Kaz Sood - Mortgage Advice

Kaz's Monthly Update #2 (from my email newsletter)

As we step into December, I find myself reflecting on a turbulent November. The financial and political landscape has been challenging, and I’m looking forward to some much-needed time to switch off over Christmas. In my previous update, I underestimated the ripple effects of the Autumn Budget. Now, with the dust settled, the reality feels far less reassuring. Discontent with this government continues to grow, with nearly 3 million signatures on a petition calling for a general election.

With that said, and while I tend to pessimism often, I’m not in the business of doom and gloom. There are always opportunities to protect and strengthen your financial position, no matter the external challenges, and that’s the focus of this email.

Market Update

A positive note for homeowners is the continued rise in house prices. According to Nationwide’s latest survey, house prices grew at the fastest annual pace in two years this November. The price of a typical UK home rose by 3.7% compared to a year earlier, with property values nearing record highs.

What happens with interest rates is really anybody's guess at the moment. I have been trying to understand where these might go in light of the upcoming Trump presidency. Trump has big spending plans, which will likely mean higher US interest rates to combat the inflationary effect of these. This will in-turn keep interest rates higher over here. There is also so much going on geopolitically at the moment and nobody can say for sure whether events are going to de-escalate or worsen. For now, it's a matter of sit tight, wait and see.

Protection: Securing Your Home and Future

As mentioned last month, I wanted to focus a bit more on protection here. This is an essential way to safeguard your home and ensure it stays with you or your family, no matter what life throws at you.
Life Insurance: This is designed to protect your family financially after your death. It’s typically the most affordable form of protection, as it covers the statistically least likely event.

Critical Illness Cover: This provides a payout if you’re diagnosed with specific critical illnesses like cancer, a heart attack, or a stroke. The funds can help manage financial pressures during recovery or pay for treatment. Both life insurance and critical illness cover can pay out as a lump sum or an income.

Income Protection: This covers up to 70% of your income if you’re unable to work due to illness or injury. Depending on the plan, payouts can last for one or two years or continue until retirement age.
So how much should you budget? Every client’s financial situation is unique, but a good starting point is budgeting between 5-10% of your monthly mortgage payment for protection. Smokers and those with certain health histories may see higher premiums, but the peace of mind is invaluable.
Ideally you should be considering a combination of these forms of cover, especially if you have a family to think about. If you’d like to review your existing plan or set something up for the first time, please just reply to this email asking for me to get in touch to discuss.

Referrals

I’m incredibly grateful for the referrals I’ve received from some of you following my previous email. Your trust and support mean so much—thank you! I’m tracking these carefully and will endeavor to keep you updated on the progress of applications for those you’ve referred. Once a client’s mortgage completes, I’ll confirm the amount owed to you and process the payment in the following month.

As a reminder, I offer 25% of the commission I earn on completed mortgage cases for any successful referrals.

Retirement Planning and Wealth Management

I’d been considering pursuing qualifications to become an Independent Financial Advisor (IFA) to offer more comprehensive advice on retirement planning and wealth management. While I’ve decided to put this on hold for now, I’m actively seeking a trusted advisor to whom I can confidently refer you should you ever need. I’ll update you on my progress early in the new year.

Thank you for reading, and as always, please don’t hesitate to reach out if there’s anything I can help you with.

With the release of a bold new Autumn Budget from the Labour government amid the ongoing cost-of-living crisis, I wanted to reach out to share some insights on how these changes might impact you. We’re living in a world fraught with uncertainty and I want to make some efforts in helping you to make some more sense of it, which is why you will be hearing a lot more from me in the coming months.

Key Budget Updates for Homeowners and Investors
My opinion of Wednesday’s budget is a mixed one. The new Chancellor of the Exchequer, Rachel Reeves, talked a lot about past mistakes of the Tories and the black hole in public finances she had uncovered. She acknowledged that public services are in a dire state, which we can all agree with, and boldly claimed her party would put these on the road to course correction.

She did however concede that this would be a difficult road and would require a lot of investment, including a commitment of £25billion to the NHS. Where would this investment come from? Some would have to be borrowed but, as expected, a lot of it would need to be raised from taxes.

Stamp Duty Land Tax (SDLT) Surcharge Increase: Some tax reform would be with immediate effect such as the shock increase in SDLT surcharge for those buying a second home (including BTL). In these cases, a 5% surcharge is now applicable, which has added thousands of pounds onto the tax bill of some buyers and is resulting in a lot of aborted transactions. Buy-to-let is no longer the golden goose it once was, and perhaps that will prove a good thing in terms of wider economic prosperity.

Employer National Insurance Contributions (NIC): The other big tax shock came in the form of increased liability in the form of employer National Insurance Contributions. This will be a big earner towards government coffers, but is likely to result in fewer job vacancies, fewer pay-rises and less investment into research and development in a lot of companies. The government would have surely anticipated the backlash they would receive for this, but the timing is questionable - it does further erode public trust in a government which is not particularly popular (PM Keir Starmer has a very negative approval rating according to polls). Some of you are owners of, or are in senior positions in, small businesses and will have difficult decisions to make following these changes.

Capital Gains Tax (CGT) Stability: Capital Gains Tax (CGT) is another notable thing to mention. Fortunately, there were no changes here with regards to residential property. As before, CGT is not payable on the sale of your own residence and CGT for second property has been maintained at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. I do suspect this may be reviewed in the coming years and as soon as I hear of any changes on this, I will be sure to let you know.

Inheritance Tax (IHT) Freeze with Agriculture-Specific Changes: Inheritance Tax rates and thresholds for most people have been frozen until 2030 (who knows what to expect after that?), however there are new inheritance tax implications for farmers and other agricultural land holders, which impacts their ability to pass on their farms to their family. Farmers are in uproar about this and are warning of big increases in food prices as a result. This is something that could be a big hit to the pocket of many of us, myself included.

Housing and Homeownership Initiatives: Pre-election and since, this Labour government has promised a commitment to housebuilding and in the budget, Rachel Reeves quantified this in terms of a £5 billion investment, including £3 billion to assist small-scale builders. If you have not yet bought your first home, or have somebody close to you who is looking to get onto the ladder soon, the government’s commitment to expand the housing supply could be very welcome news to you.

Additional Budget Highlights:
There was a big theme of justice at the beginning of a speech, which included a commitment to compensating victims of the historic Post Office Horizon scandal and the infected blood scandal. There was talk of retrieving public funds in dodgy Conservative government COVID contracts in the quantity of billions of pounds. There was also talk of making private jet flying more expensive (with a sly dig at Rishi Sunak), empowering police and retailers to prevent shoplifting, going after tax avoidance schemes and cracking down on gangs involved in welfare fraud. These are all things which, I feel, most reasonable people would like to see. Whether the government can deliver on these is another story.

Rachel Reeves spoke of a commitment to putting more money into the pockets of ‘working people’ and, with this in mind, announced there would be no increase in fuel duty (thank God!), there would be an increase in minimum wage and that a new Office for Value for Money would be set up.

Forecasts: Mortgage Rates
You must also be eager for some input on where interest rates are going to go in the light of this budget. It was just last week that Goldman Sachs made a very bold prediction of the Bank of England base rate coming down to 2.75% from the 5% it currently sits at. I think the spending announced in the budget and the government borrowing required to fund it makes this near on impossible, however I do think we will see further cuts. With average 5-year fixed and 2-year fixed rates currently available at 4.64% and 4.91% respectively, we can expect these to come down a little bit over the next year or so. The outcome of next week’s US general election is likely to have some impact on where interest rates go, with the Bank of England not being able to chart a course that is fully independent of the US Federal Reserve. I will speak about this in some detail in my next newsletter, after the election.

Don’t Forget Protection!
We all know the NHS is broken…

This government’s investment in the NHS will take time to see dividends, and for now we are dealing with something that isn’t working particularly well. In addition to mortgages, I can help with protection in the form of life insurance, critical illness cover and income protection all of which are of increasing importance in today’s world. In addition to the main benefit of these policies, they often come with great benefits like 24/7 access to remote GPs, which I think is so important at the moment when it can be so difficult to get a face-to-face appointment.

I have already helped many of you in setting up a protection plan for you and your families. If you would like to review the cover you currently have in place or you don’t have anything currently, please reach out to me. It’s absolutely vital that we get this sorted. I’ll be sending a lot more information out on protection in subsequent emails.

Private medical insurance, which gets you access to private healthcare when you need it, is not something I can help with directly, but I can refer you to somebody who can help if this is something you are considering. There is some really good cover available out there which is available at affordable prices. My referral partners will be able to point you in the right direction.

Referral Benefits: Save While Supporting Your Network
If you have friends, family, or colleagues who could benefit from expert mortgage advice, I’d love to help! In efforts to grow my business, I am now offering you a very generous reward of 25% of commission I earn on a case for each successful referral you make to me. This could see you earn anywhere between £100-1000 for a successful referral. Please get in touch and I will explain how this works. As an adviser and friend, it would be a pleasure to be able to help put more money into your pockets.

Why should you use a mortgage broker? I share several reasons here