Your home may be repossessed if you do not keep up repayments on your mortgage.

With an offset mortgage you can potentially reduce the amount of interest you pay by offsetting a credit balance against the mortgage debt. Some lenders facilitate this through a single account (usually known as a current account mortage), others offer multiple accounts that allow customers to virtually separate their finances, but whichever the mechanism, the offsetting principle is the same.

Unspent income is offset against the amount of mortgage debt outstanding so you only pay interest on the net amount owed. For example, if the mortgage balance outstanding is £150,000, but you have a credit balance of say £10,000 in a current or savings account, interest is calculated on the net £140,000.

Normally a borrowing limit applies, and it is usual that a borrower can redraw against this limit as the mortgage is paid down. Although limits may be decreased over the term to lock in capital repayments, problems can still arise for undisciplined borrowers who choose to effectively ‘withdraw’ previously made mortgage payments.

However, with good management and discipline, an offset mortgage can result in significant interest savings and facilitate earlier repayment of the mortgage, but it is very important to ensure you are the right person for this type of mortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.

Equity Release is a lifetime mortgage or home reversion scheme. To understand the features and risks, ask for a personalised illustration.

What is a lifetime mortgage?

Lifetime mortgages are a popular means for homeowners typically over the age of 55 – they can help by releasing some equity in their homes. Thousands of people in the UK already choose this method to help achieve their retirement goals and supplement their retirement income.

A lifetime mortgage is a way of borrowing a set amount of money against the value of your home, in the form of a long-term loan, and without the need to move. You continue to own your own home, for the duration of the plan and as long as you are living in it – you’ll also be responsible for keeping your home in good repair.The loan is paid back using the proceeds from the eventual sale of your property. This is usually when you die or have moved into permanent long-term care.

The money released can be used for whatever you wish (so long as any outstanding mortgage has been paid off). You should be aware that taking out a lifetime mortgage could reduce your eligibility to means-tested benefits and could affect your tax position.

Also, as the interest is added to the loan, there may be no value left in your home at the end of the plan. Taking out a lifetime mortgage may also reduce the options that you have for moving or selling your home. You should talk to your Financial Adviser and/or solicitor about this if you’re at all unsure.

Before you think about equity release, you should also consider your other options:

• Savings and assets that could help fund your retirement
• Consideration of a conventional Mortgage as an alternative
• Sell up and trade down
• Sell up and live with children or other relatives
• Sell up and hope that the local authority can provide housing
• Selling and renting
• Take in tenants (not an ideal option for many elderly people)
• Local authority or other grants

Equity Release Schemes may affect your eligibility to means tested benefits. Equity release products involve borrowing against or selling all or part of your home. There may be more suitable methods of raising the funds you need.

Equity release schemes may work out more expensive in the long term than downsizing to a smaller property.

Your home may be repossessed if you do not keep up repayments on your mortgage..

Buying a home for the first time can be a daunting prospect. There’s so many things to think about – and that’s before you’ve even considered the many mortgage products, rates and lenders to choose from.

To help you reduce the stress, here are our Top Tips for First Time Buyers.

• Budget accurately: Be realistic about how much you can afford to spend on a house, and ensure the intended mortgage is affordable. Don’t forget to allow for furnishings, and remember older properties may require extensive work, such as re-flooring, tiling or renewing the wiring. Make sure you budget for these likely expenses in addition to the purchase price, along with other fees such as conveyancing and stamp duty.
• Ask for a second opinion: When buying for the first time, there may be a number of details to look out for that you may not be aware of. Always take an experienced home buyer with you when viewing a property. If this is difficult to arrange, make sure you at least get some assistance at the second viewing stage.
• Remember the bills: If you have been used to living at home with your parents, remember to budget for expenses such as council tax, gas and electricity bills, boiler servicing, and other home repairs.
• Consider Council Tax: Make sure you know what the likely council tax charge will be in your new property. The selling agent should be able to help you.
• Look at the local area: Even if you do not have children, remember that property in the catchment area of good local schools will always be much easier to sell on (though it may be reflected in a higher purchase price). Also, write down a list of local amenities which are important to you (shops, gym, cinema etc). Before making any final decision about where to move to, take a stroll or bike ride around the local area.
• Speak to your motor insurer: If you have a car, your insurance premium may increase if you move to an area with a higher crime rate, or are trading off-street parking for on-street parking.
• Check transport links: Consider the availability of public transport services, like local bus routes or the frequency of train services from your nearest station. Even if you drive everywhere, this information will be useful for anyone coming to visit you who doesn’t.
• Check connectivity: If you are a heavy internet user, check the broadband speeds available in the area you’re moving to. The selling agent should be able to provide this information.
• Think about commuting time: Commuting can be one of the biggest household expenses. Since you’re likely to be spending much more time on domestic chores and/or DIY, minimising your commuting distance could be important. If property is more expensive nearer to your place of work, make sure you weigh up this additional expense when compared to the costs and time of commuting.

Your home may be repossessed if you do not keep up repayments on your mortgage..

Flexible mortgages recalculate the outstanding capital and interest (the amount you owe) on a daily basis. This allows you to make overpayments when you have money to spare, and see an immediate reduction in your loan.

Some also allow you to make underpayments when finances are tight, which will increase the interest you have to pay in the long term.

They may even allow you to take repayment holidays – a complete break from making payments as long as a reserve amount of money is in your account.

Any unpaid interest will be added to the outstanding mortgage; any overpayment will reduce it. Some flexible mortgages have the facility to draw down additional funds, to a pre-agreed limit.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Remortgaging means switching your mortgage to another deal with another lender without moving property.

Some people switch mortgages because it will work out cheaper for them. For example, the introductory discounted interest rate may have finished with your current lender, and you might get a cheaper deal with another lender.

Other people remortgage to consolidate their debts.

It is worth noting that a remortgage isn’t always the most suitable option. Sometimes any saving made by securing a cheaper interest rate can be outweighed by the fees incurred in setting up the new mortgage and converting unsecured debt to secured debt may not be in your long term interest.

If you plan to switch mortgage, remember to look at the overall repayment period too. You may be able to pay less monthly, but check the final repayment date of the mortgage. It may be longer than your current deal.

You may be able to find a new mortgage deal with your current lender – and it may even work out cheaper to do so.

In fact, many lenders allow you to switch your mortgage deal quite frequently.

Securing short term debts against your home could increase the term over which they are paid and therefore increase the overall amount payable. You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

With a self build mortgage, money is released in stages as the build progresses. Some lenders will lend you money to purchase land – typically 75% of the purchase price or value (whichever is lowest).

After this, the money for the build is released in stages. These stages can be fixed or flexible, depending on the lender, but usually there are six (see table below).

There are two methods by which the money can be released during the build – at the end of each stage (known as arrears stage payments) or at the start of each stage (advance stage payments).

With the arrears stage payment method, money is released after a valuer has visited the site and confirmed completion of the stage. This can cause some self-builders cash flow difficulties.

The advance stage payment method works in the opposite way, with money released at the beginning of a given stage, before work starts. This method has become popular as it provides positive cash flow during the build, making it easier to stay in your current house while the build progresses.

The stages of a build depend on whether or not you are building a traditional (brick and block house), a timber frame construction or if you are renovating or converting an existing property.

The following table provides an indication of the typical stages: