ReadytoBuyPodcast Mark Humphrey

Today I’m speaking with Sara Sheppard, founder of SLS Wills and More to discuss why it’s SO important for you to have a will.
Will writing is not offered as a service under my business proposition and any queries would be referred to a suitably qualified third party.
However, I have approached an expert to give an insight into this important subject. Please note that Will writing is not regulated by the Financial Conduct Authority.
Sara is vastly experienced and an expert in her field, with over 30 years in the industry and sits on the Society of Will Writers Professional Standards Board as an associate member
04:15-06:23
What happens if someone dies without a will?Rules of intestacy will determine how your estate is distributed.
-         Assets held in joint names will pass to the other surviving party automatically. However, assets in a sole name or property held as tenant in common – would be subject to the rules of intestacy.
If there is a spouse or civil partner and children, the spouse or partner would receive first £270,000 of the assets (as of the rules in March 2022).
Anything above this amount, would be divided into two equal shares –
half to spouse / civil partner, other half divided between the surviving children.
Therefore the house could end up being jointly owned by spouse and children, which can be particularly complex if children are below the age of 18.
-         If single, your assets could pass to your parents, or siblings, or if you don’t have either, it could pass to people you don’t know about after following bloodlines (possibly even at cousins 3 or 4 times removed!).
06:25-10:52
What are the key reasons to have a will?-         You have control over what happens to your assets – tempered with the fact that you must make provisions for those financial dependant on you, for example, you can just cut out your spouse and children without a very good reason!
This is also why it’s wise to get advice when setting up a will and not just doing yourself without guidance. Use an expert, like you would with a mechanic for your car.
A will is one of the most important documents you’ll ever prepare and naturally you won’t be around to make any corrections at that point.
-         Wishes for your funeral
- Wishes for who would look after your children. Without a will, THEY COULD END UP IN CARE – they wouldn’t automatically be looked after by your family!
Things happen more often than you think and as a married couple, something could happen to both of you – for example a car accident and neither of you survive

10:53-12:47
How often should we review our will?-         Recommend every 3-5 years, or
-         On a lifechanging event, such as:
o Moving Home
o Birth of child or Grandchild
o   On Retirement
o After inheriting money
o Divorce
o   Death of a family member
You can change as often as you like, provided you have mental capacity.

12:48-14:06
How does Marriage impact our current Will?Marriage automatically revokes any existing will, so a new will would need to be written or if you passed away, you would be intestate
This is particularly relevant for blended families, with children from different partners and can get very complex and without a will in place could...

It might sound like a really simple concept, and ultimately it is - is something affordable? 
In a mortgage context, the concept of affordability is a relatively new term and concept.
Historically - income multiples determined how much you could borrow.
Background
In the early 2000s, lenders used to lend you 2.5 x your combined annual income if applying for a mortgage as a couple or 3 x your income if applying alone.
With the explosion of house prices in the last 25-30 years, there is a need to have greater flexibility when it comes to affordability. 
Regulation in this industry has increased during this time, initially by Financial Services Authority (FSA), and more recently renamed the FCA (Financial Conduct Authority).
As a result - affordability was introduced – which goes a step further than simply looking at income multiples, which was quite a crude measure of how much you can borrow. 
Whilst many lenders still use income multiples that sit behind their calculations, there's very much more emphasis placed on the affordability on a monthly basis – i.e. how much is coming in each month and how much is going out.
In very simple terms, affordability is what’s left after deducting your outgoings from your income.
IncomeIt’s rarely this simple though as there are so many different types and parts to your income.
In the simplest example, you might be an employee with a fixed basic annual salary.
However, you might have additional income such as:
Bonus (monthly, quarterly or annual)CommissionOvertimeAllowances (Car, Shift etc)
If self-employed, you could be a sole trader, a limited company director, contractor or Limited Liability Partner (LLP). We saw in episode 21 how lenders may use different income depending on your set up and their own internal rules.
You may receive other types of income such as; child benefit, tax credits, child maintenance etc
Lenders often have a different approach to each other too – which explains why you may be offered differing mortgage amounts from different lenders.
OutgoingsMany different forms of outgoings and again may be treated in a different way by different lenders
Credit commitments – loans, car finance, credit cards, store cards etcChildcare costs – nursery, childminder, nanny etcChild Maintenance Travel CostsHousehold expenditure
Lenders will tend to use the Office of National Statistics (ONS) data, when they factor in a lot of these, so that will tend to take an average. 
Lending DecisionsLenders will balance two main things when deciding whether to grant your requested mortgage:
Affordability - Ultimately, how much of your income is left over after all of the above outgoings is the important figure to them. Is it sufficient for your mortgage payment now and if rates increase?Credit Risk - is essentially the lender gauging the risk of you as a borrower not paying your mortgage back
They'll look at all sorts of data that they've got for people in similar situations to you historically, along with viewing the conduct of your credit agreements on your credit file before reaching their decision
As with affordability, credit risk policy will vary between lenders – explaining why some may provide different decisions
“DEFINITELY NOT A SILLY QUESTION” Feature
Q – I’ve got a loan I intend to repay before my new mortgage starts. Will this affect the affordability calculation?
A – It may do, depending on the lender. Most lenders...

“I’m self-employed, is it harder for me to get a mortgage” is a question that I'm often asked, and being self-employed myself too, I can see it from both sides. 
In this episode, I’ll be discussing how it does tend to be more involved and there are more things to consider when you're self-employed, but it certainly isn't impossible, and with a bit of help you can navigate the requirements and get the mortgage that you need
02:06-03:26
It's important to make a distinction between the different types of self-employment - the two that we're going to discuss today will be:
Sole traders / partnerships
Limited Company Directors 
There are other forms of self-employment that we’ll cover in another episode:
Limited liability partner or an LLP, a common set up if you're a partner in a law firm, for example. Contractor - such as an IT contractor where you invoice a company each week or each month and you organize your own tax. 
What income can be used for the mortgage? 
It depends upon the business set up (i.e. sole trader/partnership or Limited Company) and we’ll explain both in detail. 
One thing to be aware of - lenders will use figures that are disclosed to HMRC, so for those of you that don't disclose everything to the taxman, you can't have it both ways, income that is declared to the taxman essentially will be the income that will be usable from a mortgage perspective. 
03:27-09:01
Sole trader / Partnership. You'll either be doing your own self assessments each year, or you'll have an accountant that does it.
Your financial year will be in line with the tax year(the fiscal year) which runs from the 6th of April through to the 5th of April. 
Self employment is quite different from being an employee where you have a set basic salary each month (and therefore easier for lenders to understand what you get paid now and going forward).
Being self employed, your income can be very up and down, and so lenders are making a judgement on your future income by looking at your track record - usually your last two years, possibly the last three.
As a sole trader, lenders look at your last two (possibly three) years’ Net profit figures. 
Not your turnover or total income, your net profit which comes after taking into account all of the expenses
Ordinarily, lenders will look at an average of your last two years figures, although if your latest year is lower, they'll tend to use that lower figure instead of an average.
They may also ask more questions, if it's quite a significant drop, to understand why that's the case, and more often than not, it might be a one-off capital expense (e.g. vehicle or equipment) which may give the lenders comfort that your profit next year will again be higher
 HMRC Documents
It depends on when we are in the year when applying for a mortgage, which determines which tax returns are required
For example - If we're in July 2022, most lenders would be fine accepting your tax return which ran to 5th April 2021 as your latest year. They appreciate you may not have completed your April 2022 return yet!
However, once we get to October 2022 – your tax returns for the period ending 5th April 2021 are now 18 months old and most lenders will want your 5th April 2022 tax return as the latest year. 
Worth bearing in mind and getting organized if mortgage time coming around.
Whilst your 5th April 2022 tax return isn’t required by HMRC until the end of January 2023, in our example, if lenders want it – this could be the difference between getting your mortgage and not!
Lenders didn’t historically ask for business bank statements every time, but since the beginning of the...

So many of us have a mortgage and see it as a millstone around our neck, something that holds us back and can impact our lifestyle.
I say the opposite, that our mortgage can flex around our lifestyle
Your lifestyle and priorities will change as you go through different stages of life, whether you’re young and single, right through to having a relationship(s), possibly children, career aspirations, retirement planning etc
Think of an imaginary set of scales with the following on either side:
income – which ultimately helps to fund your lifestyleLifestyle – hobbies, leisure, family, career
Naturally, the balance changes as you go through life as your career and income change, alongside your lifestyle.
When it comes to owning your home, your needs will change along with your life-stage and lifestyle and having some flexibility will really help you to maintain this balance.
A Mortgage – is a necessary vehicle to help us own our own home - None of us dream about getting a mortgage, it’s the dream house and the lifestyle that we strive towards!06:27-07:27
What factors determine our monthly mortgage payments?
1.      How much you borrow – Loan Amount
2.      How long you repay the mortgage (term)
3.      Interest rate
07:29-11:27
1.      Loan Amount
When we think about the loan amount, you may think it’s set in stone – but you do have options that can help your lifestyle
•       I can’t stress how important regular reviews are. All of our situations change over time, so speaking with a whole of market mortgage broker can help you understand your options.
•       You might decide that you need a bigger house (maybe your family has grown!). Moving may not always be the cheaper option – there are a number of costs you’ll incur when moving such as stamp duty – so why not explore the cost of both extending and moving to help you make an informed decision.
•       If you’ve got unsecured debts that are impacting your lifestyle due to their monthly costs, there may be an option to consolidate them into the mortgage for one monthly payment. You may end up paying more interest and securing a debt that was previously unsecured, but your advisor can talk you through your options to find the most suitable option for you.
Think carefully before securing your debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
•       If you’ve got a significant amount in savings (earning very little interest) there are mortgages that allow you to offset interest on your mortgage by using these savings, which could save you money. Again your advisor could talk you through these options to ascertain whether they’re suitable for your situation
•       If you have equity in your property and have been thinking of buying a holiday home – there might be the opportunity to increase your mortgage to help fund this. Again your advisor would be able to discuss your personal circumstances with you
11:28-15:38

2.      Interest Rate
Getting the right deal for your circumstances is so important to ensure you’re not paying more than you need too.
Use a whole of market mortgage broker, who can look at the whole market to find you the most appropriate and competitively priced deal available to you, rather than just one or two – or even “your bank”
Review regularly, rates change as we’ve seen over the past few

It’s natural to follow your friends, family and colleagues when it comes to moving and we’ve all looked sideways at some point in our lives, yearning for what someone else has!
We also tend to get bombarded with lots of information and “advice”, whether from those close to us or even the news and social media - but how should we decide if now is the right time to move?
02:10-08:47
Things are outside of your controlA Recession – like we had with the Credit Crunch in 2008 Impact of BrexitCovid
We can’t second guess what’s going to happen or any impact on the Housing market prices drop – should you wait?
My advice is to base your decision on the info you have about yourself and family, your situation and goals and try not to worry what might happen
What if you wait?
You might still be waiting in 2 years, 3 years, 5 years and putting your life and your plans on hold!
Also, things that may not go to plan with you and your health – you can take steps to protect yourselves and your love ones again the financial impacts of this. No reason to delay if you’re ready now.
08:46-10:20
  Changing Jobs – within same firm or moving firmsUnderstand your options – a mortgage broker will help.
Many mortgage lenders won’t penalise you for changing jobs and often will take your new income into account if you’re starting the new role within 3 months – subject to seeing your new contract.
If your income is increasing, it may mean your mortgage options are greater than in your current role. Lenders tend to apply a sense of reasonability in terms of the job change being in a similar field and any income change being sustainable.
10:20-12:34
Maternity LeaveLenders don’t discriminate if you’re on maternity leave. If you intend to return to work after your leave – most lenders would want a letter from your employer confirming your return to work date, terms (hours per week and salary) and be happy to include your income in their affordability assessments.
Lenders will also want to understand any childcare costs going forward – to ensure they’ve taken into account
12:35-15:35
DEFINITELY NOT A SILLY QUESTION FeatureQ - My friend says it’s better to buy in the spring – is that right?
A – No, there’s no one “best” time of the year to buy. Our situations, requirements and dreams all unique and as explained throughout this episode – the right time to buy or move home is when it’s the right time for you. There are times of the year, Spring being one of those, where more homes go up for sale – but it doesn’t mean it will suit you or your family situation.
REMEMBER:
1)    Always SEEK ADVICE for your own circumstances, and;
2)   A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments
15:37-18:56
Need to save up for a bigger depositThe smallest deposit is 5%, so with any less, you’d need to continue saving, unless family may be able to assist with a gift to boost your deposit. Have you asked them?
Understand the numbers – a mortgage broker will help.
Don’t just assume a 10% deposit is needed (for example) if you don’t have this yet.
Your mortgage broker could compare buying now with a 5% deposit now (if feasible) with waiting to save a larger deposit and buying in the future.
If you’re renting, saving more may take quite some time if you don't have much spare income and house prices may have increased in this time, so takes you even longer to save your 10% deposit
Example of my clients in 2018...

Things to know about Leasehold properties!
Vikki Herbert, Solicitor and Partner at Thackray Williams Solicitors joins me today to discuss some key things you need to know if you’re considering buying a leasehold property
Vikki has over 20 years experience in her field and specialises in Leasehold Enfranchisement Matters and anything related to a residential lease
02:39-05:09
The difference between a freehold and leasehold property –
o  Freehold Property – you own both the land and the building. Most houses are freehold. There are some leasehold houses, although this is no longer allowed and new houses must be freehold
o  Leasehold Property – essentially a long-term let – you rent the building that sits on the land. Flats are leasehold.
05:10-05:27
Discussions around topical issues/considerations with leasehold properties
05:28-11:17
     Ground Rent - leaseholder pays the freeholder to rent the ground from them
o  This is a fixed rent that’s clearly set out in the terms of the lease
o  Increasing Ground Rents – lenders require that increases are reasonable i.e. broadly in line with inflation (Retail Price Index / RPI).
o  Good conveyancer/solicitor will check out the detail to ensure everything's in order
o  Try and get as much info on ground rent, service charge and the length of the lease upfront from the selling agent – it can be checked out
11:20-14:01
     Service charge
o  The charge paid to the freeholder or management company to maintain common/communal parts and structure of the building (roof, stairwell, gardens etc) and to provide buildings insurance for the whole building
o  It can change from year to year.
o  If buying a property, looking back at service charges from previous years can give a good indication of how costs may vary and what maintenance/works have been done.
o  Speaking to other leaseholders (flat owners) in the building may also give a good sense of how well the freeholder treats the leaseholders
o  Expensive Service Charges can be challenged as freeholders are obliged to charge “reasonable service charges”.
14:02-17:30
“DEFINITELY NOT A SILLY QUESTION” Feature
Q - Is it harder to get a mortgage on a flat near shops or commercial premises
A – Potentially yes, but it all depends on a number of factors: how close, what types of shop / commercial premises, what the local area is like. Essentially the lender wants to know how the proximity may affect the future saleability of the flat, which also has an impact on it’s value.
As we’ve said many times, all lenders have a slightly different approach to each other, some are more accommodating than others when it comes to this. You may also find that you’re required to put down more of a deposit than for a similar flat that isn’t close to commercial premises, which lowers the risk to the lender.
A Whole-of-Market Mortgage broker will be able to help you as they’ll understand the stance of lenders from across the market – so be able to quickly identify who may and may not be able to help.
REMEMBER:
1)    Always SEEK ADVICE for your own circumstances, and;
2)    A mortgage is a loan secured on your home and may be REPOSSESSED if you don’t keep up mortgage payments
17:32-20:37
     
Obtaining consent from freeholder / management company
Depending on the wording of...