Money To The Masses Putting you in control Fri, 19 Sep 2014 23:11:49 +0000 en-GB hourly 1 The latest MTTM Podcast – How to make it, How to save it, How to spend it Fri, 19 Sep 2014 22:30:00 +0000 Money to the Masses podcastWelcome to the FREE podcast.

MTTM Podcast episodes

You can listen to the latest episode of the podcast by clicking on the play button in the player below. To hear past episodes simply click on ‘More Episodes’ in the player’s top menu. Here is the full list of episodes:

  • Episode 16 – Christmas steals & train ticket deals
  • Episode 15 – Income protection, Private Jets and Investment Mantras
  • Episode 14 - Damien’s little nuggets (and the rules of money)
  • Episode 13 – Claiming Your Fuel Payment And Becoming A Field Agent
  • Episode 12 - Inside Estate Agents’ Minds And Back To School Finds
  • Episode 11 - Get a pay rise, credit myths & business start-up gems
  • Episode 10 – Lets talk about tax baby
  • Episode 9 - Buying, Selling And Letting Advice – The Property Special
  • Episode 8 - Huge Amounts on Current Accounts and You Can’t Go Wrong With Honest John
  • Episode 7 - Reader and Listener Question Special – Pensions, Trusts and IFA’s
  • Episode 6 – Big Picture Budgeting and The Fiver Challenge
  • Episode 5 – Organic Pear and Best Airfares
  • Episode 4 – Writing a Bestseller & Magnificent Melons
  • Episode 3 – House Buying Tricks and Life Insurance Tips
  • Episode 2 – Insider Secrets and DIY Investing
  • Episode 1 – Interesting Apps and Interest Rates

For those who don’t know, the show is jointly hosted by myself and Andy Leeks (author of the brilliant As They Slept – The comical tales of a London commuter) and aims to be informative as well as enjoyable. Every show is split into 4 sections:

  1. How to make money – covering ways to make money whether it be apps, websites, investing, business ideas or any way we can make you richer
  2. How to save money – this section teaches you how to not loose it. Be it saving, cutting bills, secret tricks or insurance
  3. How to spend money – this section covers how to spend it and how others do including celebrities.
  4. Reader / listener questions – I answer questions sent in by you guys!

Please have a listen below and if you do enjoy it then please thank us by downloading the podcast from itunes and leaving a 5 star review. I realise that you might listen to the podcast in the window below so be thinking ‘why the hell would I want to download it as I’ve already heard it once?’ Well by downloading it you will help push the show up the itunes charts and help us spread the word. Think of it as a thank you from you to us.

Download from iTunes

Alternatively here’s the show’s RSS feed –

Get in touch

If you want to get in touch, whether it’s a reader question or just to give feedback on the show then you can contact the show here.

Once again, please leave a review of the podcast on itunes here.


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Tenancy agreement – do I need one and what should it contain? Thu, 18 Sep 2014 05:42:14 +0000 Do I need a tenancy agreement and what should it contain?

Tenancy agreement - do I need one and what should it contain?In England, Wales and Northern Ireland there is no legal requirement for a private landlord to provide a tenancy agreement for their tenants.  In Scotland you must be provided with a tenancy agreement if you are an assured or a short assured tenant of a private landlord.

Whilst there may be no legal requirement for your landlord to supply you with a tenancy agreement it is advisable to insist on one to protect your interests. If your current, or prospective, landlord refuses to supply you with an agreement I would consider alternative accommodation that would provide you with more security.

The tenancy agreement whether written or oral is a contract between the tenant and their landlord. This gives both parties rights and a written agreement, signed by both parties, is a base document that can be used to try and resolve any disagreements. Without a written agreement it would be very difficult to prove the terms of the tenancy if required.

What should be contained in a tenancy agreement?

Regardless of whether you have a tenancy agreement or not it is a legal requirement for your landlord to provide you with his name and address.

If you have a written tenancy agreement it would be good practice to include the following:

  • your name, your landlord’s name and address and the rental property address
  • date the tenancy starts
  • details whether other people are allowed to use the property
  • duration of the tenancy
  • amount of rent payable and when payable
  • details of any other bills covered by the rent
  • whether the landlord will supply any other services e.g maintenance of common areas
  • length of notice that you or your landlord need to give if you wish to end the tenancy

Are there any other issues I need to understand?

There are some legal responsibilities that the tenant and landlord have that may not be set down in the tenancy agreement. These are known as implied terms of a tenancy agreement.

Some of the most common implied terms are:

  • the landlord must carry out basic repairs such as maintaining the supply of gas, electricity water and sewage services
  • the tenant has the right to live in the accommodation without disturbance from your landlord
  • the tenant must respect the property by not damaging the property or the fixtures and fittings
  • the tenant needs to provide access to the property for any repairs that need to be carried out

Further Reading

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Latest interest rate predictions – when will rates rise? Wed, 17 Sep 2014 10:00:39 +0000 bank of england This article is continually updated to bring you the latest analysis on when interest rates are likely to rise, so be sure to bookmark it.

If you wondering whether you should fix your mortgage rate, but don’t know a mortgage adviser whose opinion you trust, then an award winning mortgage adviser and contributor to MoneytotheMasses, is happy to help. You can ask his opinion for FREE with no obligation on your part, just click here).

When will interest rates go up?

(in summary: until recently the market consensus was that the BOE’s would not increase interest rates until after the General Election in May 2015. This shifted when the BOE hinted at a possible rate rise by the end of 2014. But this has now been pushed back and the market now expects the first rate rise early 2015 to 0.75%. Then this will increase to 2.25% by 2017 and 2.5% by 2019 – see bolded bullet points below)

The forecasting of the Bank of England base rate has been transformed in recent months. First of all Mark Carney, the Governor of the Bank of England (BOE), issued new ‘forward guidance’ on when the Bank of England will raise interest rates.

This is a policy which he employed during his previous role in Canada’s central bank to try and control the market’s expectations of when interest rates will rise. The reason for doing this is that an expectation of a rate rise is as important as the actual rate rise itself. If a market thinks that the BOE will increase rates then the cost of borrowing throughout the economy will rise. This can prove damaging for a stuttering economic recovery, meanwhile artificially low interest rates also make cash deposits unattractive, which in turn boosts consumer and corporate spending.

Mark Carney originally created a notional link between the UK unemployment rate and BOE base rate. In a pledge to keep rates lower for longer Mark Carney said that rates would not rise until UK unemployment fell below 7%. But this threshold has now been hit, somewhat unexpectedly, so Mark Carney had to ditch the unemployment trigger when it looked like a breach was imminent, instead replacing it with 18 economic indicators.

So now Mr Carney has moved the goal posts on when interest rates will likely go up:

  • the BOE has now decided it won’t tie interest rate rises to any particular economic indicator but a range of 18 of them
  • the market had thought that the the BOE’s first interest rate rise was unlikely to occur before the General Election in May 2015
  • But at the annual Mansion House Speech on June 12th Mark Carney dealt a shock by saying that rates could rise before markets think they will. So there is now the slight possibility that interest rates could go up by the end of 2014 but more likely by the beginning of 2015
  • And the latest minutes from the BOE rate setting meeting show two committee members once again voted for a rate rise.
  • but when rates do rise the BOE has said it will be gradual and , in the medium term, materially below the 5% level set on average by the BOE historically. It is expected that the first interest rate rise will occur at the start of 2015 to 0.75% followed by further 0.25% increases every few months

So the current forecast of when interest rates will go up is: Markets are now pricing in the first rate rise (to 0.75%) as early as the first quarter of 2015 with interest rates increasing again to 1% by the end 2015.

Whilst the BOE is now claiming that not just one economic indicator will be used in any ‘forward guidance’ of when rates will rise, a range of them will still determine when they actually do put them up. So economic indicators are still important in judging when interest and mortgage rates are likely to rise. Below is a roundup of the most important indicators which will influence when interest rates go up:

So what might influence when rates rise, despite the change in the BOEs ‘forward guidance’  

  • Inflation has unexpectedly fallen – in August the official measure of UK inflation fell again, this time from 1.6% to 1.5%. Don’t forget that the Bank of England’s target inflation rate is 2% (with anything above 3% getting them a slapped wrist from the Chancellor). To combat inflation interest rates would be increased. So recent sharp falls in inflation have fuelled speculation that the first interest rate rise will now not occur until 2015.
  • Increasing official support for a rate rise?  – in August the Bank of England’s Monetary Policy Committee (MPC), who are the guys who decide the UK base rate, once again voted to keep the base rate at 0.5%. But what ruffled a few feathers was that the vote was not unanimous for the first time in 3 years. 2 out of the 9 committee members voted for a rate rise. Also minutes from a previous meeting suggested the BOE was ”surprised by the low probability attached to 2014 rate rise”. However, in September the 7-2 split remained suggesting that while an interest rate rise is on the way it’s perhaps more likely to be in 2015.
  • The UK economy is growing again –  the Office of National Statistics has confirmed that the UK economy grew by 0.8% in the first 3 months of 2014. And The National Institute of Economic and Social Research has estimated that UK economy grew by 0.9% in the second quarter of 2014 – which would make it the strongest quarter in 4 years. This is good news and the evidence suggests that economic growth is back at its pre-crisis level, although a growing economy increases the prospect of a rate rise.
  • There’s optimism about future economic growth - be it the UK services, manufacturing or construction sectors data has pointed to improved signs of economic recovery. Importantly the services sector, which accounts for about 75% of the economy, has been growing at its fastest rate in years. Also, there are signs of continued optimism with a recent survey of British business confidence coming it at its highest rate in 20 years! With the economic recovery becoming increasingly entrenched it has led to some analysts expecting (and in some cases demanding) a normalisation of interest rates sooner than suggested by the official guidance.
  • Unemployment is falling– The number of people out of work fell by 146,000 to 2.06 million (a six-year low) in the three months to July. The UK unemployment rate now sits at 6.2%, below the BOE’s old ‘forward guidance’ threshold, a threshold the BOE hadn’t expected to be breached until 2016. But while unemployment is falling wage growth has slowed to the lowest rate since records began, a sign of slack in the economy which some analysts say indicates that a rate rise is some way off.
  • UK economic growth forecasts are being upgraded – such is the optimism for UK economic growth that the British Chambers of Commerce, the BOE as well the International Monetary Fund (IMF) have upgraded forecasts for economic growth in 2014. The IMF in particular now expects the UK economy to grow faster than any other major European economy in 2014, while the BOE now expects a growth rate of 3.5%.
  • Governor Carney is on a mission – Mark Carney took up the post of Governor of the Bank of England over a year ago and he is  making it clear that interest rates will not be rising until there is clear evidence that the economy is growing but more importantly that unemployment is falling. Both are now occurring so watch this space.

So should you rush to fix your mortgage now while rates are low?

Fortunately I’ve answered this question in my  post ‘Should you fix your mortgage rate now?‘ But if you want more help or advice then you can contact an award winning mortgage adviser here.

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Pensions: Can I carry forward unused annual allowances? Wed, 17 Sep 2014 06:37:55 +0000 carry forward unused annual allowanceIs it possible to carry forward unused annual allowances?

My wife has a SIPP worth about £28K. She has not made any contributions in to her pension for a number of years and is not currently working /earning. Can she carry forward unused annual allowances from these previous years?

Many thanks!

 My response:

Yes, it is possible to carry forward unused annual allowances although there are certain rules and caveats. Firstly you have to have been a member of a “registered pension scheme for the years question or a member of an overseas pension scheme and either you or your employer qualified for UK tax relief on pension savings in that scheme”

Assuming that someone meets the above criteria then if they wish to pay more into their pension than the current year’s annual allowance and receive tax relief then they can carry forward unused annual allowances from the previous 3 tax years.

However, the allowances are carried over in a strict order (after using the current year’s allowance you then use the earliest annual allowance first). The annual allowance for the most recent tax years are

  • 2011/12 – £50,000
  • 2012/13 – £50,000
  • 2013/14 – £50,000
  • 2014/15 – £40,000

So lets say that someone was earning £80,000 in 2014/15 and had the following unused annual allowances:

  • 2012/13 – £30,000 unused
  • 2013/14 – £30,000 unused

It would be possible for the person to pay £80,000 into their pension in 2014/15 while claiming tax relief on the contribution. This is because they can use the 2014/15 allowance of £40,000 and then carry forward the £30,000 unused allowance from 2012/13 and then £10,000 from 2013/14. This will then leave them with £20,000 unused annual allowance for 2013/14 which could potentially be carried forward next year.

It is important to remember that the annual allowance is set to limit the amount of tax relief a person receives on pension contributions. Also that you can only claim tax relief on contributions up to 100% of your relevant earnings (not all earnings are relevant, investment an dividend income are not) or £3,600 which ever is greater.

So in your wife’s case, despite her being a member of a pension scheme and assuming she hasn’t paid into that pension in the last 3 years she still wouldn’t be able to pay more than £2,880 net (equivalent to £3,600 gross) into her SIPP this year and receive tax relief as she has no relevant earnings. In addition, your wife can not use the carry forward rules and get tax relief on her pension contributions, which is the whole point of using the rules. Of course there is nothing stopping her putting more than £3,600 in to her pension this tax year, but she wouldn’t get tax relief on the extra contributions so there is little point doing so.

So unfortunately unless your wife has a sudden increase in earnings in this tax year over and above £40,000 then the carry forward of unused annual pension allowances is not available.

Full details of the rules surrounding the carry forward of unused annual pension allowances can be found on the HMRC website. Also as a general aside for others reading this, if you wish to see the potential impact of increasing your pension contributions on your pension fund and possible retirement income then here is a great pension calculator* which I have found useful.

I hope that helps,

Damien Fahy


Twitter: money2themasses

The material in any email, the Money to the Masses website, associated pages / channels / accounts and any other correspondence are for general information only and do not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation. See full Terms & Conditions and Privacy Policy

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Best of the Sunday papers’ MONEY sections Sun, 14 Sep 2014 07:30:48 +0000 14th September 2014

The Independent

Which? proposal is a big incentive for energy suppliers to raise their game

Don’t be afraid of new funds if they’re driven by experience

Scottish independence: How will kilt-edged stocks fare?

The Telegraph

Scotland referendum: 45 money questions answered

10 best places to retire

More bank account switching? The number has actually fallen

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Best of the Sunday papers’ PROPERTY sections Sun, 14 Sep 2014 07:30:36 +0000 14th September 2014

The Independent

The art of flipping: how to buy property off-plan and sell at a profit

More than half of tenants have problems with landlords and letting agents

Autumn’s new homes launches in emerging London neighbourhoods

The Telegraph

World’s best addresses for sale

A tour round the £30m King’s Speech house in London

12 rules for good village etiquette

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Reader Q: Where should I invest £100,000 to generate income? Fri, 12 Sep 2014 09:00:18 +0000

Get an answer to your financial question online Reader Question:

I’ve been made redundant and have £100,000 to invest. My mortgage is low and almost paid off so need to invest for an income boost. Do I buy a house or where else could I get decent return?

My response:

Essentially what you are asking is how to invest £100,000 to generate income now.

First of all seek independent financial advice

The first thing I would suggest is to seek independent financial advice as your wider personal and financial circumstances need to be taken into consideration before you do anything. For example, how old are you? Are you a high rate income tax payer? Are you married? If so you may want to put investments in your wife’s name if she is a non-tax payer? What is your attitude to risk? What is your investment timescale and do you need access to the capital?

If you don’t already have a reputable financial adviser who specialises in investments click here.

But obviously I want to give you an idea of what your options are.


On the assumption that you are looking to make income from your investment then buy-to-let is one option. As a nation we are obsessed with home ownership and as a result property is often seen as a safe investment. How many times have you heard the phrase as safe as houses or been told to invest in property?

Property returns do tend to be uncorrelated to investment markets but they are not without risk. Over the long term house prices have tended to beat inflation (around 2.8% above inflation per annum since 1960) but the housing market like investment markets experiences periodic price corrections and crashes.

For a buy-to-let investor concerned with rental income, the average UK property yield is around 5% gross (i.e. before tax) but there are massive regional variations. Buy-to-let shouldn’t be entered into lightly as property is an illiquid investment and there are often large initial capital outlays.

My guide to buy-to-let covers all the factors you should consider including costs, likely returns and whether it is a good investment.


Although a lot of people think of cash as the starting place when looking to invest it can be the eventual destination. If you really want to ensure you get the best interest rate for £100,000 or more of savings then I would highly recommend the following savings concierge service* . I’ve personally vetted the service, which not only can get you the best return, ensure the maximum protection for your money but they will also carry out any administration and account switching for you. Find out more here*.

If you would rather go it alone then you need to realise that with inflation in excess of most savings account rates the real value of money on deposit can be quickly eroded. With the withdrawal of the National Savings and Investments (NS&I) Index Linked Saving Certificates savers have been struggling to find an alternative. NS&I Index Linked Savings Certificates offer a risk free and tax free way of beating inflation, as measured by the Retail Prices Index or RPI. So what are the alternatives now?

Typically the only way to earn a higher rate of interest from a savings account is to lock your money away for a longer fixed term. Here is a roundup of the current best savings rates available on instant access accounts. Even these rate usually fall woefully short of inflation. There are also a number of savings bonds available on the market which will provide inflation beating interest rates and the good news is that they can be held in a cash ISA, so returns can be tax-free.

But one word of warning. Theses bonds will either restrict access to your capital during the term of the bond or impose penalties if you wish to withdraw your money early. If in the medium term the Bank of England Base Rate (which influences rates on savings and mortgages) start to return to normal (which is around 5%) then you could find yourself stuck with a deal which isn’t as competitive as rates offered on ordinary savings accounts. Something to think about.

One of the best FREE tools out there is the rate tracker email alert*. You simply enter your email address and the name of the savings accounts you currently have. Then not only will the system tell you if you are getting a good deal but it will continuously monitor the market for you and email you when there are better deals out there than your existing account.

If you do decide to put your money into a savings account then you may wish to limit the amount held with any financial institution to £85,000. This will ensure your savings are covered by the Financial Services Compensation Scheme should your chosen bank go bust. For more details read my article ‘How to protect your savings from your bank going bust’. Of course, National Savings and Investment bank accounts are 100% back by the Government so represent no investment risk. Unsurprisingly the returns from these products are not the most competitive.


It is possible to invest directly in shares and hopefully receive and income stream via regular dividend payments along with a bit of capital appreciation (for which you can use your annual capital gains tax allowance to receive receive tax- free, or at least in part) . Well that’s the theory. Direct equity holdings carry much higher investment risk and hopefully rewards. The problem is that if you get your timing or research wrong you can swiftly find yourself sitting on a huge loss and no income stream. (that’s exactly what happened to people who invested in banks in 2008). According to the Barclays Equity Gilt Study equities have produced an annual return of around 5.4%  over the last 50 years but this does mask huge crashes and market rallies.


Corporate bonds are essentially loans to companies paying you an interest payment (a coupon) and your original loan amount back at an agreed date. The riskier the company the more likely they are to default, so the greater you potential return by way of compensation. But as ever with greater risk comes the potential for greater loss.

At the safest end of the spectrum we have Gilts (which are loans to the UK Government) through to investment grade bonds (companies with good credit ratings) through to non-invetment grade and high-yield bonds (loans to companies with poorer credit ratings). Like equities it is possible to hold bonds directly and a number of companies (such as Tesco) have even marketed their bonds directly to the public.

Bonds are deemed lower risk than equities and their typical annual return over 19 years has been around 2.5%. But as ever past performance is no guide to future returns.

The above are just a few of the main investment asset classes. There are others such as commodities and hedge funds but I don’t wish to bamboozle you. The main point being you have a wide choice of assets which can produce income.

But up until this point I have talked about holding assets directly. Placing all your money into a single asset (such as one company’s shares) is akin to putting all your eggs into one basket. However, most people invest via an investment wrapper or product into a number of investment funds which invest in a range of assets.


When you invest two things to consider are ‘how’ you invest and ‘what’ you invest in. The ‘how’ is whether you invest via pension, investment bonds, collectives etc. While the ‘what’ is usually the underlying investment itself, such as equities, bonds, property etc.

Without trying to oversimplify investment but think of it like a car. In order to get from A to B (ie your current situation to your desired stage in life) you need to choose a car. The car that best suits you will depend on the journey you plan to take, your current budget etc. Every car will have different running costs, tax etc and not one car suits all. Think of this as the investment wrapper (pension, Stock and Shares ISA etc). Once you have chosen a car you need to put petrol in it to get you to your desired destination. This is akin to the underlying investment choices. Clearly the petrol drives performance but the car can enhance it. But obviously it’s no good buying a Ferrari if all you plan on doing is going to the shops and back each day. It’s a similar thing with investment – excessive costs can wipe out any benefit. A good financial adviser can help you make the investment decision that suits you and your plans.

Below is a selection of investment vehicles. Each is taxed differently and has its own rules when it comes to access and drawing an income which a financial adviser will be able to explain in full detail.

Unit trusts/Investment trusts (collective investments)

These are pooled funds where lots of investors’ money is combined and the fund run by an investment manager with a certain brief. This can be based on the asset type such as bonds, property, shares, a geographical region or a theme such as cautious managed. The fund manager will buy and sell a much larger range of holdings which will hopefully reduce exposure to a single company’s share for example. If collective investments are held directly then they are subject to income and capital gains tax

Stock and Share ISA

This is simply a tax wrapper and can hold cash, shares and collective investments as described above. The benefit of investing via an ISA is that income and capital gains are tax free but you have a limited subscription each tax year which is currently £15,000.


Defined contribution or personal pensions are another tax wrapper offering income and capital gains tax free growth. Again you can invest in the aforementioned assets and collectives (but not residential property).

Investment Bonds

These are products that are offered by life insurance companies that are subject to income tax. Their investment flexibility is usually limited to a range of investment funds.

Building a Portfolio (and a neat tool to help you)

By building a portfolio it is possible to diversify your investments so as to not put all your eggs in one basket. Consequently, other than your investment amount, there is nothing to stop you spreading your risk by investing in a range of asset with which to provide an income. By choosing the right combination of assets and investment wrapper/product to suit your circumstances you can enhance your returns. This is what a good financial adviser would do for you. This value added is often overlooked by investors who concentrate solely on investment performance. While investment performance is important so is tax efficiency, suitability and risk.

But I don’t want to completely sit on the fence. While I don’t know your personal circumstances someone looking to build an investment portfolio (through whatever wrapper) to generate income would likely have Equity Income Funds and Bond Funds at its core (average current yield on an equity income fund is about 4%). But in both these cases don’t just be lured by an attractive yield figure of a given fund. Without exception higher yield means higher risk and normally the greater chance of capital loss. For a pure income seeking investor a short term capital loss is not a problem, as long as they still receive the regular income/dividends, and they do not need to crystalise the capital loss. To download a useful guide on equity income funds click here*. Interestingly there are some property income funds due to be launched shortly.

I am a fan of tools that bring complicated concepts to life. Fidelity have created an interactive investment tool which takes you through the basics of investing and explores various portfolio and asset allocations. By asset allocation I mean how much you should be investing in UK company shares, how much you should be investing in property unit trusts etc.


If you simply want income and no access to capital then it is possible to buy an annuity which will provide you with a guaranteed income stream. The level of income will depend on your age, sex and possibly health but once purchased you lose all access to the capital.


So is property the best way to provide income? Not necessarily and in my opinion I’d be wary of putting all my eggs in one basket. Buy-to-let yields vary wildly and the costs involved are often unforeseen.

Diversifying the assets you invest in not only reduces risk but also diversifies the source of your income. The greater the investment risk you take the greater the potential loss. Can you afford to lose any money? If not then you may need to be realistic with your income targets for any investment and settle for safer assets.

As I’ve said seek financial advice as an adviser will be able to advise you on the best thing to do with the £100,000 which may not even be to invest it, once your wider circumstances have been taken into account.

I hope that helps

Best Wishes



Money to the Masses


Twitter: money2themasses

The material in any email, the Money to the Masses website, associated pages / channels / accounts and any other correspondence are for general information only and do not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation. See full Terms & Conditions and Privacy Policy

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Should you fix your mortgage now? Thu, 11 Sep 2014 10:00:37 +0000 should i fix my mortgage now

Why fix your mortgage rate?

At the heart of the ‘should you fix your mortgage’ question is a worry that interest rates will soon be heading upwards. The attraction of fixing your mortgage rate is the certainty it brings to your mortgage monthly repayments. The interest rate on a fixed rate mortgage is fixed for a specific period of time and will remain at this rate regardless of changes to the interest rate in the market place. Once the fixed period expires then the rate will normally convert to the lender’s Standard Variable Rate, or another fixed rate if available. Lenders frequently charge a fee (Early Repayment Charge) if a borrower wishes to terminate or switch to another interest rate within the fixed term.

People who are currently paying their lender’s standard variable rate (SVR) are vulnerable to interest rises. If interest rates go up then so will their monthly mortgage payments. Tracker and variable rate mortgages have interest rates which reference the Bank of England base rate, currently at the historic low of 0.5%. However, while tracker mortgages will move in step with the base rate (e.g. 1% above) lenders can often move their standard variable rates with no defined link to the base rate. In fact a number of them have already done so, including the Bank of Ireland.

So if you are on the lender’s default SVR, which a lot of mortgage borrowers now are, then check the terms and conditions. Some lenders have SVR’s which will always be at a maximum of say 2% above the bank base rate (most Nationwide mortgages taken out before April 2009 fall into this category).

SVRs have traditionally been the most expensive way to borrow but a combination of a low base rate and the small print in the mortgage terms and conditions mean that many borrowers are happy sticking with their SVR for the time being. It’s a case of the small print actually benefiting the customer for once as some of the SVRs (namely those with a base rate plus 2% max limit) compare to the best tracker rates out there.

When will interest rates rise?

Whatever deal you have one thing is certain when it comes to interest rates, the only way is up (as Yazz once said). People are getting too comfortable with the notion that 0.5% is the norm when it comes to interest rates. It is not. Historically the norm has been somewhere around the 5% mark so the Bank of England will move rates back up in the future. And there has been a lot of recent press speculation that rates might be heading up sooner rather than later (which is probably why you are reading this). However, if you really want to get a feel for when interest rates might go up then read my latest interest rate predictions which tells you when the market thinks rates will start to rise.

How to find the best fixed rate mortgage

First up, speak to an independent mortgage adviser and review your mortgage. If you don’t know a mortgage adviser whose opinion you trust, then Dean, an award winning independent mortgage adviser and contributor to MoneytotheMasses, is happy to help with a FREE no obligation chat (just click here – he’s one of the only mortgage advisers I’d let near my finances).

The attraction of fixing your mortgage rate is the certainty it brings to your mortgage monthly payments. But the first thing you need to work out is what fixed rate will you get? This will depend on, among other things, the amount you want to borrow compared to the value of your property (called the Loan to Value), your credit rating, the fixed rate period, your earnings….

With regard to the term you might take, once again it depends on your view of interest rates and the level of certainty you want when it come to your monthly payments. But what I would say is that a lot of mortgage advisers are suggesting that people consider longer term fixed rates rather than a simple 2 year fixed deal. This is because while the market expects the base rate to rise it doesn’t expect it to rise quickly. Consequently if you take out a short fixed term mortgage then just as it comes to an end you might find interest rates have just soared at a time when you are once again subject to a lender’s SVR, but probably without an upper limit to any increases (Most lenders have scrapped these on new mortgages). A decent mortgage broker should be able to advise you on this.

Once you’ve decided on the period for which you want to fix then find out the rate at which lenders may lend to you. The Money Advice Service has a great mortgage finder. Remember that the best rates are usually reserved for people with the lowest loan to values (LTV).

It goes without saying that when you take out a fixed rate mortgage you could end up paying say 5% for 5 years and interest rates remain low throughout. If this becomes the case then you can only switch mortgage deals if you pay an early redemption charge. Obviously interest rates might soar to 7% so you would be quids in on your fixed rate deal.

Is now the best time to fix your mortgage?

In principle the bank base rate has never been lower so it seems like it’s now or never. But let’s be clear, the rate at which you can borrow money is linked to the City’s swap market rates, i.e. the rates at which banks will lend to each other for fixed terms . So the actual Bank of England base rate is not the deciding factor in the fixed rate deals out there.

And swap rates have increased sharply in the last year with the five year rate jumping from 1.5% to 2.18% now. In fact Ray Boulger, of broker John Charcol was quoted last year as saying “I think we’ll look back on June 2013 and say, ‘That’s when fixed rates hit bottom’ “. The fact that a number of lenders withdraw many of their competitive fixed rate deals seems to back up Boulger’ s statement.

But with banks being no longer being able to access cheap money via the Government’s Funding for Lending Scheme there is the argument that rising swap rates could start to translate into higher mortgage rates. Having said that, competition has been heating up in the best 5 year fixed rate mortgage market and we’ve recently seen the best deals drop below 3%.

To sum up, if you have a high loan to value then you will likely benefit from fixing, as you will be able to secure a low fixed interest rate. The best 2 year fixed deals are around 1.94% (with a 65% LTV) which is well up on where they were 6 months ago. As mentioned above, the best 5 year fixed deals are back around 2.89% (with a 65% LTV). But do look beyond the headline rate and focus on the total cost of the deal including all fees.

If your SVR is low (say around 2.5%) and you have little or no equity in your property you may be better off sticking with your existing deal for the time being. (In some cases you won’t have a choice if your LTV is too low or you are in negative equity). But always go and speak to a mortgage adviser before making any decisions. There are may be options open to you other than fixing your mortgage such as a capped mortgage.

One trick to keep your options open

However, if you want to fix your mortgage rate but are unsure whether to do it now or later, you could hedge your bets by getting a mortgage offer in place now and not complete for say 6 months. That way you have a good fixed rate deal ready to go and can still take advantage of your current low flexible rate for a few more months. Obviously you must bear in mind that you will likely incur non-refundable valuation charges, whether or not you actually decide to complete in the end, and the lender could technically withdraw their offer before you accept. But these are risks that you would face even if you fixed now.

For more information on mortgages read my Guide to Mortgages.

Image: Danilo Rizzuti /

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The smart way to house hunt online Wed, 10 Sep 2014 15:00:29 +0000 for sale sign

Make sure you get the best deal when house hunting

If you are thinking of moving house then putting time into some research may help you get the house of your dreams a bit cheaper.In my opinion  there is no better place to start than on the property portal Rightmove. In 2012 visitors to this website viewed over 1million properties every hour and it is by far the most popular place to start house hunting.

Like most people I like looking at properties,  I think it’s the ‘nosey neighbour’ in us all, but I want to direct you to away from property photos to a section I think can add a great deal to your house hunting.

If you start on the Rightmove homepage and look for the tab at the top of the page labelled ‘House Prices’ a  menu will appear with following categories – Find Sold House Prices, Price Comparison Report, Market Trends, Find Estate Agents and Property Valuation.

It’s the first three categories that will help you get the best deal for your current property as well as the property of your dreams at the best price. Below I cover each of the three tools in more detail and explain how to use them to good affect.

Find Sold Properties

One of the most important pieces of information you can have, when searching for a property, is how much other properties have recently sold for in the area. In this section you can put in a postcode and obtain information from the Land Registry and Registers of Scotland about actual sold prices in that postcode.

Once the postcode has been entered you should be shown a list of properties together with details of  the address, sale price and date of sale. You can also extend the area of search as well as filter your search by type of property, year of sale and tenure.

Now you have details of the historical selling prices of properties in the area and, who knows,  you may even find the house you want to view in this search showing the last time it was sold and the price achieved. Genius!

Price Comparison Report

This section will help you get an idea of how much your property is currently worth before you decide to put in on the market. Enter your postcode and you will get a list of properties currently on the market in your area. You can apply filters on area, property type and number of bedrooms which will enable you to get a closer match to your current home. Remember that the prices shown are asking prices which may be up to 10% higher than the actual prices achieved. This a fantastic tool that can be used when discussing the marketing price of your property with your chosen estate agent.

Market Trends

This section will show you how the market in a certain area has performed over recent years and will give you guide to whether prices are currently rising or falling. I would recommend making a wider search than just a postcode area, doing this will include a greater number of properties and therefore a more reliable trend.

Further reading


(image by artur84,

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Top 5 reasons why your house is not selling Wed, 10 Sep 2014 14:30:08 +0000 reasons why your house is not sellingWith the current improvement in the UK property market it is important, when trying to sell your home, that you don’t make the following mistakes.

Top 5 reasons why your house is not selling

1. You have instructed the wrong estate agent

  • Not all estate agents are the same and to make sure you have the best chance of selling your property you need to instruct the best agent in your area.
  • Check the local papers and the property portals to get a feel for who are the top selling agents in your area
  • Invite at least three estate agents to present their marketing plan for your property. The marketing plans should include full details of proposed advertising and what property portals they use
  • Ask each agent to provide proof of recent sales of similar properties to yours together with the sale price achieved
  • Compare the fees charged and suggested marketing prices for your property and be cautious of an estate agent charging very low fees and/or a high marketing price. This may mean they are just pushing for your instruction to beat off the competition and may not be the best agent to use

2. Your property is a mess

Sorry to be so blunt but you are not going to get top price for your property if it looks like it has just been hit by a hurricane!

  • Have a good tidy up, clear all surface areas and put clothes books and magazines out of sight
  • Do all those little DIY jobs you have been meaning to do, it will make all the difference
  • Tidy up the garden and move wheelie bins to a less visible location if possible

3. You are marketing at the wrong price

We all think our properties are worth more than all the others in the street but if you want to sell it then you need to market your property at a competitive price

  • Carry out some research on the property portals to see the marketing prices of similar properties in your area and set your price accordingly
  • Remember the prices shown on the property portals is the marketing price, sale prices are typically around 5% lower

4. You have poorly shot or badly presented photographs

The first impression a prospective buyer is likely to get of your property is on a property portal such as Rightmove or Zoopla. It is vital, therefore, that the photographs taken by your estate agent are the best they can be.

  • Be critical of the photos taken by your estate agent and don’t be afraid to ask them to retake them if you are not happy
  • Move cars and wheelie bins away from the front of your property before any photos are taken
  • Consider paying extra for upmarket marketing material if your property warrants it
  • Ensure that when the photos are uploaded to the property portals and the estate agents own website they are presented in the correct sequence. For instance the downstairs cloakroom should not be the first photo seen!

5. You are not getting feedback from your estate agent

It is vital that your are communicating with your estate agent regularly and obtaining feedback on what is happening with regards to the marketing of your property

  • You should receive feedback on every viewing to understand what people thought of your property and what actions you should take to make it more saleable
  • Find out from your estate agent how many people actually viewed your property online. If these numbers are low then your marketing price may be too high. If these numbers are high, but with little or no viewings, then the presentation of your property needs to be reviewed


For more information read


(image by smarnad via

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