Blog

The UK's Chancellor, Rachel Reeves, announced the 2024 budget last week, which includes a significant tax increase of £40 billion. This is the largest tax increase in a budget since 1993. Here we aim to unpack some of the changes that may apply directly to mortgage and property markets<h3>Overview</h3>The budget aims to balance the need to reduce the national debt with the need to invest in public services and stimulate economic growth. It remains to be seen how these measures will impact the UK economy and it's citizens Increases will be achieved through various measures, including raising National Insurance contributions for employers, abolishing certain tax loopholes, and raising the national minimum wage. The budget also includes a significant investment in public services, with an additional £22 billion allocated to the NHS. This is intended to help reduce waiting lists and improve patient care<h3>Housing and Property</h3><ul><li style="list-style-type: none;" data-mce-style="list-style-type: none;"><ul><li>Stamp Duty Hike: The Chancellor has raised the stamp duty land surcharge for second home purchases from 2% to 5%, effective 31st October 2024. This will likely impact investors purchasing additional properties</li><li>£5bn Housing Investment: The government plans to invest over £5bn to boost housing supply. This includes increasing the Affordable Homes Programme to £3.1bn and providing £3bn in support and guarantees for small builders. Renovations across the country will also deliver thousands of new homes</li><li>Right to Buy Curtailed: The government will lower discounts for buying council houses. Proceeds from such sales will be retained by local authorities to fund housing improvements and new builds</li><li>Cladding Removal Accelerated: A £1 billion fund will speed up the removal of unsafe cladding on residential buildings, a key recommendation from the Grenfell Tower Inquiry</li></ul></li></ul><h3>Capital Gains Tax</h3>The tax on profits from selling assets i.e. investments (including stocks) will increase. Starting in April 2025, the lower rate will rise from 10% to 18%, and the higher rate will increase from 20% to 24%Please note that these changes only apply to non-residential assets. The tax rates on residential property will remain the same<h3>Income Tax and National Insurance</h3>Starting in 2028-29, the income levels at which you start paying income tax and National Insurance will increase based on inflation.&nbsp;The government will not extend the previous freeze on these thresholds<h3>Employer National Insurance</h3>From April 2025, businesses will pay a higher rate of National Insurance on employee earnings. The rate will increase from 13.8% to 15%Additionally, businesses will start paying National Insurance on employee earnings above £5,000 instead of the current £9,100<h3>Wages</h3>National Minimum Wage Increase: The National Living Wage for people aged 21 or older will rise by 6.7% from £11.44 an hour to £12.21 from April 2025. The National Minimum Wage will also rise for younger workers and apprenticesYou can find more information about the budget on the UK government website: <a href="https://www.gov.uk/government/news/chancellor-chooses-a-budget-to-rebuild-britain" target="_blank" rel="noopener" data-mce-href="https://www.gov.uk/government/news/chancellor-chooses-a-budget-to-rebuild-britain">www.gov.uk/government/chancellor-budget</a> MCA Finance Limited is not able to provide advice on taxation matters, and the above content should not be deemed as tax advice. We recommend you seek professional advice from a suitably qualified adviser

UK Government Autumn Budget

New British polymer money. The 5, 10, 20 pound notes.

<h3>The Bank Rate, often referred to as the base rate, is a crucial component of the financial landscape. Set by the Bank of England, it’s the interest rate at which the central bank lends money to commercial banks. This rate influences all forms of interest rates including savings, loans, and mortgages.</h3>What Happens When the Bank Rate Falls?A decrease in the Bank Rate makes borrowing cheaper. Homeowners with variable-rate mortgages might see their monthly payments decrease, providing relief and increasing disposable income. However, people also face the downside of lower returns on their savings.Impact on Mortgages. A&nbsp;fall in the Bank Rate impacts various borrowers differently:First-time homebuyers may find the property market more affordable due to reduced borrowing costs, resulting in more manageable monthly payments and larger loan qualifications.Homeowners with variable-rate mortgages could benefit directly through decreased monthly payments, increasing disposable income.Fixed-rate mortgage holders are not impacted by immediate changes but can refinance at lower rates when their term ends, potentially reducing future payments.Prospective homebuyers benefit from increased affordability, allowing for larger loans with the same monthly payments.Investors and buy-to-let landlords could also see enhanced profitability and opportunities to expand portfolios or refinance existing mortgages due to lower rates.Planning AheadStaying informed about changes in the Bank Rate is essential for making informed financial decisions. Whether you are taking out a mortgage, planning to refinance, or managing your savings, understanding how the Bank Rate affects you can help you optimise your financial strategy.Consulting with a specialist can provide personalised guidance tailored to your specific situation. To discuss the options available to you and how the current Bank Rate could impact your financial plans, get in contact today.

Bank Rate: understanding the impact of it's fall

Fork in the road for major decision on wooden boardwalk in forest

<h3>Many homeowners, who opted for interest-only mortgages several years ago, are finding themselves facing the next steps for their mortgages, with their interest-only period coming to an end. This transition can be both challenging and crucial, requiring careful consideration and informed decision-making.</h3>Options to consider If you’re coming to the end of your interest-only term, there are a variety of options for you to consider. You could inquire about remortgaging with a new lender, which could offer an opportunity to secure a better interest rate or more favourable terms.However, it’s important to weigh the associated costs and factors. Part of remortgaging can include lifetime mortgage, allowing you to stay in your home while accessing equity tied up in the property. This option may not be right for everyone, as it may affect your entitlement to benefits.When remortgaging you could explore the option of a Retirement Interest Only mortgage (RIO). Available to over 55’s, a RIO is a loan secured against your home and you pay interest each month, meaning the amount you owe doesn’t increase overtime. This could be the best option for you, but it’s important to discuss with your adviser to explore your options.These aren’t the only options when coming to the end of your interest-only mortgage term. You could also explore other avenues such as switching to a repayment mortgage, downsizing to a smaller property, adopting a part and part mortgage, or extending your interest only period with your current lender. Extending your mortgage term is typically considered on a case-bycase basis and may require you to demonstrate your ability to repay. Reaching the end of an interest-only mortgage term marks a significant milestone for many homeowners. It’s a moment that calls for careful consideration and decisive action. There are many options available to you but navigating these options can be complex. When looking at alternative options it’s important to consider affordability, term and end date of any required new borrowing.Seeking professional adviceWhen facing this decision it’s important to seek professional advice from your mortgage adviser. Your adviser can offer support in understanding the implications of each decision, including the financial commitments involved and any potential risks. By exploring the available options, seeking professional advice, and engaging with your mortgage adviser, you can navigate this transition with confidence, ensuring a secure financial future for you and your family. For more information, contact your adviser who can support you and discuss the options available to you. If you’d like to discuss the options available to you, contact your adviser today

My interest-only mortgage term is ending: What are my options?

British one pound coin placed on top of polymer 5 Pound banknote with visible Big Ben symbol.

<h3>When it comes to purchasing your dream home, the excitement can sometimes overshadow the necessary considerations of financial security. However, there is no better time to talk about income protection (IP), and it doesn’t have to be daunting..</h3>Instead, think of it as an opportunity to achieve financial resilience even in difficult conditions.The importance of income protectionIncome protection is designed to provide financial security in case you are unable to work due to illness or injury. A mortgage is often the largest financial commitment you will make, and being unable to meet repayments due to a loss of income can have serious consequences, including the risk of losing your home.So why income protection?1. Maintain lifestyle: IP ensures that you can continue to cover essential living expenses, such as mortgage payments, bills, and food, even if your income stops temporarily.2. Financial commitments: With IP, you won’t have to dip into savings or accumulate debt to meet your financial obligations.3. Long-term security: Having an IP policy means that you are prepared for the unexpected, which is a cornerstone of financial planning and resilience.Life’s uncertaintiesUncertainties are part of life’s experience, with unexpected events such as illness, accidents, or job loss capable of disrupting even the most secure plans. These uncertainties highlight the critical importance of insurance.Income Protection provides a safety net, ensuring that an income stream is maintained when you are unable to work due to health issues or other unforeseen circumstances.It offers reduced financial stress during challenging times, allowing you and your loved ones to focus on recovery and well-being.With tailored policies available, you can choose coverage that best suits your needs and financial commitments, safeguarding lifestyle and providing stability.For more information and to discuss your financial resilience, get in contact today.

Financial resilience: the role of income protection

<h3>Following Labour’s win in the July 2024 election, whether you are a prospective buyer, renter or landlord, everyone is eager to understand the implications for the housing market</h3>Under the leadership of a Labour government, an ambitious housing agenda promises strong changes designed to address affordability, increase supply, and protect renters.Boosting housing supplyLabour’s most significant pledgeis to build at least 1.5 million new homes over the next five years. This initiative represents the largest boost to affordable housing in a generation. The plan includes creating new towns with high-quality homes, green spaces and reliable transport links, ensuring these communities are both liveable and sustainable. A key aspect of Labour’s strategy is the introduction of a ‘planning passport’ which will fast-track the approval and construction of high-density housing in urban areas, optimising the use of already developed land. Accelerated construction could lead to a variety of homes becoming available for prospective buyers and landlords looking to develop their portfolio.Affordable housing and first time buyersLabour is dedicated to making homeownership more accessible, particularly for first-time buyers. Their plan includes offering first-time buyers first selection on homes in new developments through a government-backed mortgage guarantee scheme. This initiative is designed to support younger people in getting onto the housing ladder, addressing the affordability crisis for many aspiring homeowners.Renter protection and leasehold reformsRenters will see significant protection under Labour’s new policies. The party has pledged to ban no-fault evictions, providing greater security and stability for tenants. Additionally, Labour plans to reform or end the leasehold system, addressing a longstanding issue affecting many homeowners. These changes aim to create a fairer and more secure rental market, enhancing tenant rights, and making the process of homeownership more straightforward. Opportunities to takeAs these policies unfold, the housing market is ready for a period of dynamic change and opportunity. We are yet to see the effect of these initiatives, but it’s a step in the right direction and can help homeowners, new and old, throughout the market.To discuss the options available to you, get in contact today

Labour: A new beginning for the housing market?

Female Surveyor In Hard Hat And High Visibility Jacket With Digital Tablet Carrying Out House Inspection

<h3>Purchasing a property is a significant milestone for anyone. However, one aspect that is often overlooked is the importance of a survey</h3>What is house surveying?House surveying involves a professional surveyor examining the property to identify any problems. This process is essential to understand the true condition of the house you are planning to buy. Surveyors assess various elements, including the roof, walls, floors, windows, and any other structural aspects that might not be immediately visible.A thorough home survey is an indispensable step that can save you from future headaches and unexpected expenses. Whether you opt for a Homebuyer Report (level 2) or a more detailed Building Survey (level 3) , the benefits of gaining a comprehensive understanding of your prospective property can be significant.Uncovering flawsA home survey can reveal issues that aren’t apparent during initial viewings. Structural problems, dampness, faulty wiring, or plumbing issues might lurk underneath, which could risk costly repairs down the line. You can gain valuable insights into the property’s true condition, enabling you to make informed decisions about your purchase.Financial shieldInvesting in a home survey is a smart financial move. It provides an accurate understanding of the property’s condition, which can help you plan for necessary repairs, negotiate a fair price, or even reconsider the purchase if significant issues are found.Long-term clarityKnowing the condition of your new home helps you anticipate and plan for maintenance and repairs, minimising the chance of unexpected and costly surprises. Ensuring your new home remains a source of stability for years to come. Head of Countrywide Home Surveys, Helen Stead says:“For most people, buying a property is a big financial decision and there is a significant knowledge gap around the difference between a survey and a mortgage valuation. Buyers who didn’t commission a survey typically faced unexpected costs in the region of £6000.&nbsp; A survey can highlight any serious problems allowing you to renegotiate and go into the purchase without unexpected costs further down the road.”For more information and to ensure you receive the survey that’s right for you, get in contact today.

Our latest blogs

UK Government Autumn Budget

Bank Rate: understanding the impact of it's fall

My interest-only mortgage term is ending: What are my opt...

Financial resilience: the role of income protection

Labour: A new beginning for the housing market?

Why is a house survey important?