MTTM Podcast Episode 465 – How to get on the property ladder, Buy Now Pay Later turmoil & flight compensation rules

Listen to Episode 465

In this week's podcast I discuss the various ways to get on the property ladder in 2024. I explain the different types of mortgage products that are available for first time buyers as well as the various government schemes. We also discuss the collapse of Buy Now, Pay Later firm Laybuy and the implications for customers. We then explain the rules around expenses and compensation if you experience a delayed or cancelled flight. In a podcast first, you can access an extra section of the podcast by clicking the link below and watching our podcast on the Money to the Masses YouTube channel (Don't forget to like and subscribe while you are there)

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Podcast Episode 465 Summary

Getting on the Property Ladder

Damien Fahy and Andy Leeks discuss various strategies for getting on the property ladder. They cover different types of mortgages and government schemes.

• Guarantor Mortgages: These require a close family member to use their savings or home equity as collateral. While this helps those with low deposits, it can be risky for the guarantor if the borrower defaults.
• Barclays Springboard Mortgage: A type of guarantor mortgage where a family member deposits 10% of the property value into a special account for five years, earning interest while securing the mortgage for the buyer.
• Skipton Track Record Mortgage: Available to renters who can prove they've been paying rent equivalent to or higher than their prospective mortgage for at least 12 months.
• Lifetime ISAs: These allow individuals aged 18-40 to save up to £4,000 a year with a 25% government bonus, aiding in deposit accumulation.
• Joint Borrower Mortgages: These mortgages enable multiple people to combine their incomes to meet affordability criteria.
• Joint Borrower Sole Proprietor Mortgages: Up to four incomes can be combined to support a mortgage application without all being listed as property owners, avoiding additional stamp duty for the non-owner borrowers.

Buy Now, Pay Later (BNPL) and Laybuy Administration

The podcast addresses the news that BNPL company Laybuy has gone into administration. Damien and Andy highlight the pitfalls of using BNPL services, which can lead to increased spending and potential debt issues if not managed properly. They emphasise the importance of using these services responsibly and understanding the implications on credit scores and financial health.

• Laybuy Administration: Laybuy's collapse was due to reduced customer spending, higher credit losses, and increased fraudulent activity. Despite the administration, customers are still required to pay their outstanding debts to avoid damaging their credit scores.
• BNPL Industry Risks: The episode revisits past discussions on BNPL, stressing that the appeal of interest-free, fee-free purchases can lead to overspending and financial strain. Regulation in this industry is still evolving, and consumers should be cautious and ensure they can afford their purchases without relying on BNPL services.

Flight Compensation and Luggage Issues

Damien and Andy delve into flight compensation rights, particularly focusing on a recent incident at Manchester Airport where a power cut led to significant delays and lost luggage. They provide guidance on what passengers are entitled to and how to claim compensation.

• Compensation Rights: Under EU regulation EC261, airlines are responsible for getting passengers to their destinations regardless of the cause of delay. Passengers are entitled to reasonable expenses for food, drink, accommodation, and transport during delays. Compensation amounts vary based on flight distance and delay duration, ranging from £110 to £520.
• Lost Luggage: Airlines have up to 21 days to return lost luggage before it’s considered officially lost. Passengers can claim compensation for essentials and possibly higher amounts through travel insurance if they have the necessary documentation. Taking photos of packed luggage can aid in the claims process.
• Travel Insurance: Policies often include delay cover, providing compensation for significant delays or missed connections. Checking policy details and keeping receipts can streamline the claims process.

Multiple Choice Questions

Questions:

1. What is the main purpose of a guarantor mortgage?
   • A) To help people with poor credit or low deposit
   • B) To reduce monthly mortgage payments
   • C) To provide interest-free loans
   • D) To guarantee you get the interest rate you want
2. Which company is mentioned as having gone into administration?
   • A) Klarna
   • B) Afterpay
   • C) Laybuy
   • D) PayPal Credit
3. What can a professional mortgage offer to certain professions?
   • A) Lower interest rates
   • B) Larger multiples of salary for a mortgage
   • C) Interest-free loans
   • D) Reduced deposit requirements
4. Which profession is unlikely to be eligible for a professional mortgage?
   • A) Doctor
   • B) Teacher
   • C) Engineer
   • D) Dentist
5. How long does an airline have to return lost luggage before it's considered lost?
   • A) 14 days
   • B) 21 days
   • C) 30 days
   • D) 45 days

Answers:

1. A) To help people with poor credit or low deposit
2. C) Laybuy
3. B) Larger multiples of salary for a mortgage
4. C) Engineer
5. B) 21 days

Resources:

• MTTM Deals Page
• What are guarantor mortgages?
• Concessionary mortgages explained 
• First time buyer guide
• Manchester Airport power cut compensation: What are your rights?
• Buy Now, Pay Later firm LayBuy enters administration