Cornwall news Getting your children on the housing ladder UK news
PremierLeague-News.Com - Cornwall - Peter McGahan from Worldwide Financial Planning talks about potential support for the housing market at the present time
PremierLeague-News.Com - Breaking Sport Transfer News ! The chief executive of Worldwide Financial Planning, Peter McGahan, discusses how the Government is taking steps to help first-time buyers step onto the property ladder, with potential access to pensions and the reintroduction of a new mortgage guarantee scheme to secure their dream home. We have seen numerous ideas coming from the Government regarding supporting the housing market - the depreciating asset that appreciates in value. And we can see why. Rising house prices give a feeling of confidence. If I am in debt for £10,000, it really hurts. If I am in debt for £200,000 for something that could be ‘worth’ £230,000 in two years or £400,000 in 20 years, I’m less bothered. I’m more likely to borrow against it, or release ‘equity’ and spend it elsewhere in the economy later. It is the oxygen of a fiery debt-driven economy, and falling prices are a large, soaking wet blanket thrown on a newly lit match. Increasing support for the housing market The Government has, and is, considering allowing savers access to their pensions to ‘get on the ladder’. You must remember at the end of other ladders there was a noose. The theory from the minister was that young people saving 8% of their earnings would have £10,000 pension pots very quickly. It is hard not to see some of these ideas as ‘help to sell’ rather than ‘help to buy’, a plan that supports many large house builders - like that of the actual 'help to buy' scheme - rather than purchasers. The reality is, young people do not save 8% in pensions. Even if they did, it would take the average earner four years to build up a pot of £10,000 - the very minimum to get onto the housing ladder using the Government 95% mortgage scheme (and not allowing for the hefty house buying and fitting costs). This idea is quite disastrous in that it doesn’t help those who have no disposable income. These are the people condemned to never-ending spiraling rent. Similarly, many of the risk properties in and around London are leasehold flats. These are like taking a depreciating asset and doing your best to make it depreciate more. Monthly service charges and unexpected hefty bills is not attractive to any future would-be purchaser. The carrot was held out. Research showed pension savers would invest more into a pension if they thought they could access it to buy a house. Of course, they would. Asked that question, the answer will always be yes, but that would leave people penniless in future years at retirement. Remember the power of investing early in an article a few weeks back. The first five year contributions can easily make up half the final pension pot in retirement. All evidence proves internationally that pension pots are not replenished properly if accessed earlier.
News source = PremierLeague-News.Com
. However, its real benefit lies in that lenders know property prices will not be under the same pandemic pressure, and some are now offering 95% schemes, whilst opting not to be restricted by the Government’s scheme. Mr Sunak encouraged banks with the guarantee on a portion of the loans if there were losses, and the top five banks moved to support it. According to Moneyfacts, there were 391 95% mortgage schemes available a year ago. That had dropped to just five at the beginning of this month. The Yorkshire Building Society is returning, but not using the Government’s backing and its commercial costs. The Yorkshire believes, and are comforted, that other lenders will now return to this 95% market which in turn supports that first rung of the ladder - the first-time buyer and the housing market generally. That’s good news. As for raiding your pension? Really? That’s like taking a bite out of your daughter’s birthday cake five days before her birthday and leaving it in the sun. Tempting at the time. A bit ‘awks’ later. We already have the lifetime ISA. Use that. Save up to £4,000, attract a 25% tax break (same as a pension), enjoy the returns, and when you are ready to buy, hey presto. You just need to be 18-50, the exact age the pension option would be targeting. If you have a financial query, please call 01872 222422 or email email@example.com or visit www.wwfp.net. You can also follow on Facebook and Twitter @WorldwideFP. Worldwide Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority (FRN: 440668). The FCA does not regulate credit cards, will writing and some forms of mortgage and inheritance tax planning. Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made. All information is based on an understanding of current tax practices, which are subject to change. The value of shares and investments can go down as well as up. Your home may be repossessed if you do not keep up repayments on your mortgage.
Source = PremierLeague-News.Com - Cornwall