Stay vigilant and scam aware

Several institutions, including the Bank of England, the National Crime Agency and the Financial Conduct Authority (FCA) have warned consumers to be particularly vigilant about scams in the current climate of uncertainty. These warnings follow an increase in incidences in the last few months, with scammers often targeting the most vulnerable people, such as those under financial pressure, perhaps having lost jobs or been furloughed. 

Millions affected

Recent research1 found 5.2m people in the UK had fallen victim to, or knew someone who had been duped by, a financial scam, since the beginning of the pandemic.

The most common financial scam involved banking, accounting for 60% of victims. A further 35% had been targeted by an insurance scam and one in five consumers reported having been targeted by a pension scam, often through fraudsters offering free pension reviews. 

Scams can have a significant financial impact – according to the research, victims lost on average, £566 per scam.  Having been a victim is also likely to result in people suffering more than just a financial impact – more than half of respondents (55%) agreed that it had impacted their mental health.

Government guidance

The government has provided guidance detailing how consumers can protect themselves from fraud. This guidance includes checking the company’s credentials via a reliable source such as the FCA’s Financial Services Register, being wary of deals that sound too good to be true, not giving out personal details, not clicking on links from unknown senders and seeking professional financial advice before making any decisions. The official advice can be found here www.gov.uk/government/news/be-vigilant-against-coronavirus-scams

How to be a scam-smart investor

The FCA also has an online scam checker where you can check a pension or investment opportunity – this can be found here www.fca.org.uk/scamsmart   

Helping you to stay safe 

In times of uncertainty, when we may be under more financial pressure, we can be more stressed and anxious, making us more vulnerable to fall victim to scams. If you are unsure about any financial opportunities that come your way, please contact us before you act on any approaches. Rest assured, we are here to help you.   

1 Canada Life 

Working from home – changing the way we think about where we live

One effect of the pandemic has been the requirement for many people to find ways of working from home, aided by technology. Figures1 from the Office for National Statistics (ONS) at the end of May, show that 41% were working from home, for at least part of the week. The extent to which an employee can work from home obviously depends on a number of factors, such as whether a specific physical environment, tools, or proximity to other people are required for the role. 

New horizons

It appears likely that a significant number of these workers may continue to be wholly or partially home-based after lockdown measures ease and this could give them greater choice about where they choose to live. 

If a daily commute to a place of work isn’t required, other priorities such as schools, local facilities, value for money and a better quality of life may come to the fore.

Insurance – need-to-knows

The Association of British Insurers (ABI)2 has issued reassurance that, if you are an office-based worker, now working from home because of government advice or because you are self-isolating, your home insurance cover will not be affected. The ABI has stated: ‘You do not need to contact your insurer to update your documents or extend your cover.’

It is worth checking your policy document, but company property such as a mobile phone or laptop is not usually covered by a standard household insurance policy. Your employer should be able to confirm that the correct insurance is in place to cover these items outside of the usual place of work. 

What if I have an accident whilst working from home?

As you are in control your own home environment, you are responsible for your own safety. Therefore, if you were to suffer an accident whilst working at home, your employer would generally only be responsible if it was due to their negligence, meaning that they had failed to take reasonable care for your safety and the accident was due to that negligence.

If you have a protection policy such as Accident and Sickness or Income Protection, and you have an accident or suffer an illness that prevents you from working, you may be able to make a claim.

Do you have the right cover in place?

If you are unsure whether you have the right insurance cover in place, contact us for advice on your own individual circumstances.

1 ONS,2020

2 ABI, 2020

Sources

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandwellbeing/bulletins/coronavirusandthesocialimpactsongreatbritain/5june2020

 

Protecting your loved ones

Losing a member of your family at any stage in life can be devastating, particularly when children are involved. 

Family life brings responsibilities such as ensuring your dependants are provided for in case you die, particularly if you have a mortgage or other debts. When you have young children there are additional practical and emotional problems connected to the loss of a parent. In addition to dealing with grief, the financial pressures of raising a family on just one wage can be overwhelming. The death of a non-working partner has its own financial impact, such as childcare provision. 

No need to be complicated 

Different types of protection policies are available but a simple level-term policy, where a pre-decided lump sum is paid out should you die within a stated period, is among the simplest to arrange and is typically very cost-effective. The amount payable on death (sum assured) should be enough to cover any outstanding debts, including mortgage, regular outgoings, potential university fees and so on. The period of cover (term) should reflect the needs of your dependants – children will probably need support until they finish education and a partner may need it until pensionable age.

Joint or single cover?

A joint policy will cover yourself and your partner, paying out on the first death within the term. Alternatively, you can have separate single-life policies, which can be a bit more expensive but means there could potentially be two pay outs. A young, fit individual should be able to easily find affordable life cover. Premiums with rise with age, health, lifestyle choices such as smoking and other factors that affect your life expectancy. Your adviser can help find a suitable policy for your circumstances as long as you are open about your lifestyle, especially if you have existing medical issues.

Keep under regular review

A review with your adviser will help to ensure that you have the right cover in place for your financial circumstances, giving you the peace of mind that you’ve got things covered.

As with all insurance policies, conditions and exclusions will apply

Your home may be repossessed if you do not keep up repayments on your mortgage

Maintaining your protection cover is vitally important

Since the pandemic outbreak many people are reassessing their finances to see which, if any, of their monthly expenditure can be cut and may be considering cancelling their protection policies, such as income protection. This could be a false economy and leave you unprotected in the future, at a time when you may need to make a claim.

Income protection explained 

Income protection policies provide a monthly payment (payable after a waiting period) to help replace your income if you are unable to work because of illness, an accident or sometimes on redundancy, income protection plans do not normally cover redundancy as standard. Short-term income protection policies will pay out for a fixed amount of time (six months or a year), whereas long-term income protection policies are designed to replace your income (up to a maximum of around 60% before tax) until retirement age or for a specified period of time.

Existing policies and COVID-19

Policyholders who took their policies out before the outbreak should be covered under the existing terms and conditions, for both short-term and long-term income protection.

Fortunately, most people who get the virus recover within a few weeks. You would therefore be unlikely to be able to claim under the sickness element of your income protection policy because these types of policy normally have a waiting period before money is paid out. Some plans may also have  a minimum claim period, such as  30 days. If you have been furloughed by your employer, and are still receiving most of your income, it is unlikely that you will be able to claim under your policy.

It is normal to have a waiting period for payments under income protection but there are plans available with day one cover.

If you are an existing policyholder who had unemployment cover included in the policy and you are made redundant, you should be able to make a claim for enforced redundancy.

Taking out a new policy

Policies are available for new customers who want accident and sickness cover, although you should be aware that pre-existing medical conditions will be excluded, as is always the case. In addition, insurers may have changed their terms for new customers. 

It’s important to note that insurers have stopped offering redundancy cover at the moment on new plans.

Managing existing policies

The good news is that you can renew your short-term and long-term income protection policies, although the terms may change at renewal.

Furthermore, if you are unable to pay your premiums at the moment, some insurers are offering three-month payment breaks.

Here to help

It’s important to remember that all protection cover should be bought for the short, medium and long term and should be tailor made to suit your own circumstances. When it comes to taking out protection cover, don’t just opt for the cheapest premium, it’s important to make sure the policy matches your individual circumstances. This will give you peace of mind, knowing that in the unfortunate event of having to make a claim, you will be covered.

If you need any advice on an existing income protection policy or you are looking to take out a new policy, contact us for expert advice.

 Some income protection products may have an investment element. The value of your investments can go down as well as up, so you could get back less than you invested.

Give your children a flying start in financial education

With the majority of children now being home-schooled during the pandemic, many parents are struggling to keep them engaged and interested, as well as being concerned about their education and development. One good way to help your children is by teaching them a skill which isn’t necessarily on the curriculum but is vital for everyday life – financial education. 

Schools and colleges

Many schools and colleges would like to increase the time spent on financial education but are hindered by the curriculum, a busy timetable and a lack of financial skills and knowledge. As a result, only four in 10 children and young adults currently receive formal financial education lessons. 

Start early 

According to The Financial Capability Strategy, part of the Money & Pensions Service, children’s attitudes to money are already well-developed by the age of seven, so it’s best to start early, ideally from pre-school years. Evidence shows that children and young adults who receive a financial education are more likely to be financially confident, save regularly, have a bank account and generally have the skills needed to make the most of their money in the future and avoid getting into problem debt.

Games can teach a life skill

Choosing what is on your home learning curriculum could give you the opportunity to try some financial education. It doesn’t have to be complicated, simple things like playing family board games together can help to promote financial literacy; games such as the ever popular ‘Monopoly’ and ‘Game of Life’ have junior versions and are a good starting point. 

Pocket money

Giving your children a small amount of pocket money on a regular basis can be a great way to teach them the real value of money, by encouraging them to save up only for the things that they really want. It can also show the value them of putting money into a savings account to earn a small amount of interest. 

Setting an example

Talk to your children about how much things cost and very importantly, set a good example; your financial behaviour will lead the way. A good life lesson is to understand that material goods are not necessarily the most important things in life and some of the most valuable things, like spending time together, are free.

Existing borrowers – this could be the right time to remortgage

Mortgage rates are now at record low levels, following two Bank of England rate cuts in March to bring the base rate down to 0.1%. You may have benefitted to some extent already if you are on a tracker, discounted or variable rate mortgage, but borrowers whose mortgage deal is nearing its end, or those currently on an uncompetitive standard variable rate (SVR), should review their situation as there are some very competitive products on the market, with potential savings to be had. 

No time to waste

In such a fast-changing environment, those who are considering remortgaging in the next few months would be well advised to assess their options now. Some lenders, particularly more specialist mortgage providers, have increased rates to protect their position.

Lenders are adapting  

Lenders’ contact teams have been under pressure with borrowers requesting mortgage payment holidays. Many purchases have not been able to complete due to the lockdown and in addition, the processing of new mortgage applications has faced operational constraints, such as an inability to do physical valuations. However, lenders have started to adjust their processes to overcome these problems, for example by using automated valuations.

Reduced choice of products 

The number of products available on the mortgage market has reduced over recent weeks, particularly those in the higher loan-to-value range. Despite the reduction in products there are still competitive deals available for those wanting to take advantage of the potential savings. Using a mortgage adviser with expert insight and knowledge of the market is key. An adviser will also know which lenders can use automated valuations and will be aware of processing times.

Move now

Lighthouse will work with you to find a lender with a remortgage solution to lower your costs and give you greater disposable income. Or, if you are looking to make alterations to your property, or perhaps release some equity, our specialists will explore the options available to you. These may include remortgages, further advances, bridging loans and secured loans.

Your home may be repossessed if you do not keep up repayments on your mortgage. 

Equity release – what are the options?

As retirement approaches, you may be considering accessing the value in your home. If downsizing isn’t an option and you are aged 55 or over, equity release could prove to be the right solution for you. 

What is equity release?

Equity release is a type of loan that is only available to homeowners over the age of 55. It is secured against the value of the borrower’s property and paid off by selling the property when they die or go into long-term care. 

Equity release has grown in popularity in recent years as more older homeowners seek to unlock the value in their properties. With interest rates remaining low, it’s proving to be an increasingly attractive option for many. 

How does equity release work?

There are two types of equity release: lifetime mortgages and home reversion schemes. 

  1. Lifetime mortgages

This is a type of mortgage that allows you to borrow money against the value of your home, just like a traditional mortgage, but you don’t have to make any repayments (although some products now allow you to do so). A percentage of your property’s value is released as a lump sum and interest builds up on the amount borrowed. On your death or when you move into care, the loan and any accrued interest will be paid off from the value of your home, reducing what your heirs receive (although it may also reduce any Inheritance Tax due on your estate). 

  1. Home reversion 

Home reversion involves selling all or a proportion of your home, in return for a tax-free lump sum, regular income or both, allowing you to stay in your property, rent-free, generally for the rest of your life. As home reversion plans are not loans, no interest accrues, but if the property rises in value, you will only benefit from growth in the proportion of the property you still own.

What other options are there? 

Equity release isn’t right for everyone. It can reduce your entitlement to means-tested state benefits and reduce the value of your estate, meaning you leave less behind for your loved ones.

Other options, such as retirement interest-only (ROI) mortgages, downsizing or taking an income from savings or investments, may be more suitable. 

ROI mortgages are only available to those who own their home outright or have an existing interest-only mortgage that they are looking to remortgage. The lender will undertake affordability checks to ensure you can afford the interest repayments, but this option means only the capital and not accrued interest will be owed. 

Meanwhile, downsizing can provide older homeowners with a cash lump sum attained through selling their current property and purchasing a cheaper one. 

Confused? Don’t worry – our expert advisers can help

Releasing equity from your home is a big decision and it’s important seek professional financial advice before proceeding with an equity-release plan. Our expert advisers can assess your personal circumstances and help you to decide which option (whether equity release or another avenue) will best suit you. Just get in touch. 

Equity release may not be right for everyone. It may affect your entitlement to state

benefits and will reduce the value of your estate. Tax advice with no investment element is not regulated by the Financial Conduct Authority.

Starting a family? Get your finances on track

There’s a lot to think about when you’re expecting a new baby. Exciting preparations for your little one’s arrival, such as decorating the nursery, buying prams and other necessities, and selecting new clothes and toys, can make for a long to-do list. Amid this whirlwind of activity, financial planning can easily get forgotten. However, while it might not feel like the most interesting of tasks, it’s definitely one of the most vital and certainly should not be put off.   

Assess your needs

Raising a child to the age of 18 is expensive and with young people now often living with their parents well into their 20s and even their 30s, it’s becoming an increasingly costly business. Take some time to consider what your outgoings will be, factoring in expenses such as childcare and school fees. You may also need to modify your plans to account for a reduced household income if, for example, one parent plans to be a stay-at-home parent. 

Save, save and save some more

Before starting your family, it’s wise to open a savings account to accumulate the funds you’ll need to cover your initial expenditure and provide you with extra funds during the months following the birth, when new parents typically take a hit to their income. Making a concerted effort to pay off any existing debts will also help to take the strain off your finances once your baby has arrived and will save you money in the long run. 

Think ahead

While it’s tempting to concentrate solely on raising funds to meet your short-term costs, there are a number of financial planning decisions you should also be considering that will make life easier in the long term. With a brand-new family member to look after, you may need to think about reviewing your protection policies, drafting a new Will, or opening a savings account (such as a Junior ISA) in your child’s name. You could even consider paying into a private pension on your child’s behalf, although they wouldn’t be able to access this until they are 55 under current legislation.

Here to guide you

Whether you’re considering parenthood or already have a new baby on the way, it’s a good time to take stock of your financial situation. We can review the current state of your finances and put plans in place that will help you towards a secure future for yourself and your growing family. 

The value of your investments, and the income you receive from them, can go down as well as up, so you could get back less than you put in. A pension is a long-term investment and inflation will reduce how much your income is worth over the years.  Tax advice with no investment element is not regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate Will Writing or taxation and trust advice

How Clive and Sarah were able to pay for a new kitchen and help their son onto the property ladder

Clive and Sarah are a retired couple with no savings. They asked us to see how they could find the money they needed for a new kitchen and to help their son get on the property ladder.

The couple are retired and in their early 70s. They live in a three-bedroom, semi-detached house in a beautiful, tree-lined street on the outskirts of York. After working hard for many years, Clive as a warehouse manager and Sarah as a supermarket cashier, they had managed to pay off their mortgage some years ago and are enjoying their retirement.

A lifetime home

The couple bought their home when they got married in their late 20s, at a cost of £8,600. Not a lot in today’s terms, but mortgage repayments were a stretch for them in 1977 and even more so when Sarah stopped work for a few years when their son, William, was born in 1978. Their property is now valued in the region of £300,000. They love their home and have no plans to move but would like to do some improvements to make things even more comfortable at home.

A helping hand for their son

Clive and Sarah dearly wanted to be able to help their only son and his young family onto the property ladder. William is 42, works as an NHS nurse in central York and has been renting for years. He hasn’t been able to save a deposit for a property and he and his family felt trapped in rented accommodation.

Equity release as a solution

Our specialist adviser discussed Clive and Sarah’s situation and recommended a lifetime mortgage, which allowed them to release a lump sum of £100,000 from their house. From this, Clive and Sarah spent £22,000 on their new dream kitchen and £13,000 on a climate-controlled conservatory. This left £65,000 to give to William. 

Benefits for Clive and Sarah

Taking £100,000 out of the value of their home enabled Clive and Sarah to have the home improvements they wanted. In addition, the value of their house is likely to have increased as a direct result of making the improvements. Their lifestyle in retirement remains the same as before, as the lifetime mortgage does not require repayments. The interest charged builds up and is repaid at the same time as the lifetime mortgage. This will happen when they eventually move into a care home or pass away.

A brighter future for William

They were able to give William a substantial deposit to put towards his own home. A larger deposit means he was able to get one of the best mortgage rates available and his monthly mortgage repayment is less than the monthly rent he was paying. This means he now has money for things like family holidays and savings.

As the lifetime mortgage has reduced the value of Clive and Sarah’s house, William is now likely to inherit less when they die, but he will still benefit from any growth in the value of his parents’ home.

Book a review of your finances

To book a no obligation initial consultation, which will take place by phone, call 08000 85 85 90 or email appointments@lighthousefa.co.uk or contact your usual Lighthouse Financial Adviser.

 

The initial consultation is designed to discover whether or not you would benefit from financial advice and there is no obligation on either side to proceed further. Any advice related fees will be clarified with you before any commitment to proceed.

* We have changed real names and other details to preserve anonymity. All financial details reflect the circumstances.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.

How we helped Claire get her financial well-being back on track

In these challenging times we are all facing growing demands on our time and energy, which can have knock-on implications for our finances. Taking financial advice now can make the difference between just about managing and having a more comfortable life and in due course enjoying the retirement you deserve.

Take Claire, a 48-year-old supermarket employee from Bristol. She works full-time and has two children at school. In addition to being a parent, she also spends time looking after her ageing mother who is in the early stages of dementia. Claire earns enough to cover her monthly outgoings, but not much is left at the end of the month, especially now she is unable to work overtime due to her increased caring responsibilities.

Prioritising you

“With increasing demands on my time, energy and money, I‘ve been struggling to think about my finances. I’ve been concerned that I don’t have life insurance and I haven’t really thought about retirement or reviewing my mortgage. Meeting my adviser, Tom, set me on the right path. He assessed my finances and helped me set realistic financial goals, enabling me to feel in control. Taking out financial protection was much more affordable than I expected. My policies cover death and critical illness, and provide an income if I’m unable to work, protecting my mortgage payments. Having them immediately gave me peace of mind in these uncertain times.”

TIP

With family members young and old depending on your support, it’s vital to have the right sort of protection policies so if an unexpected event occurs, a policy would pay out to help ease the financial burden.

Mortgage savings

“Tom checked my mortgage; I hadn’t realised that the rate I was on wasn’t very competitive. As my fixed term came to an end a while ago, I was able to switch to a better rate. The savings I’ve made have enabled me to top up my savings each month, pay the protection premiums and top up my pension.”

Retirement reality

“As far as my retirement is concerned, I have a pension with my current employer to which I contribute. I also have pensions from previous employers but didn’t know what these were invested in and how much they were worth. Tom found out their value and whether they were invested in a way that is suitable for me. He talked me through the types of pensions I have – I now understand the differences between defined benefit and defined contribution schemes. I know how much my pensions are worth and the importance of paying in more when I can, so I can enjoy a more comfortable retirement.”

TIP

Even if it seems like years away, you need to save for your retirement, so find out about your pension. It’s important to know how much it’s likely to be worth, so that you can make plans to save more if you need to.

We can help

In these challenging times we are all facing growing demands on our time and energy, which can have knock-on implications for our finances. Taking financial advice now can make the difference between just about managing and having a more comfortable life and in due course enjoying the retirement you deserve.

Book a no obligation initial telephone consultation

To book a financial review (which will be conducted over the phone) with one of our professional financial advisers call 08000 85 85 90, email appointments@lighthousefa.co.uk or contact your usual Lighthouse Financial Adviser.

 

The initial consultation is designed to discover whether or not you would benefit from financial advice and there is no obligation on either side to proceed further. Any advice related fees will be clarified with you before any commitment to proceed.

* We have changed real names and other details to preserve anonymity. All financial details reflect the circumstances.

The value of your investments, and the income you receive from them, can go down as well as up, so you could get back less than you put in. A pension is a long-term investment and inflation will reduce how much your income is worth over the years. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation. As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.