Foursquare Financial Ltd Weekly Blog – Episode 11

Back to usual for our blog this week! We cover first time buyers NOT taking advantage of help to buy and government backed schemes, a cautionary tale when it comes to product transfers with your bank or building society, a thank you for your comments relating to our mythbusters blog and some comments from Adrian Thorley and our friends at the Exeter.

Read on to find out more!

First-time buyers would rather sell the family silver than use Government savings schemes to get on the property ladder – Source: Property Industry Eye & The Nottingham Building Society ​

Almost two thirds of first-time buyers plan to sell one or more valuable items to get on the property ladder.
A poll by The Nottingham Building Society found that 63% would sell high-priced assets such as jewellery to help buy their first home, with 14% expecting to raise more than half of the funds they need this way.
The Bank of Mum and Dad is also still very much alive, with 81% of would-be first-time buyers expecting some of the funds to come from here.
Half said they would rely on grandparents, while 62% are relying on an inheritance.
The research highlights a lack of use of savings schemes that help buyers build a deposit, with 40% having no intention of using the Lifetime ISA and a fifth said they would not take advantage of the Help to Buy ISA.
Tina Hayton-Banks, director of member services for The Nottingham, said: “We know saving for a deposit is no mean feat for first-time buyers and our research echoes what we hear all the time across our branch network, that people are exploring every available route to get on the ladder.
“It’s a shame there’s still a relatively low awareness of products that can help them get there faster, such as the Lifetime ISA, but it’s an account we’re proud to be offering to support first-time buyers and expect to see its popularity grow and grow.”

Case Study

​Every now and again, as a business that puts integrity and honesty at the heart of everything we do, we help a client who’s best (and some times only) option is to product transfer direct with their existing lender. This week, as an example, a client had an older Britannia Building Society mortgage, now administered by the Cooperative Bank, which we couldn’t move to a more competitive lender as her circumstances didn’t allow it. As a result, we offered at no cost to the client to help her through the process with the lender over the phone by sitting in on the appointment and helping her understand some of the areas she was concerned about. We made no mortgage advice charge to the client, and made no commission from the deal, however, the client was delighted we helped her, and when her circumstances change in a year or two, we are hopeful she will return to us for a remortgage.
 
The process was quite enlightening, listening to the scripted telephone agent who was unable to give advice to our client. We felt it necessary to highlight some of the pitfalls that product transfer sseem to entail. We hear from time to time that clients feel that product transferring or rate switching is “easier” and “less time consuming” than a remortgage. Which is true, to some extent. But from sitting in on this phone call, we noticed some key areas that could mean the extra time and effort that goes in to a remortgage could mean saving thousands of pounds in mortgage interest. Here are the highlights:
 
·         The adviser was unable to give advice… This one is key. The reason you would engage a mortgage adviser is for their expertise and knowledge, and even the most experience home buyer or remortgagor may need help when it comes to common questions such as “Should I pay an arrangement fee or not?” or “is a fixed rate better for me than a variable or tracker deal and if so, how long should I fix for…?”, neither of which the bank adviser was able to answer.

·         The valuation was based on the last held valuation on file. This is huge. The area of Bristol that the client lived in has had huge capital growth in the last 5 years, and the valuation from September 2016 being used meant that they put the valuation at least £30,000 less than current market value. In the real world, this meant the difference of a product being selected at 75% loan to value (LTV) to less than 60% LTV. The lower the LTV, the priced products you are eligible for. By remortgaging, a client will have a valuation as part of the process meaning they can take a product they are eligible for and potentially save money on the monthly payments, fees or legal costs.
​
·         The client was unable to review her term or repayment type at this time – Some clients have spent years and years on interest only mortgages, not paying off any capital, as they thought the repayments would be too high. Put simply, buy extending the term slightly and having a better interest rate, most clients can have a repayment mortgage, or a part and part mortgage, for a surprisingly low cost. However, as these options aren’t often discussed or advised upon at product transfer stage, clients continue year after year to pay interest only loans without venturing in to the realms of the unknown.
 
Sometimes, as in our clients experience this week, you may have no choice but to transfer with your current lender. However, at least spend 45 minutes looking at the options before hand. It will cost you nothing to find out, but could save you thousands and ensure you get the right product and advice for your needs.

Company News

Those of you who follow us regularly through our blogs and social media pages, will know that we have been busy boys this week! Our mortgage mythbusters series seems to have gone down well. If you missed them, check the blog section of our page out to catch up. We tackled many misconceptions of the mortgage market, and set out to put your minds at ease for the future.
 
Next week, we join our network for our biannual training conference, so we expect the next blog to be filled with learning from our day out! ​

From Our Network – Adrian Thorley, The Exeter

The Exeter wins Best Individual Income Protection Provider
 
We’re delighted to announce that The Exeter has been named as the Best Individual Income Protection Provider at the prestigious Cover Excellence Awards 2018.
 
In announcing the award at a glittering event in London, Editor of Cover, Adam Saville said:
 
“For catering for more occupations and providing accessibility to cover, the winner’s income protection offering was described as “progressive” by the judges”
 
So, what makes income protection by The Exeter stand out?
 
Getting the right income protection plan for your clients is vital, as such we don’t think advisers should ever have to compromise. That’s why we offer bespoke plans; income protection by The Exeter is built to deliver, whatever your client’s occupation.
 
Income One Plus
Targeted cover for low risk, clerical and professional occupations, including a choice of either level or age costed premiums.
 
Pure Protection Plus
Occupation neutral cover bringing high quality protection to skilled and manual trades and the self-employed.
 
Both plans include options to tailor cover to meet client needs, including:
 
-       Cover from day 1, along with a wide range of waiting periods
-       A choice of claim periods, 2 year, 5 year and full term
-       Two options to simplify financial underwriting at claim
-       A choice of guaranteed or reviewable premiums
 
Both our income protection plans provide cover for clients who suffer from type 2 diabetes, with no exclusions for time off work due to the diabetes itself.
 
www.the-exeter.com
​

Thanks for reading.

​Pete & James