Is Buy-To-Let A Good Bet In 2013

Demand for rental properties is set to continue to increase in 2013 with four in 10 landlords predicting rises, according to a recent poll.  The LSL Property Services landlord survey from December shows that for every investor who expects to lower rents, 39 expect to increase them.

Of the 1,223 landlords polled for the survey, 10 per cent are anticipating greater than 5 per cent rises.

It follows last month’s report by the Association of Residential Letting Agents predicting demand to significantly outstrip supply for landlords in 2013.

As house prices have rocketed in the last decade home ownership has become more difficult for young people to achieve.

Statistics from the Council of Mortgage Lenders show the average age of a first-time buyer standing at 33 and rising. Deposits are tough to raise, mortgages are hard to obtain and houses are expensive. Many are being forced into renting, particularly in areas where homes are expensive such as London and the south-east. Tough mortgage conditions are dovetailing with demographic trends to boost the UK buy-to-let mortgages.

Whether it is the greater desire for flexibility young people, immigrants needing housing or a growing student population renting has been the answer over the last decade.

These trends create a huge opportunity for private landlords and boosted demand form tenants, pushing up rents and creating huge opportunities for good returns.

How do I become a landlord?

The potential profit to be made by entering the UK buy-to-let market in 2013 is clear but how do you get started?

Aspiring landlords will need to choose a property that can be rented with a specific target in mind. It could be students, young people or even families. The next step is to get your hands on a buy-to-let mortgage, which operate quite differently to your normal mortgage.

Firstly, you will need to raise a deposit. The level of deposits required for buy-to-let deals has relaxed in recent years but the barrier to entry is still high. The minimum deposit will be 15% of a property’s value and such deals remain rare with most lenders requiring deposits of 25% to 40%.

It is also worth bearing in mind that the lower the deposit raised the higher the interest rate you will pay for the privilege.

Secondly, the affordability criteria is not based on your own personal salary but on the ability of the house to generate rental income. Lenders will have ways to evaluate expected rental income and this should be the basis of your application.

Which lender should I choose?

For amateur landlords with two or three properties the main players are BM Solutions, part of Lloyds Banking Group, and The Mortgage Works, part of Nationwide Building Society.

Between them these two lenders take up the lion share of buy-to-let lending in the UK. They can offer good rates but as the biggest can be more inflexible than the smaller, specialist lenders.

But in the last two years a growing number of banks and building societies have entered the market as a result of growing tenant demand.

Banks such as Santander  and Barclays are making the market more competitive and pushing down rates along with prominent building societies such as Skipton, Yorkshire and Coventry.

Amateur landlords now have a wide choice of lenders to choose from and a good mortgage broker can compare the costs and criteria across the market.

There are also specialist lenders such as Paragon Mortgages who cater for professional landlords with a number of properties. Paragon will only deal with professionals and not the amateur landlord with one or two properties to rent.

Is it worth it? 

Getting a buy-to-let mortgage is much easier than it was a few years ago with a growing number of lenders offering 15% deposits. More lenders is also creating less stringent criteria and better rates.

As a landlord there is always a risk of void periods, when no rent is received, but the mortgage payments still need to be met. There are also maintenance costs and potential drops in property prices.

A buy-to-let mortgage is an investment product and should be seen in the context of the associated risks. But the UK property market has weathered the storm well on property prices and rental yields are strong making buy-to-let a potentially good bet for 2013.

10 Ways to Stay On Top of Your Finances in 2013

With January almost at its end, it’s important to think about how far you’ve managed to get with your financial organisation for 2013; you may still be trying to clear off Christmas debts, or you may be looking to budget for the next few months in order to afford a holiday, or put some money aside. What are some of the best ways, then, for staying on top of your finances in 2013?

1 – Create Better Tax Records

While the tax filing deadline for 2011-2012 has almost passed, it’s worth going over your record keeping for 2012-2013 – this means keeping records of invoices and receipts for business expenses, as well as storing other receipts, and checking your tax code when you leave a job and start a new one.

2 – Get the Right Loan

If you’ve struggled in the past with high interest and debt, consider switching your approach to loans; try to avoid payday lenders, and their easy but costly loans. Instead, look towards companies that can offer longer repayment periods, and more balanced rates of interest.

3 – Re-Organise Your Files

There’s nothing worse for your financial planning than having to sort through bulging files and loose pieces of paper. Go through what you have, and sort papers into different files for your current accounts, savings, debts, credit cards, insurance, and other parts of your overall financial records. Consider scanning records into your computer as you go, as this will reduce your paper trail.

4 – Simplify Your Credit Card Debt

It is possible to simplify how much you’re borrowing on credit cards by transferring older cards onto a new one; many lenders now offer 0% rates on new balance transfers for a fixed time, which can help you to consolidate your repayments.

5 – Check Direct Debits

Make sure that you don’t have any old direct debits that you’ve forgotten to cancel; these might include old charity payments, magazine subscriptions, or payments to online DVD services. Sometimes these can continue to make payments if you forget to cancel them in time.

6 – Start Online Banking

If you haven’t do so already, start an online bank account; you can track your spending in much easier ways, and can also make payments and manage direct debits without having to go into your local bank branch every time.

7 – Get Serious About Saving

This means looking into long term savings accounts, which can include ISAs – tax free, ISAs allow you to pay in about five and a half thousand pounds per tax year, with options also available for investment ISAs.

8 – Make Use of Apps

You can manage your finances via your smartphone through apps like Mint, LearnVest, and Balance, which can either be synced up to your online banking, or configured for you to manually enter in your spending and income – the apps can then break down how much you’re spending, and can provide detailed stats on how your budget may be being exceeded.

9 – Use Your Local Credit Union

You can gain access to lower rates of interest and more stable emergency loans than payday lenders by joining your local credit union; putting your savings in your credit loan can mean that you benefit from a local lending agency that can provide safer alternatives to emergency loans.

10 – Keep Receipts

Try not to throw away paper receipts if you’re having problems with your spending. Keep receipts filed for a year, and go through them once a month to remind yourself of how much money you’re spending on different parts of your budget.

Why Do You Need A Divorce Lawyers For Your Marriage Split?

This question may seem rhetorical but it can be the biggest and most important decision you make in your life. Once the grave choice has been made the end a marriage, the pragmatics of the situation takeover, and can become infinitely complicated. There is no such thing as a simple divorce, but some are certainly simpler than others. A divorce can be painful and traumatic, but it doesn’t have to be. Involving a professional to facilitate and mediate proceedings can save you time and energy, and potentially years of your life. Whether the end to your marriage is amicable, antagonistic or apathetic, you need a divorce lawyer to take care of the legal ins and outs of your separation. A person considering divorce should always speak to a firm that specialises in Family Law, such as LFS legal.

There are always loose ends left over from a marriage or a long term relationship. There are many facets to family law that are designed to deal with this sort of thing, just as there are many facets to the end of your marriage. These can include financial and property disputes, divorce proceedings, parenting orders, de facto and same sex relationships, relocation applications and of course, division of assets. Laws are written with a view to best protecting fairness and the interests of both members of a couple. Don’t risk putting off divorce proceedings or thinking that you can handle things yourselves. Family lawyers have seen hundreds of cases like yours before, and will know the best course of action for you.

Legal services involve more than just documents and transcripts. Lawyers are trained to see the big picture and the best outcome for their clients. Having a lawyer advise you on best courses of action for success from a legal point of view is essential for all people or businesses looking to go to court.

Know Different Types of Insurance Policies

You may be a twenty years dude or a 50+ old chap, a rich man or a poor fellow, a professional or a student; one thing is common to all the stage that you may be in – buying insurance. It is something that gives you a peace of mind that whatever danger suddenly erupts in your life, you will always be taken good care of. Here are some different types of insurance that you must know before investing in any one of them.

Home Insurance: Every home owner must go for a home insurance coverage to protect his nest from unfortunate happenings. If you consult an insurance agent, he will make an assessment of how much it will cost to get the house rebuilt with the same quality materials. The regular premium that you have to pay for your insurance buy depends on the current valuation of your house.

Car Insurance: It is one of the most common insurances availed worldwide. It is quite natural for you to make sure that all coverage is met. However, it may not be a necessity if your car is fully paid for. If you still decide to get full coverage on such car, it may cost more than what you have spent for your car buy. So, only fulfill the bare minimum as required by the state you are living in.

Life Insurance: This is most probably the very first choice for majority of the insurance buyers. You can put the name of the nominee in your insurance form. In event of your sudden demise before completion of the insurance term, money will be handed over to the nominee. Life insurance is really good because it always ensures that your kids will be under best of care even after your untimely death. Your spouse will get enough for maintenance of house.

Health Insurance: The title says it all. Such insurance provides coverage for surgical expenses, medicines etc. You can buy a single health insurance or family health insurance. Needless to say, the second type requires you to pay more as premium.

Renter Insurance: It is not a familiar type for most of the laymen. Whether you own a home or not, you can always avail this insurance to protect your belongings from some unforeseen happenings. If your house or some of your precious possessions are damaged due to fire or other calamities or burglarized, this insurance will help you recover a part of what have got lost. Even many landlords now want their renters have such coverage.

How Do Contractors Get Paid?

As a freelancer, the last thing you want are financial woes or tax problems; and you most definitely do not want the taxman chasing you down for outstanding payments.

It is possible to work solo and avoid the above scenarios. How we hear you say? Well by employing good bookkeeping practices, of course. And one of the best ways to keep your paperwork in order is by getting paid on time.

It would be lovely to live in a world when coins grow on trees and we can pay our electricity bill with sweets. Unfortunately, the only objects that grow on trees are fruit, and most utility providers would raise an eyebrow if you approached them with lollypops and jelly babies to pay your monthly bill. 

When you are employed on a permanent basis, you don’t need to worry about getting paid because your employer does all the financing for you. However, when solo, you are responsible for your own finances. You need to chase your clients for your wage, and issue invoices for the work carried out. 

Want to make sure you get paid? Read on. 

Issue the right invoice

Most employers, regardless of the industry, will require some sort of invoice. Invoices can vary in terms of structure but fundamentally they all need the same pieces of information.

You must include;

  • Your contact details
  • Invoice name/date
  • Description of work carried out
  • Total billing price
  • Method of payment

You can find various templates online such as this, and this. Alternatively, why not create your own and put your individual style on it?

One thing is for sure; an incorrect invoice will only give the client more reason to not pay you on-time; so safeguard yourself by sending out an accurate statement.

This is the very first step to getting paid. If the client delays paying you, this is in fact a breach of contract, and gives you the legal right to stop working for them. If you do not receive payment, send them a reminder and then follow this up with a legal action letter.

Put a request in writing of payment within 3 working days, and explain that you will proceed with legal action.

Control the payment day

One method that you can carry out to make sure you get paid is to have jurisdiction over when you are paid. Do you want to be paid weekly, or on a project basis?

Obviously the risks are reduced the sooner you demand payment, but if the whole project is only short-term, it may not be worth being paid weekly.

If the business is small and you have never worked with them before, arrange a process that everyone is happy with.

Please note the average invoice period is usually 30 days’ notice, and most businesses prefer to receive all invoices at the end of the month. Bear this in mind when working out your finances.

Give yourself a safety net

As with anything in life, there are risks but you can minimise the danger of not getting paid by using contracts.

These are legally binding documents that tie both parties together, and give you the legal high ground should a company refuse to pay you.

Is a contract expensive to make? Hiring a lawyer can be costly but you can get free contracts online such as PCG, Freelancer Advisor. 

Employ experts

Simply put, one of the best ways you can safeguard yourself to get paid is to hire experts. There are firms that specialise in debt recovery and accountancy.

They can do all the hard work of chasing people for payment, leaving you simply to get on with the job that you are good at.

Do you really want to be spending your valuable time contacting person after person? It can be a very long-winded process. Save yourself time and money by hiring an accountant.

So there you have it; now you should know how to get paid! Make sure you do your research before taking clients on to make sure they are financially credible. You can do this by issuing a credit check, or checking Companies House to see that they are legitimately registered.

(All Images courtesy of Shutterstock)

This article was written by Nixon Williams, the specialists in contractor accountancy services in the UK. Click here for more information on taxes and budgeting advice.

How Can I Save Money to Cover Care Home Fees

Life expectancy is increasing rapidly.  Over the last 50 years, the average life expectancy across England and Wales has increased approximately 10 years for men and 8 years for women.   Meanwhile, the rate at which healthy life expectancy (the length of time we can expect to live without incurring significant health problems), is increasing less rapidly.

Whilst we’re all living longer, the cost of living in a care home has risen by 5.6 per cent– more than twice the rate of inflation. According to research compiled by Prestige Nursing and Care, the average annual UK bill for a care home room is now a massive £27,404.

So, with the statistics looking like they’re against us, the question is: what can we do to save money for our care home fees?

Put into your company pension plan

Perhaps stating the obvious, but looking into your company’s pension plan is the easiest and most invisible way to start accruing resources to cover care home fees.  It’s never too early to start, and because you never have it in your account to begin with, you’re less likely to know it’s there until you need it.

Put money into a savings account

Aside from a company pension plan, putting aside a private nest-egg to save money for retirement can provide a valuable second resource for when the time comes to give up work.  Even a savings account with a low interest rate will, over time, add up to a significant amount.  Assuming the average person needs to work for around 40 years of their life, setting up a direct debit of just £60 per month when you start work can add an additional year of care home fees plus interest to your retirement pot.

Make tax-efficient withdrawals to stretch the life of your savings

Once retired, one way of ensuring your assets last as long as possible is by drawing money for everyday living from taxable accounts first and foremost.  This will allow tax-advantaged accounts to compound for as long as possible, ensuring you get the absolute maximum from your savings.

Sell your house

If you own your house then selling up when the time comes is a really easy way of covering off a big chunk of your care home fees.  If the housing market is down when you need to access money, or you’re reluctant to sell up for personal reasons then there are options available.  Releasing equity from your property is a way of getting cash from your property that is not repayable until it’s sold.

However, depending on circumstance, releasing equity is not always the best option.  It’s important to take independent legal and financial advice before deciding to release equity from your home.

Invest on the stock market

Work with a brokerage to set up an investment portfolio that will build over time.  It is possible to manage your portfolio yourself, but by seeking professional advice a broker should be able to recommend the right investments for your circumstance.  For example, a young person who can afford to take risks may be advised to take a different portfolio than an older person who needs to steadily maximise what they have.

Find out about your benefit entitlement

More than £5 billion of means-tested benefits go unclaimed by older people every year.  The NHS Continuing Care program has been established to help alleviate the financial deficit that elderly UK residents incur in later life by working to provide assistance to those who qualify under a stringent set of guidelines.  Through this program, the NHS are obliged to fund the full cost of care, including accommodation and nursing costs if you live in a care home or pay for nursing care at home.

So, when it comes to saving for care home fees, time is of the essence.  The sooner you start, the more chance you have of building up a reasonable sum without having to incur a hefty monthly deficit from your salary. But if you’re now considering relocating to a care home and are worried about the fees, some of the above options are available to help you maximise your finances.

How To Prepare Monthly Budget Effectively?

Oh, my god! Is it necessary to plan a budget? This is the first reaction from majority of the people. Shiver courses down through the spine at the very utterance of ‘budget’. In reality, budget is a structured format of your weekly/monthly/annual expenses. You can keep track of where your money goes and distribute your earning in the best possible way. Let’s go straight to how you can prepare a budget more effectively.

Create a spreadsheet in your computer. If you like to go the traditional way, buy a paper file. Create columns and rows to list categories and corresponding expenses. The headings in the columns will reflect the categories of your monthly spending whereas the rows will contain the names of months.

The first few columns must be devoted to daily expenses like grocery bills and day-to-day travelling expenditure etc. The next few categories should be reserved for regular monthly expenses like electric bills, mortgage payment, car insurance, health insurance premium, tuition fees of your children and other must-pay categories.

A separate column should be created under the heading of ‘Miscellaneous’ or ‘Extras’. It is better if the column has sub-categories with suitable heading. Most of the miscellaneous expenditure includes unplanned and incidental spending. However, some expected yet irregular spending can also be placed under the heading. If you are to attend an upcoming wedding party or birthday celebration or marriage anniversary, then you are likely to buy gifts for the event. The expenses will be included into this added column. Unexpected expenses for medical treatment or other purposes should also be contained in this category.

Maintenance cost must also figure in your monthly budget. It is not that you have to pay for your maintenance bills month in and month out, still it is important to have a separate sub column under the ‘Miscellaneous’ or ‘Extras’ category. Car repairing, change of water pipe, electrical appliances replacements etc. go into this sub-category.

Do you donate to charitable organization? The amount donated for charity purpose must not be missed out in your budget. The idea behind preparing a budget is to keep a track of your every expense.

Are you a travel buff? Exploring the unexplored – is it sort of addiction for you? If yes, then you need to add another column which will have ‘travel’ in its heading. Input in the estimated cost you need to bear for annual excursion. Depending on where you are heading to, travelling cost may be a paltry figure or a tidy sum. Whatever the amount is, you must note it down on paper or input it in the virtual file.

Benefits of preparing a budget

The best benefit of preparing a budget is you can have a track of possible expenses in more structured format. Does your take-home income exceed the budget? Voila! That sounds really great. Don’t make a waste of the left-over; instead use it to pay off old debts or for an investment deal. But if the case is polar opposite, then you need to work on your budget once again. Curb out the impulsive expenditures so that you can effectively balance your budget.