Home & Property

Remortgaging

Keeping your outgoings down is an important financial goal. For most people, their mortgage is their biggest financial commitment. And it follows that streamlining the largest debt can produce the largest saving.

It is important that before you seek to remortgage you should challenge your current lender to give you a new offer as it could reduce the fees you pay to get a new deal. It is easier for a lender to keep your custom than to attract new ones.

As mortgage interest rates have dropped, the fees lenders levy have increased significantly. You may have to pay an exit fee to leave your current lender and, depending on your deal, an early repayment charge as well.

Securing a mortgage has become more onerous, especially flowing the financial crisis.

Three things go a long way in securing a good deal:

• Decent equity. Realistically, you’ll need to be borrowing LESS than 95% of its current value; and to get the best deals, less than 60%.
• A good credit score. This is something you need to manage in advance. You need to smooth out any problems with your credit report.
• Affordable repayments. Since April 2014 much stricter affordability criteria have been introduced, meaning lenders have to ‘stress test’ how comfortably you can afford to repay – not just at today’s rates, but if they were at 6% or 7%.

Property and Inheritance Tax

The Chancellor, George Osborne revealed in July 2015’s Summer Budget that he’d scrap the inheritance tax charge when parents or grandparents pass on a home that is worth up to £1m. That is £500,000 for each parent. This will be phased in gradually between 2017 and 2020.

The new ‘main residence’ allowance is only available for a recipient of a home and that person is a direct descendant. The band will start at £100,000 in 2017, rising each year by £25,000 until it reaches £175,000 in 2020.

In 2017, the maximum value that can be passed on to beneficiaries will be £850,000 for a married couple, £425,000 for an unmarried person. When the first person in a marriage or civil partnership dies, the allowance passes to their surviving spouse/partner. In 2020, the allowance will rise to £500,000 for each partner, making the total £1,000,000.

Currently, a couple can leave £650,000, including property, to beneficiaries before inheritance tax is due.

The allowance is only available for properties up to £2,350,000. The allowance is reduced by £1 for each £2 that the property value exceeds £2,000,000. Therefore for properties over £2.35m, there is no benefit.