First though, the good news. The introduction of potentially open ended drawdown solutions from Prudential and Just Retirement require more robust questioning of clients regarding when they require funds, e.g. a client paying for holidays for the next five years does not need to all funds at outset.Step 1. We must ensure our fact-find doesn’t just gather requirements for funds but also asks the ‘when’ question. Step 2. The ‘how much’ question is obvious but one many clients give little thought to. Step 3. We must explain the benefits and principles of drawdown and how it will meet their requirements. Take a typical case. A couple aged 63 and 64 are looking to raise funds for 25,000 for a conservatory and for an emergency fund as they have no savings. This amount also includes 3,000 for a holiday. They require these funds now. They also require 10,000 in about four years’ time to replace their car. Also, they would like about 3,000 each year to fund holidays, and want this for at least a further five years. The scenario compares releasing all funds at the outset with taking them via drawdown as required. The interest rate is 5.99 annualised.The saving of almost 13,000 in interest is considerable. The cautionary note is that the rate of interest for subsequent drawdowns under these long-term options is not known at outset and the example assumes it stays constant. It is important the suitability report draws attention to this.
- Top trends
Principality has relaunched its mortgage range.Its two-year fixed rate mortgage at 4.49% with up to 75% LTV or 4.59% with up to 95% LTV offers free legal fees for remortgages. Alternatively, the fee saver products include a three-year fixed rate mortgage at 5.09% and, as the name suggests, there are no up front administration fees, […]
The European Commission is holding a hearing in Brussels to listen to the reactions of the European mortgage industry and consumer representatives on proposals for mortgage market integration.The Council of Mortgage Lenders urges the commission to concentrate on measures that will make it easier to do business across different member states, not just on measures […]
Following its research into the self-cert and sub-prime markets, the Financial Services Authority has looked into the practices of brokers in the mainstream mortgage market, in particular the quality and suitability of advice given to customers.
In a massive turnaround, Gordon Brown has removed residential properties from the upcoming changes to pension rules.SIPPs and all other forms of self-directed pensions will be prohibited from obtaining tax advantages when investing in residential property and certain other assets, such as fine wines, from April 6 2006.This action will ensure that tax relief is […]
Steve Webb – Director of Policy and External Communications As the Autumn Statement approaches, Steve Webb calls for the Government to stop tinkering with tax relief. Twice a year, in the run-up to the Spring Budget and the Autumn Statement, we face a torrent of speculation as to what changes the Chancellor might make to […]
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