Connect with us

Investing

STAYING TOGETHER TO GET ON THE PROPERTY LADDER COULD SEE MORE THAN 160,000 RUIN THEIR CREDIT RATING SAYS MORTGAGE EXPERTS

Published

on

STAYING TOGETHER TO GET ON THE PROPERTY LADDER COULD SEE MORE THAN 160,000 RUIN THEIR CREDIT RATING SAYS MORTGAGE EXPERTS

In a market where impossibly high house prices speak of a bleak outlook for young singles, over 80,000 approved mortgages last year came from buyers combining their incomes. However, experts are warning couples they could both end up in a financial mess that could be hard to fix, if their relationship doesn’t stand the test of time.

Last year saw 338,900 first-time buyers approved for mortgages* with around a quarter of the total applying on dual incomes.** But independent mortgage broker Choice Finance is warning those thinking of sticking out a bad relationship just to get on the property ladder that they are running their risk of wrecking their credit history.

Choice Finance believe potential home-owners should be aware that by entering into a joint arrangement, both parties are severally liable. If things turn sour and one party stops paying their share of the repayments, a lender will still demand the full monthly amount from the other party. Any missed or late payments show up as black marks on both credit reports.

Matthew Pennell, Managing Director of Choice Finance says “For those in a stable relationship, a joint mortgage is a great way of navigating the current tricky marketplace, but it isn’t without its own complications and should not be entered into lightly.

“When applying for a mortgage together, both sets of credit ratings are taken into account and what some applicants might not realise is that their partner’s history will follow them if they ever look to borrow money again. If your partner hasn’t been upfront about their spending, it could drag your name through the mud in the eyes of lenders.”

A bad credit rating can not only make getting another mortgage tough, but can also mean higher insurance premiums, refusal of credit card and loan applications, plus potential employers have even been known to retract job offers based on poor credit reports.

Not only can a partner’s credit history cast a lasting shadow, but if a split is acrimonious it can make managing finances difficult in the future. If homeowners want to remortgage or to improve their financial situation by changing to a new fixed rate deal, everyone on the original mortgage contract will have to authorise it. That can be complex if communication has broken down, or if one person is being difficult or spiteful.

If selling looks like the only viable outcome, even this is fraught with difficulty.

“In the event of selling a house when a joint mortgage is in place, ordinarily the profits will be split equally. Obviously, this can seem very unfair if one person has upped and left and not contributed to repayments. Sadly, in those circumstances, you may have to employ legal assistance to level the playing field. Not only is this time consuming and expensive, there’s no guarantee the courts will settle in your favour.”

An experienced and qualified adviser should make any risks surrounding a dual income mortgage clear at the start of the application process, as well as advising on potential options in the event of a split.

Choice Finance source from the entire marketplace to find the best deals on a case-by-case basis. Their team believes transparency from application to completion helps customers make the best decision, whether they choose a joint mortgage deal or go it alone.

For more information, visit www.choicefinancemortgages.com

Investing

COVID-19 and PCL property – a market on the rise?

Published

on

COVID-19 and PCL property – a market on the rise? 1

By Alpa Bhakta, CEO of Butterfield Mortgages Limited

Over the last five years, demand for prime central London (PCL) property has been fairly inconsistent. Sudden peaks in interest from buyers could be followed by periods of stagnate price growth. Nonetheless, the advantages of PCL property investment, particularly by international investors, has remained well known.

Well-funded development and neighbourhood re-generation schemes, alongside an influx of overseas investment, has resulted in a vibrant market with a diverse range of opportunities for prospective buyers.

Nonetheless, the PCL market has not been immune to the impact of the COVID-19 pandemic. During the first half of the year, the lockdown meant physical valuations and onsite inspections could not take place. People in the UK were also discouraged from moving properties unless they found themselves in extreme circumstances.

However, as we now enter the final weeks of 2020, I believe there’re plenty of reasons to be optimistic about the future prospects of the PCL property market. Buyer demand has resulted in a new wave of activity, and this is resulting in significant house price growth. Indeed, it was recently revealed by Halifax that the average rate of house price growth in November was at a four-year high.

Obviously, there are multiple factors that have helped sustain this strong level of house price growth. Most notably, the Stamp Duty Land Tax (SDLT) holiday has succeeded in coaxing buyers back to the property market––be they seasoned buy-to-let (BTL) investors or first-time buyers––by offering up to £15,000 in tax savings on any given property purchase.

However, it’s worth considering the other factors underway in London’s property market. With the UK in a second national lockdown, many investors will be keen on hedging against future COVID-imbued market uncertainty through acquiring safe-haven assets like British property. As you’ll read below, this is having a positive impact on the PCL market.

Investors are flocking to PCL opportunities

The PCL property market has managed to be one of the most active areas of the UK’s real estate market during the whole of 2020. When discussing why this is so, we must first begin by understanding the behaviours of overseas buyers.

Given that international investors represented over half (55%) of all the PCL property purchases recorded in the second half of 2019, anything to further incentivise or dissuade such foreign actors would hugely impact PCL property transaction figures.

Earlier in the year, alongside the announcement of the aforementioned SDLT holiday, UK Chancellor Rishi Sunak indeed announced that he would be implementing 2% SDLT surcharge for non-UK based buyers of British property from April 2021 onwards.

So, for those seeking properties worth over £5 million in the UK capital, a 2% additional cost may represent a substantial amount of wealth. To avoid this, many overseas buyers who may have been contemplating a PCL property acquisition have rushed to buy such properties before this surcharge is applicable. This trend will undoubtedly continue until 1 April, 2021.

Remote working and PCL

On the topic of the PCL market’s future, many property speculators were concerned earlier this year that London’s property market would potentially collapse entirely as a result of remote working. With homeworking set to remain the norm for the foreseeable future, commentators predicted that professionals would escape the capital en-masse in favour of roomier, cheaper properties farther from their London employer’s offices.

While there have been some signs of shifting demand from urban London neighbourhoods to suburban ones, according to Rightmove statistics, there has been no recordable effect on the UK’s property market as a result.

Conversely, property specialists Savills have actually discovered that over half of all transactions including properties worth more than £5 million in the UK this year were all located in just five central London postcodes.

A busy few months

Given the performance of the PCL property sector in 2020, I only foresee this market growing stronger and stronger in the years ahead. Recent developments in the production of COVID-19 vaccine have many hoping that we may return to normality by Spring 2021, which would represent fantastic news for those involved in bricks and mortar, should it transpire.

In the coming months, I anticipate a surge in activity across the PCL market as buyers look to take advantage of the tax breaks on offer. As such, it will be important that these buyers have access to the financing needed to complete these transactions quickly. If not, there is a risk any purchase they attempt might be concluded in April 2021 when the current tax breaks in place are removed.

Overall, I cannot help but be impressed by the performance of the property market more generally during the pandemic. Having experienced slow growth in the years following the EU referendum in June 2016, it is clear that buyers are eager to take advantage of the opportunities on offer. This is particularly true when it comes to PCL property.

Continue Reading

Investing

An outlook on equities and bonds

Published

on

An outlook on equities and bonds 2

By Rupert Thompson, Chief Investment Officer at Kingswood

The equity market rally paused last week with global equities little changed in local currency terms. Even so, this still leaves markets up a hefty 10% so far this month with UK equities gaining as much as 14%.

The November rally started with the US election results but gathered momentum with the recent very encouraging vaccine news. This continued today with the AstraZeneca/Oxford vaccine proving to be up to 90% effective in preventing Covid infections. This is slightly below the 95% efficacy of the Pfizer and Moderna vaccines already reported but this one has the advantage of not needing to be stored at ultra-cold temperatures. One or more of these vaccines now looks very likely to start being rolled out within a few weeks.

Of course, these vaccines will do little to halt the current surge in infections. Cases may now be starting to moderate in the UK and some countries in Europe but the trend remains sharply upwards in the US. The damage lockdowns are doing to the recovery was highlighted today with the news that business confidence in the UK and Europe fell back into recessionary territory in November.

Markets, however, are likely to continue to look through this weakness to the prospect of a strong global recovery next year. While equities may have little additional upside near term, they should see further significant gains next year. Their current high valuations should be supported by the very low level of interest rates, leaving a rebound in earnings to drive markets higher.

Prospective returns over the coming year look markedly higher for equities than for bonds, where return prospects are very limited. As for the downside risks for equities, they appear much reduced with the recent vaccine news and central banks making it clear they are still intent on doing all they can to support growth.

Both factors mean we have taken the decision to increase our equity exposure. While our portfolios already have significant allocations to equities and have benefited from the rally in recent months, we are now moving our allocations into line with the levels we would expect to hold over the long term.

Our new equity allocations will be focused on the ‘value’ areas of the market. The last few weeks have seen a significant rotation out of expensive high ‘growth’ sectors such as technology into cheaper and more cyclical areas such as financials, materials and industrials. Similarly, countries and regions, such as the UK which look particularly cheap, have fared well just recently.

We think this rotation has further to run and will be adding to our UK exposure. This does not mean we have suddenly become converts to Boris’s rose-tinted post-Brexit view of the UK’s economic prospects. Instead, this more favourable backdrop for cheap markets is likely to favour the UK.

We will also be adding to US equities. Again, this does not represent a change in our longstanding caution on the US market overall due to its high valuation. Rather, we will be investing in the cheaper areas of the US which have significant catch-up potential.

We are also making a change to our Asia ex Japan equity holdings. We will be focusing some of this exposure on China which we believe deserves a specific allocation due to the strong performance of late of that economy and the sheer size of the Chinese equity market.

On the fixed income side, we will be reducing our allocation to short maturity high quality UK corporate bonds, where return prospects look particularly limited. We are also taking the opportunity to add an allocation to inflation-linked bonds in our lower risk, fixed income heavy, portfolios. These have little protection against a rise in inflation unlike our higher risk portfolios, which are protected through their equity holdings.

Continue Reading

Investing

Optimising tax reclaim through tech: What wealth managers need to know in trying times

Published

on

Optimising tax reclaim through tech: What wealth managers need to know in trying times 3

By Christophe Lapaire, Head Advanced Tax Services, Swiss Stock Exchange

This has been a year of trials: first, a global pandemic and, now, many countries facing the very real possibility of a recession. For investors, private banks, and wealth managers, these tumultuous times have manifested largely in asset price volatility, ultra-low interest rates and uncertainty about when things may level out, as well as questions about what can be done to safeguard portfolio performance.

The answer here lies within identifying and creating efficiencies to maximise performance and minimise cost, and while there is a slew of options as to how to do this, they are often siloed or have a single USP. Tax optimisation, on the other hand, provides benefits to all, not just in increasing returns for investors, but also in creating economies of scale across stakeholders, creating millions – if not billions – in savings for banks.

Evolving tax reclaim

The tax reclaim process used to be a tedious one banks had to manage themselves, and required detailed, industry and country-specific knowledge to stay on top of constantly shifting requirements and regulations. And when we consider that many countries – such as the UK – allow for capital gains exemptions, tax optimisation may not seem like an integral part of the process. However, this isn’t the case for all countries, and can lead to severe after-tax implications on global portfolios.

Furthermore, even if you’re able to avoid double taxation, getting the money back is not always as simple as it sounds. This, combined with the fact that countries often have contradictory taxation rules or requirements, makes navigating the tax reclaim space a challenge even for those with the right expertise and experience.

Ultimately, providing tax optimisation to investors ends up being a heavy lift for private banks and wealth managers, who often don’t have the right solutions, are relying on outdated technology and manual processes. While this is generally fine for business, it is no longer fit for the purpose when it comes to tax optimisation. To date, knowledge and expertise have been the key to protecting and maintaining profitable investments and avoiding tax leakage. However, through tax optimisation services starting to emerge, portfolio managers can now manage and reinvest easily.

Today, technology has evolved the process so that banks are able to access and submit tax reclaim – and the relevant documentation – online, leaving the tech provider to coordinate next steps with custodians and tax authorities behind the scenes. In essence, taking the legwork out of the process while assuring consistency and completeness in execution.

Simplifying tax through tech

While tax optimisation may seem like an easy choice in theory, it is not always the go-to for every private bank or wealth manager. Without the right supports and setup, including innovative technologies and automation, tax reporting must be done manually, leading to labour intensive processes and huge time wastage. Changing these processes can be overwhelming for those used to a certain way of operating.

By making tax reclaim digital, banks will be more able to optimise returns and gain efficiencies while reducing redundancies and unnecessary complexities. Cloud based solutions or platforms can offer a safe and secure solution for banks, wealth managers, and investors to access and submit any information required, processing the data automatically for conformity and completeness.

It is critical that providers who intend to offer tax services are able to do so efficiently with the right software and data processing capabilities. Not only does this drive continuity in service and efficiencies in process, but it is the only sustainable way to handle such a complex landscape sustainably without wasting time or money.

End-to-end, technologically driven tax services offer a huge number of advantages to private banks and wealth managers, the most important of which is the ability to provide continuity through tumultuous times. As we move through the end of 2020 into 2021 this will only be increasingly important as banks, managers and investors look to provide new services to clients and strengthen existing relationships in a difficult market.

As investors seek to find returns amid the global economic downturn, the demand for innovative solutions will only increase. Technology like cloud-based software, AI, and data optimisation can all serve to improve not just the tax reclaim processes, but the overall client experience within capital markets.  Private banks and wealth managers are suitably equipped to provide these innovative solutions, but those who do not prepare themselves effectively and keep ahead of trends will run the risk of losing current and new clients to someone who can offer more for less.

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

Beyond Transactions: The Payment Revolution 4 Beyond Transactions: The Payment Revolution 5
Finance9 hours ago

Beyond Transactions: The Payment Revolution

By Marwan Forzley, CEO of Veem  The uninterrupted disruption brought on by the pandemic accelerated the need for robust, digital-first...

The UK’s hidden payments crisis: why businesses should rethink their payments strategy 6 The UK’s hidden payments crisis: why businesses should rethink their payments strategy 7
Finance9 hours ago

The UK’s hidden payments crisis: why businesses should rethink their payments strategy

By Edwin Abl, Chief Marketing Officer at Modulr. As the economic conditions imposed by the Coronavirus endure, businesses are facing a...

Investing into a more sustainable future: changing businesses from the inside out 8 Investing into a more sustainable future: changing businesses from the inside out 9
Top Stories10 hours ago

Investing into a more sustainable future: changing businesses from the inside out

By Shawn Welch, Vice President and General Manager of Hi-Cone Worldwide As industries across the world are facing unprecedented uncertainty...

Securing Information Throughout the Supply Chain – Preventing Supplier Vulnerabilities  10 Securing Information Throughout the Supply Chain – Preventing Supplier Vulnerabilities  11
Top Stories11 hours ago

Securing Information Throughout the Supply Chain – Preventing Supplier Vulnerabilities 

By Adam Strange, Data Classification Specialist, HelpSystems  The financial services sector is experiencing extreme disruption coupled with rapid innovation as...

RegTech 2020: The rise of Open Banking 12 RegTech 2020: The rise of Open Banking 13
Banking12 hours ago

RegTech 2020: The rise of Open Banking

This month on the RegTech 20:20 podcast, host Alex Ford is joined by industry experts Gavin Littlejohn, Chairman of The...

The case for AI technology adoption in financial back-office roles to improve efficiency 14 The case for AI technology adoption in financial back-office roles to improve efficiency 15
Technology13 hours ago

The case for AI technology adoption in financial back-office roles to improve efficiency

By Tomas Gogar, AI CEO, Rossum In this era, digital transformation isn’t anything new. Nonetheless, it can still cause a...

Gain financial regulation qualification online 16 Gain financial regulation qualification online 17
Finance14 hours ago

Gain financial regulation qualification online

Gain financial regulation qualification online   Warwick Business School in partnership with the Bank of England are delighted to offer...

COVID-19: Dealing with fraudulent applications for the Bounce Back Loan Scheme 19 COVID-19: Dealing with fraudulent applications for the Bounce Back Loan Scheme 20
Finance18 hours ago

COVID-19: Dealing with fraudulent applications for the Bounce Back Loan Scheme

By Ed Lloyd, EVP Global Head of Sales, Encompass The COVID-19 pandemic is still having a devastating impact on businesses...

EU Commission sets out new intellectual property action plan affecting SEPs, patent pooling and EU design protection 21 EU Commission sets out new intellectual property action plan affecting SEPs, patent pooling and EU design protection 22
Business19 hours ago

EU Commission sets out new intellectual property action plan affecting SEPs, patent pooling and EU design protection

By Andrew White, Partner and UK & European patent attorney at intellectual property firm, Mathys & Squire The EU Commission...

InsurTech is helping to drive the digital evolution of the UK motor retail industry 23 InsurTech is helping to drive the digital evolution of the UK motor retail industry 24
Technology19 hours ago

InsurTech is helping to drive the digital evolution of the UK motor retail industry

By Alan Inskip, Tempcover CEO & Founder If the last nine months have made anything clear, it is that the...

Newsletters with Secrets & Analysis. Subscribe Now