October Newsletter 2011
Welcome to our Autumn Newsletter. With university fees set to dramatically increase from next year it may be easier than you think to start putting a plan in place to help fund your child’s education. And as household budgets continue to feel the squeeze, we illustrate how important it is to shop around when it comes to financial planning advice.
In this issue:
Do you know what your bank charges you?
We were recently contacted by an individual who had invested their entire ISA allowance (£10,680 in the current tax year) with their bank. They were surprised and dismayed when they discovered that the initial charge taken from this investment by the bank was equal to 5% of the investment total (or £534 based on the current ISA allowance). When they subsequently inherited a more substantial sum of money, they decided to shop around and compare the difference in charges (and service) between their existing bank and those of an independent financial planner.
They came to us and because we charge a fee rather than a percentage of investment we were able to save them an amount equal to 3% in initial charges, enabling them to invest more of their money.
Charges of 5% seem to be fairly typical with banks and building societies but lower fees can often be found by looking elsewhere. In fact, a recent study by the British Population Survey of 16,000 people revealed that 50% of customers who bought products from banks and building societies either didn’t know what the charges were or thought there were no charges at all!
Clearly fees are an important consideration
and understanding exactly what they are should
be part of every investment decision you make.
It pays to shop around and search for fee based
advice where possible.
Mortgage availability improves
Although the UK property market remains fairly sluggish, conditions have eased slightly for potential borrowers. Mathew Clamp, our Mortgage Principal, is certainly noticing a positive difference compared to just 12 months ago, with some extremely competitive rates available.
According to figures from price comparison website
Moneyfacts, the number of available mortgage
deals has risen to its highest level since December
2008. Lenders are now competing for mortgage
business which has led to a welcome decline in
mortgage rates; average rates for fixed and
tracker mortgages have reached their lowest level
since 1988.
Prospects for first-time buyers also appear to
have brightened. According to Moneyfacts, “Lenders
appear to be applying the recent cuts equally
across all loan-to-value tiers, which is good
news for first-time buyers.” Figures from the
CML show that first-time buyers are now borrowing
an average of 80% of their property’s value as
lenders are still reluctant to offer 100% mortgages.
This is also a noticeable shift away from interest
only mortgages which were far more popular before
the financial crisis.
The CML expects the mortgage market to remain
stable over coming months; UK interest rates
have now been at an all-time low of 0.5% since
March 2009 and lenders do not appear to expect
an increase in the near future. However, many
lenders are still not sharing with borrowers
the full benefit of the fall in funding costs
and mortgage rates are certain to rise again
as soon as lenders believe an interest-rate rise
is imminent.
For assistance with your own mortgage review
or property purchase, please contact Mathew
Clamp who will
be pleased to answer your queries.
University Fees – how are you going to help your child?
With University tuition fees of approximately £9000 per annum at some universities (from 2012), an average 3 year course is likely to cost more than £50,000, by the time you have factored in the costs of rent, food, clothes, entertainment and study materials.
If you are planning to help finance your child’s
university education, you might wish to consider
helping to pay the fees and costs as and when
they fall due, or alternatively you may prefer
for your child to receive the relevant tuition
and maintenance loans available and then help
to repay them once your child graduates.
Whilst the second option might be worth considering
if you need more time to accumulate sufficient
savings, you can substantially increase the financial
assistance you can offer simply by planning ahead
and taking steps right away.
If your child then chooses not to go to university,
the sum you will have saved can be used to help
them get onto the property ladder. Either way
you will be giving your child the best start
you possibly can.
The sooner you start to plan the greater the potential funds you can achieve. Please contact us for practical ideas that you can start implementing today.
National Financial Planning Week
Monday 21st November sees the start of National
Financial Planning week which aims to raise
awareness of the importance of financial planning
and its role in enabling consumers to be in
control of their finances and their future.
We will be issuing our Top Tips on how to kick start your own financial plan and take positive steps towards achieving your financial goals. We will post these onto our website and will send you a reminder on the 21st once they are live so that you can download them and start putting them into practice.
Previous Newsletters
Jackson Jeffrey Financial Services Ltd is authorised and regulated by the Financial Services Authority under number 502476, verification may be obtained on the FSA website or on 0845 6061234.
The contents of this newsletter do not constitute advice and should not be taken as a recommendation to purchase or invest in any of the products mentioned. Before taking any decisions, we suggest you seek advice from a professional financial adviser. All figures reflect our understanding of current legislation and available data. The guidance contained is subject to the UK regulatory and taxation regime and is aimed at consumers who are based in the UK.
Jackson Jeffrey Independent Financial Services is a trading name of Jackson Jeffrey Financial Services Ltd. Jackson Jeffrey Financial Services Ltd is a limited company registered in England and Wales. Registered number: 6916339. Registered office: Leofric House, Binley Road, Coventry, CV3 1JN