage. The two different types of variable rate mortgages are SVRs (Standard Variable Rate) that is fixed by your lender and a tracker rate that follows the movements of the Bank of England’s Base Rate – although the tracker rate will usually be higher than the base rate (e.g., base rate plus 2%).

The main advantage of a variable rate mortgage is felt when rates go down as you could end up paying less as a monthly repayment than you did at the start of your term, (however it could also be more if rates go up). You’ll also be able to get a lower rate on a variable rate mortgage than on a fixed as you’re taking the risk that rates could increase throughout your term. For those whom flexibility is key, a variable rate or tracker rate mortgage would be preferable than being locked into a product with Early Repayment Charges (ERC) should your circumstances change, and you need to exit your fixed rate mortgage product early.

There is no right answer to this question. It is entirely down to personal preference and your own financial situation. Given the current volatility in the market, it’s so important to get in touch with your adviser to discuss your options.

If you’d like to discuss the options available to you, contact us today.

Help to Buy scheme closing

The Government’s Help to Buy scheme is coming to a close and the deadline for new applications is 31st October this year.

All applications for purchasing properties through the Help to Buy scheme must be submitted before the October deadline – and only properties that will be build-complete by 31st December 2022 will be eligible for the scheme. There is no guarantee that Homes England will honour the 20% Equity Loan if the building is completed next year, so it is so important to ensure your home will be building-complete before the turn of the year.

As first-time buyers looking to take advantage of the Help to Buy equity loan scheme, it’s important to note that you will have to reserve a property by the end of October. With the scheme officially closing in March 2023, the October deadline is the first stage of bringing the whole process to a close. The timeline for the various deadlines is:

• October 31st, 2022 –deadline for applications

• December 31st, 2022 – deadline for homes to reach practical completion

• March 31st, 2023 – deadline for buyers to complete on their homes

 The Help to Buy scheme was originally launched by then chancellor George Osbourne in 2013 in a bid to rekindle the then struggling housing market. Since December 2020, the equity loan scheme for England has been open to applications from first-time buyers only and there have been regional price caps for qualifying properties.

A spokesperson from Homes England stated: “When the scheme closes on the 31 March 2023 homebuyers must have legally exchanged on their home. The deadline for new applications is at the end of October to ensure consumers have enough time to complete their purchase”.

Time to get your move on?

With the October deadline fast approaching and the house buying process not always being plain sailing, now is the time to really get a move on if you want to take advantage of the Help to Buy scheme. It’s important to have an open and ready line of communication with your adviser, as this could be the difference between you getting your application over the line in time or not. If your homebuilder cannot finish your home in time, your homebuilder must return your reservation fee to you in full.

Also, if you have exchanged, your homebuilder must unconditionally release you from the contract and return your deposit. Consider contacting your conveyancer for advice.

There are no other fees to apply for a Help to Buy: Equity Loan, but you may still have to pay related costs and fees involved in the purchase of your home. This includes costs related to your legal and financial advice.

A department for levelling up, housing and communities spokesperson said: “The scheme is just one of the ways the government has made homeownership more achievable and affordable. Shared Ownership, First Homes and the Mortgage Guarantee Scheme continue to support many more people into homes of their own.”

If you’d like to discuss the options available to you, contact us today.

Remortgages, Product Transfers and the cost-of-living crisis

There’s no point dancing around the subject – we all know that the cost-of-living crisis has become a serious worry for millions of UK citizens. With energy prices sky rocketing, keeping on top of your outgoings can be incredibly stressful and with a further rise coming in October, perhaps it’s time to reassess your finances and see if your monthly repayments can be reduced.

Remortgages and product transfers can offer a solution to the cost-of-living problem by enabling you to arrange new terms on a mortgage to suit your financial situation. So, if you are starting to worry about managing your finances during this stressful period – keep reading to find out what method could suit your situation the most.

When it comes to using your mortgage to lessen any financial difficulties you may be having, you have two main options. One of these is to negotiate a new deal with your current lender (perhaps lengthening the repayment period while lessening the monthly payments). The other is to remortgage your property – going to a new lender to secure a better deal. The Financial Conduct Authority estimates that one third of homeowners pay their mortgage lender’s Standard Variable Rate – meaning that roughly two million households are potentially wasting money each month when they could be getting better rates.

Product transfers

A product transfer involves you and your mortgage adviser negotiating a better deal with your current lender. If you’re coming to the end of your fixed term, you’ll be switched to your lender’s Standard Variable Rate (SVR) – a rate that could be much higher than one you could get through a product transfer. It’s the best way to keep your monthly payments at a manageable level without having to switch lender. It’s also arguably the more convenient option of the two – with less paperwork being involved making the process much quicker.

Remortgages

Remortgaging is when homeowners change their mortgage deal or need to take out a larger loan to release more money from the equity of their home. Similarly, a remortgage can achieve much lower rates than your current lender’s SVR, however it can also free up your capital with additional borrowing which can be hugely beneficial if you’re looking to make improvements to your home (perhaps to improve its energy efficiency). If you’re looking to longer term solutions, improving the energy efficiency of your home can help to reduce the cost of energy for your home. If you’re not sure which of these two options best suits your current situation, or if you simply want to explore what’s available to you, get in touch with your mortgage adviser to discuss whether a product transfer or remortgage could help you cope during a worsening costof-living crisis.

If you’d like to discuss the options available to you, contact Bill Somers Mortgage & Insurances Services today.

Critical Illness Cover for your kids: what you need to know

When it comes to our children, there’s nothing we wouldn’t do to protect them – right? Well, there are some things that so many parents fail to consider. No one wants to imagine their child falling ill – but it does happen to some and is a situation that is important to be prepared for.

Critical Illness Cover is an integral part of any protection policy if you have children – and it will help with some of the impacts you may not have even considered.

Children’s critical illness cover plays an important role in the protection space. Of course, you’d do anything to protect your children from harm – but what happens if they do fall critically ill? Aside from the obvious emotional distress such an ordeal can cause – a child falling ill can have a huge impact on your finances, especially if you’re forced to take time away from work to look after them. In the past, children’s cover was typically included automatically on critical illness plans regardless of whether you had children, it is now much more common for insurers to offer a more flexible range of options tailored to your needs – so it’s important to ask about it when getting covered.

The benefits of children’s cover can often be overlooked as it isn’t an income earner within the household falling ill, but the financial benefits from the cover offer a peace of mind and financial stability that is hugely valuable in the case of something as difficult as your child becoming critically ill does occur. Pay outs can be used to cover losses of income if you had to take time away from work to care for your child, as well as paying for expensive treatments or essential modifications to your home where necessary. Children’s CIC will protect your child whether they are naturally born to you, a stepchild or adopted.

 What age does CIC cover children for?

The oldest age you can hope for your child to be covered for under a child’s critical illness policy ranges from 18 to 23 depending on the provider, although the majority will at least cover until 21. Most providers offer cover that start from birth, although some won’t offer a policy until your child is 30 days old.

Of course, even just imagining your child falling critically ill is an incredibly difficult thing to do – which only highlights just how important it is to get them covered. The emotional stress of dealing with a critically ill child is more than enough for anyone to deal with – and CIC offers peace of mind that your financial situation will be secure if such a tragedy were to happen to you.

 If you already have cover in place but it doesn’t cover your children, get in touch with your adviser to talk through your options. You can add your children to your policy at any time, so make sure to speak with your adviser and ensure your whole family is protected.

 If you would like to discuss the protection options available to you, please get in touch with Bill Somers Mortgage and Insurance Services today.

5% deposit shared ownership mortgages: what you need to know.

The shared ownership sector has gained some real traction recently, with more and more lenders offering raised LTV criteria on newly built homes. Several big-name lenders now offer 95% LTV shared ownership mortgages on new builds as the market continues to make homes as accessible as possible to prospective first-time buyers.

With industry giants Halifax recently following suit in the shared ownership space – we explore what you need to know when it comes to getting a shared ownership mortgage.

What is shared ownership?

Shared ownership is a scheme utilised if you can’t afford all of a deposit and monthly mortgage payments for a home that meets your needs. It involves you buying a share of a property while paying rent to a landlord for the remaining share. If you can purchase a share between 25% and 75% of a home’s full market value, you could be a prime candidate for such a mortgage. You would pay proportionate amounts of rent and mortgage repayments relating to the split of the ownership. You can then purchase more of the home in the future (known as staircasing) which would see your rent decrease as the landlord owns less of the overall property.

Who buys shared ownership homes?

Shared ownership is classed as affordable housing and so it comes as no surprise that around 80% of shared ownership properties were bought as first homes in both 2020 and 2021. Over half (52%) of shared ownership homes were purchased by households consisting of one adult, as the scheme is one of the few affordable methods for buying a first home on a single income. 29% of homes were bought by households of two adults and 13% by households with children.

 Crunching the numbers

 Recent data from the department of levelling up shows that the average price of a shared ownership home was £275,100 in 2021, with an initial equity stake of £109,800 (41%) and an average deposit of £17,700. In terms of rising prices, the average for shared ownership homes have risen by 67% over the last 12 years – at a similar rate as the wider market.

 The shared ownership space continues to grow in popularity, with the likes of Leeds Building Society and Halifax offering 95% LTV mortgages as more and more buyers look to affordable housing. As house prices remain high and the cost-of-living crisis continues to tighten the purse strings for millions of households up and down the country, it may be worth considering how shared ownership could benefit you or your loved ones.

If you would like to discuss shared ownership mortgages or mortgages in general, please get in contact with Bill Somers Mortgage Services today.

Help to Build Equity Loan scheme launched

After the recent government announcement of further help being offered to first-time buyers as they try to get onto the property ladder, we thought it would be a good time to breakdown what the Help to Build Equity Loan scheme is and how it may be able to help you.

The scheme aims to offer those who have not been able to buy their first home the opportunity to build it, with 5% deposits made available and backed by £150 million of government funding.

What does Help to Build include?

Help to Build is a government equity loan, available to those in England who want to custom build, self-build or shell build a home. With custom build - you work with a small or large developer to design the build, specifications, and layout of the home to meet your needs now and in the future whereas with self builds - you create an individual home to suit your needs and handle every stage of the building project. With a shell home - you buy the outside shell of a watertight home, with walls, a roof, and windows, but it’s unfinished inside. It allows you to tailor the internal layout to suit your needs, including where to build internal walls.

On June 27th, 2022, the Help to Build Equity Loan scheme went live as the government works to help younger people get their hands on their first homes. As part of the ‘Levelling Up’ initiative - the new scheme will allow 5% deposits on land and building costs on new Help-to-Build mortgages. With £150 million of government backing behind the scheme, first time buyers will now be able to access self and custom designed homes with a much more affordable initial deposit – with the previous average for deposits on these mortgages around 25%. The change will mean that first time buyers will no longer be priced out of building their first homes. The scheme will help to “level up communities” by supporting young people and families into homeownership in the areas they wish to live.

In response to Richard Bacon MP’s independent review of scaling up custom and self-house building, the government have set out how the new scheme could deliver 30,000 – 40,000 new homes a year.

Speaking on the government’s response to his report, Richard Bacon MP said:

“I am very pleased by the government’s warm response to my review. The government recognises the crucial role which custom and self-build housing can play in addressing the nation’s housing challenges, including delivering more affordable housing.

Making it easier for people to build or commission their own homes helps to promote a more diverse housing market with more real choice and control for consumers.”

If you would like to speak to us about help to build mortgages or mortgages in general, please contact us today.

Mortgage Broker or Bank: Which is Better For You?

Buying a home is exciting, however the process can be very stressful getting the mortgage sorted, your finances in order and all the paperwork that comes along with it. As mortgage advisors we can help match you with the perfect mortgage and help make the process as stress free as possible. A mortgage broker will act as a middleman between you and the lender, able to sort paperwork and usually work with multiple lenders, they can compare the loans for you and present you with the best deal. Banks or Direct Lenders on the other hand will only be able to offer you their in-house loan offers, meaning to compare you will have to do that research yourself. As a mortgage broker Bill Somers understands that you’re looking for a home not a mortgage and is committed to help you get the property of your dreams with the perfect mortgage, get in touch today to find out your mortgage options.

How Mortgage Brokers Work?

Mortgage brokers have access to many mortgage products. After gathering all your information and what house you would like to buy, they can recommend the best loan to suit you. They will be able to understand the interest rate and closing costs to find any exclusive deals that may be hidden away from you. They can compare both banks and lenders to see which loan program and rate would get you the most out of your loan. If you were thinking of doing the research yourself you would have to apply with each lender or bank separately and evaluate which would be best, however without the depth of knowledge of a mortgage advisor you may not be able to understand which loan would suit you best long term. If you are still on the fence as to whether to go for a mortgage broker here are some pros and cons otherwise chat to one of our experts to see what type of mortgage would suit you.

Pros of a Mortgage Broker

• Wide range of products: Able to bring in several quotes from lenders and make you a recommendation as to the best one for you.

• Act as a Middleman: A mortgage broker will act as a middleman so that you don’t have to contact multiple lenders yourself.

• Save you time: Help you deal with all the paperwork and get it to apply for the loan quickly and give you advice along the way.

• Source your insurance: Often mortgage brokers like Bill Somers specialise in insurance too so could help you get financial cover should you unexpectedly become ill or are unable to repay your mortgage.

Cons of a Mortgage Broker

• Charge a fee: Mortgage brokers may charge a fee however if this means they might find a loan that could save you thousands in the future, the upfront cost may be worth it.

How Bank Mortgages Work?

Banks or direct lenders can sometimes be a more streamlined process with everyone dealing with your loan working for the same company, that is if you meet their criteria. However, they will only have access to loans in the bank/lender’s portfolio meaning that they may have limited loan options for you.

Pros of Bank Mortgages

• Simple: Offers a simple streamlined process should you meet their criteria.

Cons of Bank Mortgages

• Limits your choices: You will only be offered the loan options from that bank or lender.

• Pay more: Without the knowledge of what other banks or lenders have to offer you could end up paying more.

• Tough lending criteria: If you go with your high-street bank, they often have tough lending criteria meaning that you may not be eligible unless you have a good credit history.

Why Use a Mortgage Broker Instead of a Bank?

If you have a good credit history, income and assets are strong, going through a bank might be just as easy as you won’t need to shop around to find a lender to fit your specific criteria, potentially saving you time and money. However, if you are not in this perfect scenario then a mortgage broker may be the way to go. A mortgage advisor will do the research for you to find the best loan to suit your circumstances, whether that is that you are self-employed, you’re wanting a buy to let mortgage, to remortgage your house or you’re a first time buyer. As well as if you don't have a good credit score a mortgage advisor will be able to offer you advice on which mortgage lender is more likely to accept you or tips on how to increase your mortgage affordability. Mortgage rates will mostly be based on your credit score, how much debt you already have, where your property is located, your down payment, and the size of the loan you are applying for. If you know that your application may have a few challenges, speaking with a mortgage broker may be best to find the perfect mortgage loan and lender to suit you.

Our experts have years of experience and knowledge in dealing with mortgage lenders and with their wealth of knowledge, they will be able to find you the perfect mortgage, get in touch today.

Life Insurance: Do I Really Need It?

Life insurance pays out either a cash sum or regular payments on your death, this can help your loved ones deal with any financial impact that may follow when you are gone. You may consider getting life insurance if you have people that rely on you and your income. 

Why do People Buy Life Insurance?

Buying property or starting a family is when most people begin to look into life insurance, when someone is dependent on you and your income. A life insurance plan will help give you some peace of mind and help your loved ones with any future costs that may occur should you die.

Here are a few reasons that many people choose to buy life insurance:

• Buying Property: As discussed above, buying property is one of the main reasons people take out life insurance.

• Marriage: Life insurance helps you to contribute financially to your loved ones’ life after you have gone.

• Having a baby: Many parents take out a term life insurance just in case something should happen before your child is financially independent of you, this will help with any financial implications left when you die and could help with university fees etc.

• Inheritance Tax: Buying a life insurance policy to cover the tax bill so that your children can enjoy all that you intended to give them. This is normally best discussed with a tax specialist.

So, what life insurance do I need?

There are a few different types of life insurance to consider. At Bill Somers we will use our extensive knowledge of life insurance policies to find the right cover to suit you and your lifestyle and help with all the paperwork that comes along with it, to help make your life that little bit easier. We will also look at your suitability for other protection products for example critical illness insurance and income protection.

Do You Need Life Insurance if you have a mortgage?

If you are single and don’t have anyone who depends on you financially you may not need life insurance; if you have a mortgage the lender would simply reclaim the property on your death and sell it to settle the remaining debt. However, if you plan to leave any mortgaged property to someone or a charity you would then need life insurance so that the mortgage could be settled prior to them receiving the property.

On the other hand, if you own a property that’s mortgaged that both you and your partner are named on, on your death the responsibility to repay the debt will continue with your surviving partner. They will be expected to pay the debt in its entirety even if your income currently comprises much of your household income. 

Although discussing your passing is not a fun topic it is necessary to plan with your partner or loved ones what will happen with any assets or finances after you are gone, this is where we can help you get everything in order.

How To Get The Best Life Insurance?

Talk to our team at Bill Somers and with our extensive knowledge of life insurance, can ensure that your cover is right for your needs. We can take the stress out of comparing policies and companies by taking care of the paperwork and being the point of contact with the insurance company you choose. 

Get in touch today to discuss your life insurance options.

Income Protection Insurance: Why you should always be covered amid a cost-of-living crisis

Protection insurance is severely undervalued by thousands of people across the UK. Often seen as an unnecessary expense; there are a vast number of people living in this country who are yet to take out a protection plan and therefore remain unprepared should they lose their income or worse – their life. 

With a cost-of-living crisis currently causing panic for many, it’s so important to stay covered even when you’re looking to cut costs elsewhere. Despite common misconceptions surrounding how often providers pay out and steep monthly premiums, uncertain times make protecting your family should anything happen to you even more vital. Get in touch with the team at Bill Somers today to help you find the correct protection insurance for your needs.

What are the different types of protection cover?

There are several different types of protection insurance, from payment protection insurance to permanent health insurance. At Bill Somers we will use our extensive knowledge of insurance providers to find the right cover for you, looking into Life Insurance, Critical Illness Cover and Income Protection Insurance. 

The necessity of protecting your income has never been more apparent. The pandemic offered millions of people a scary insight into just how quickly circumstances can change for anyone by forcing a huge proportion of the population out of work. Now, imagine how dire that would have been without the safety net that the furlough scheme provided for so many households nationwide. Income protection insurance provides a tax-free income allowing you to pay your bills, mortgage, rent and childcare should you become sick or have an accident and are unable to work.

Critical Illness Insurance Cover - is a type of protection insurance that is designed to provide you and your family with financial stability should one of you fall seriously ill. Illness can stop you from working at any time and without warning and being in the midst of a cost-of-living crisis, protecting yourself against such an outcome with protection insurance has never been more valuable.

Do You Need Protection Insurance?

There are many reasons you may need protection insurance. If you are are self-employed or a small business owner, you may not have sick or annual leave pay. If you have family members that solely rely on your income alone or if you have debt, such as a mortgage that you will have to pay even if you are unable to work. Your work contract may not specify what happens if you become critically ill and so may not offer protection if this happens. If you need help deciding if you need protection insurance and what policy would suit your needs, contact us today.

Do insurance providers actually pay out?

So, do providers pay out – or is it all too good to be true? Well, contrary to what some sceptics might say, 98.3% of all claims made in 2019 on protection policies were accepted. This figure is enough on its own to display just how common a successful claim is – and how unlikely it is that a claim is rejected. There are of course a few occasions when providers don’t pay out – most commonly due to underlying issues not being disclosed when the policy is initially taken out. At Bill Somers, we will ensure you are with the right insurance company to cover your needs.

Is Everyone Eligible for Protection Insurance?

Another common misconception surrounding the protection industry is that more complicated cases get turned down. There are plenty of insurance providers that specialise in the more complex of cases – and the figures suggest that the vast majority of those cases pay out too. The Exeter reported that 93% of claims were paid in 2021 with a total pay-out of over £10 million. Out of the 1,318 claims made throughout 2021, only 92 were turned down (that’s just 6%). You will need to be employed at least 20 hours per week and have been in your current job for at least 12 months to qualify, in most cases.

It’s so important for everyone to protect their income, and if the past couple of years has taught us anything, it is that no one can predict what the future holds. Being protected against any eventuality is a safety net that could prove to be invaluable to any of us. Get in touch today to discuss which protection insurance is best suited to you and your family.

Should you be in on the remortgage boom?

Recent analysis has shown that remortgages have risen by more than a quarter between the months of March and April. This is largely down to the multiple base rate rises announced by The Bank of England throughout 2022 and the response from lenders to raise rates accordingly.

Many consumers are now looking to ‘lock-in’ the current available rates in a long-term fixed mortgage ahead of any more potential rate increases – but is this the right thing to do? We look at how base rate rises and the cost-of-living crisis could persuade you to follow suit.

The number of remortgages have increased by more than a quarter between March and April. Over 50% of borrowers took out a five-year fixed rate product. With rates on the rise, it’s essential you take the time to review your current mortgage. If you’re currently on a variable rate plan or your fixed rate term is coming to an end in the next year or two, now could be the perfect time for you to lock in a new long term fixed rate mortgage before rates potentially get significantly higher in the coming months. As the economy tries to recover from the pandemic and combat inflation, rates are predicted to rise further – so acting quickly could save you money on your monthly repayments.

Remortgaging has other positives at this moment in time as well. Along with locking in your repayment rate, remortgaging now offers a unique opportunity for those worried about making money stretch amid the cost-of living crisis that the UK currently faces. Releasing equity in your property can be the perfect solution to being a little more comfortable as energy prices and inflation both continue to rise. So, if you find yourself struggling to cover the cost of your bills over the coming weeks and months, perhaps remortgaging is worth looking at – it could save you thousands.

There are some, of course, who won’t need to worry about a higher cost of living and are in a slightly more comfortable position financially. Well, remortgaging can still offer benefits to you too! As summer approaches, maybe you’re considering some home improvements? A conservatory? Maybe a home office? Whatever you may be considering, home improvements can be expensive – but not to worry. Remortgaging can make lump sums available to you to finance such projects so that you don’t have to save and could get the work done while the summer weather is (hopefully) warm and dry.

Remortgaging isn’t for everyone, but it does currently offer unique opportunities to take advantage of. If you just want to secure lower mortgage rates for the coming years, want some spare cash to help you through the cost-of-living crisis or maybe you want to add value to your property by doing some home improvements – whatever the reason, remortgaging could be the answer.

If you’d like to discuss the options available to you, contact us today.

Holiday lets: are they worth it?

If you’ve ever considered investing in a second property, you may have already thought about holiday lets. With the popularity of staycations on the rise, now could be a better time than ever to get into the game.

The ability to make some extra cash while also maintaining the possibility of enjoying the property yourself is an attractive prospect for many.

Generally, a holiday let is a property that is let out to tourists for short periods of time as accommodation for their trips. Whether you let out the property for a weekend or a month – holiday lets can command a much higher price than a standard buy to let. As long as the property is available to holidaymakers for a minimum of 210 days of the year, you are free to use it yourself for the remainder of the 12-month period. Shorter term lets can offer an easier role as a landlord too – as you’re not responsible for maintaining a tenant’s primary home.

Some recent predictions suggest that the appetite for staycations will continue to rise post-pandemic after regulations caused a surge in people choosing to holiday domestically. This trend has led to investors looking to make holiday lets a lucrative safe haven for their money. At peak times, some holiday lets in popular tourist destinations can earn as much in a week as a standard buy to let does in a month. Although holiday lets in popular destinations can be more expensive to purchase initially, the return on investment is typically more than a buy to let.

As long as your property meets the furnished holiday let criteria, holiday lets are eligible for full mortgage interest tax relief. As holiday lets are officially categorised as businesses, there’s no limit on the mortgage interest amount incurred that you’re able to offset against your profits. This can be a great way for taxpayers on a higher rate to reduce their income tax bill. Holiday lets are also subject to business rates as opposed to council tax, while there’s also a possibility you’ll be able to claim 100% relief on business rates should your property have a rateable value of less than £12,000.

While the primary reason for moving into the world of holiday lets is to generate income, they also offer the chance for landlords to enjoy them as well. Unlike a standard buy to let, landlords are able to utilise their properties for a certain period throughout the year – creating a happy medium between a second income and a second home.

If you’d like to discuss the options available to you, contact us today.

How to improve your mortgage affordability

With affordability tests being revised in the wake of the cost-of-living crisis currently happening in the UK, many prospective buyers are looking for ways to improve their chances at securing the best possible mortgage for them.

With house prices still at a high, improving your affordability can be a great way of increasing your chances of securing a mortgage – especially for first time buyers looking to raise a deposit for their first home. In this article, we look at the most effective ways you can improve your affordability.

The affordability test that comes with a mortgage application is designed to protect consumers against being sold loans that they are unable to pay – obviously something that is an essential part of the process, but also an added obstacle for some that are perhaps right on the cusp of affording the home they want. With the criteria now set to be tightened, it may well be time to look at improving your own affordability wherever you can.

Cutting costs

One of the more obvious solutions is to cut unnecessary costs. The lower your monthly outgoings, the more you’ll be able to afford. Although this may appear to be stating the obvious, the impact that making cutbacks can have may be more significant than you’d think. Reducing your outgoings by just £100 a month by cutting down on eating out and the odd takeaway could add up to £10,000 to your maximum loan. Obviously cutting down on monthly outgoings isn’t a possibility for everyone – but if you are able to make some sacrifices, it could really help to improve your affordability. For those who may find cutting costs a little harder, perhaps trying to switch providers for various services such as TV packages could result in you being offered special deals that can help you save.

Reduce your debts

If you are someone with outstanding loans, not repaying them before applying for a mortgage could affect your affordability. It may be advisable to reduce debts where you can before any mortgage application to have a better chance at passing an affordability test. Student loans are often treated differently by lenders, and you may not have to worry about reducing them before getting on the ladder.

Prepare in advance

Different lenders may require different types of evidence when calculating affordability. Some could ask to see three months’ worth of statements whereas others could ask for six or more. It’s a good idea to prepare for the longer period before applying to make sure each statement you provide will be beneficial to your affordability.

If you are worried about how changes to affordability criteria could affect your mortgage application, it’s important to speak to your adviser so they can help to put your mind at ease.

If you’d like to discuss the options available to you, contact us today.

Key worker products – what’s out there?

After nearly two years of key workers holding the country up on their shoulders through their immeasurable effort and sacrifice throughout the pandemic, more and more mortgage products are becoming available with exclusive benefits specifically for key workers. So, what do you need to know when it comes to benefiting from these special rates?

Key worker mortgages offer discounted rates and deals for those providing a valuable service within their professions that benefits their community. Teachers, NHS workers and military defence staff are amongst those that would typically qualify for a key worker mortgage. The aim of this type of scheme is to provide stability for those who work to have a positive impact on their communities.

Key worker property schemes

Current key worker property schemes available on the market are designed to help key workers get onto the property ladder. The type of scheme you’re able to apply for will depend on your location, job role and the property scheme you’re applying with.

The available schemes, lending requirements and eligibility will all vary depending on the provider and local authorities, but there are typically three main types of key worker schemes available: Rent to buy, help to buy and shared ownership plans. If you want to discuss the options available to you, get in touch with our advisers and they can answer any questions you may have.

Local authorities and councils

Local councils and authorities commonly offer favourable deals for key workers – a trend that has become more frequent since the beginning of the pandemic. This is in an attempt to help key workers buy homes in their district and can be presented in many ways:

• Reserving a portion of houses solely for key workers

• Key worker shared ownership options

• Rent to buy schemes

Government schemes

The Help to Buy scheme is a shared equity Government scheme available to first-time buyers and homeowners buying eligible new build properties in the UK. By taking advantage of a government equity loan of up to 20% in England and Wales (40% in London boroughs), it can be much more manageable to enter the property ladder. Although this is not solely for key workers, it can still be an extremely beneficial scheme.

We can all agree that key workers deserve so much praise for the last two years and indeed for the jobs they do on a daily basis, so the availability of these schemes is a welcome addition to the market. If you’d like to find out if you’re eligible or perhaps want to look into taking advantage of one of the key worker products available on the market, get in touch with one of our advisers today.

If you’d like to discuss the options available to you, contact us today.

Rising Inflation: How does it affect you?

As reports of rising inflation in the UK flood the news, we thought the time was right to take a closer look at how it could impact you. With inflation hitting a 30 year high in recent weeks, it’s bound to have an effect.

What is inflation?

Inflation is a measure of the relative value of a currency. It measures how much prices rise and fall and is tracked by several indices – mainly the consumer price index (CPI). The CPI records the average cost of 700 items including everyday items such as food and fuel and a figure is referred to as the headline rate is determined based on how much those prices have gone up over a year.

Why is the rate so high?

The rate of inflation has been rising recently and is currently at a 30 year high, but why is that? Well, one of the biggest contributors to the recent rise has been the increase in the price of petrol. The price of petrol rose by 5.1% month on month in 2021 to reach a record high – with a 7.2p per litre increase between October and November being the biggest increase since the ONS (Office for National Statistics) began keeping records of the price in 1990. Other average prices have also risen recently, with second-hand cars becoming more expensive as issues with supply chains have consistently held up vast numbers of new cars going to market.

What does this mean for you?

In a nutshell, what this rise in inflation could mean for you is that your cash might not stretch as far as it previously had. If you are on fixed pay, then you may feel the effects slightly more as the prices of everyday items increase around you. If you are saving, higher levels of inflation can cause problems. It may not make a huge difference in the grand scheme of things, but if you are looking to stretch your savings, moving to higher risk investments can sometimes reap more rewards – although there is an obvious increase to risk in this method.

What happens to your mortgage?

If you have a variable rate mortgage, the recent rise in the base rate will mean a slight increase in your repayments. However, many homeowners across the country have opted for fixed-rate mortgages, and monthly repayments will not increase for the duration of their fixed term.

In more general terms, a significant rise in inflation can have a negative effect on how far your income can stretch. The good news is there are measures in place to counter it such as the base rate increase and the proposed 6.6% living wage increase set for April 2022.

If you’d like to discuss the options available to you, contact us today.

Critical illness cover – what you need to know

Critical illness cover (or CIC) is a type of insurance that is often sold alongside life insurance. It is designed to provide you and your family with financial stability if one of you were to fall seriously ill. It’s of course not a nice thing to think about but preparing for the worst is always a good way to ensure you have a safety net to fall back on if a critical illness were to prevent you from going to work.

If you are diagnosed with a critical illness, it can obviously impact your ability to work and therefore dramatically impact your annual income. People are so quick to insure their belongings like phones and laptops but often overlook their income – a fact that makes little sense given the just how important your income can be. CIC is designed to help you. If you do fall critically ill, this type of insurance will pay out as a lump sum as long as the illness you are diagnosed with is covered by your policy.

How does it work?

When it comes to taking out critical illness cover, how much cover you need and how long you need the policy to be active for are two of the main considerations to make. For example, you may decide that you want to be covered for the next 30 years for a £100,000 pay out – two factors that will play a big part in determining the cost of your policy. It is always a good idea to take some time to properly work out what you’ll need from your policy to ensure you get the perfect policy for you and your family.

Most people buying critical illness cover aim to use the lump some to pay off their mortgage. With all the stress that comes with having a critical illness, the last thing you and your family would need in that situation is the obligation of monthly mortgage payments. However, this doesn’t mean the lump sum can’t be used for other things, such as treatment or tuition fees for children. It is also worth setting aside the equivalent of a few years salary in order to live comfortably while being unable to work. You can also choose if you want the cover to increase over time to keep up with inflation or decrease if you only intend to pay off the mortgage.

When does it pay out?

This will often depend on your provider, but it is usually a matter of weeks for a successful claim to be processed. It’s good practice to contact your insurer as soon after your diagnosis as possible to make sure you don’t encounter any financial issues before your lump sum is paid. The good news is the pay-out is not classed as income and therefore isn’t taxable.

If you’d like to learn more about critical illness cover and perhaps take out a policy yourself, our advisers are on hand to answer any questions you may have.

If you’d like to discuss the options available to you, contact us today.

Average asking prices for UK homes soar in February

The average asking price for homes in the UK rose sharply in February with strong demand for properties in London and homes in shorter supply. According to Rightmove, asking prices have experienced the biggest monthly increase since the company started recording such data in 2001. With property prices already high, this revelation comes as welcome news for homeowners looking to sell.

The average asking price of homes entering the UK housing market shot up by £7,800 between January and February of this year. The figure peaked at £348,800, up 2.3% since just a month earlier. This new data comes as the average asking price of homes has risen by nearly £40,000 since the beginning of the pandemic – a staggering amount when you consider that between 2018 and 2020, that figure was just over £9,000. Shortage of stock caused by the pandemic along with high demand have played a key role in the asking-price rise.

It wasn’t just the largest month-to-month jump on record, but with a 9.5% increase in asking price compared to the same month last year, February also saw the largest annual rate of growth since 2014. London saw a big rise in inquiries from potential buyers compared to the rest of the country, a fact that correlates with the capital’s above-average asking price rise of 6%. New property listings also saw a monthly increase of 11% in February.

This unprecedented level of growth is also being supported by low borrowing costs. Data released by the Bank of England shows that the borrowing rate on outstanding mortgage stock fell to 2% in December of 2021, the lowest on record. Mortgage rates have also remained at a historically low level despite the recent base rate increase, with further interest rate rises expected in an attempt to combat the highest rate of inflation seen in the UK for 30 years.

According to Rightmove, this reflects a semi-predictable trend as the pandemic restrictions weaken and people return to office life in much larger numbers following two years of huge proportions of people working from home.

Despite rate rises and some rising costs on the horizon, the property market is performing in a resilient manner. Although growth could slow as rates increase further, this is still one of the strongest positions the housing market has been in. If you are looking to take advantage of these record highs, we’ll be happy to help you get the ball rolling, so don’t hesitate to get in touch!