Are you a ‘wise owl’ or a ‘bear of little brain’, when it comes to financial planning? Mortgage buyers, savers and buyers of life insurance all stand to save thousands, by taking independent financial advice before they buy. Here are our financial planning tips.
Be sure of better life insurance
Insurance researcher LifeSearch said that in the last decade, the cost of term life insurance has fallen by up to 50%. It now makes sense to seek insurance advice in order to review your existing policies - you may get a cheaper deal, even though you are older!
Furthermore, 76% of clients who take financial advice buy an insurance deal more suited to their needs than the one originally sought, LifeSearch said.
A principal service offered by an independent financial adviser is finding the client a policy that offers better benefits than the policies they already have, but at a lower cost, LifeSearch said.
Safe as houses: independent mortgage advice
Recent data from the Association of Mortgage Intermediaries (AIMI)* states that by taking independent advice, you will, on average, knock almost £1,000 per year off the cost of your mortgage.
AIMI stated that such clients save, on average, £963 on their annual mortgage repayment, and that literally nine times out of ten an independent financial adviser beats a tied adviser hands down, in finding a better mortgage deal for his client.
Half of mortgage buyers fail to shop around
Despite this, the alarming fact is that almost half of mortgage buyers (49%) still buy their mortgage direct from their building society, without considering any other option.
Even among those who did some preliminary ‘shopping around’, 39% contacted no more than 3 lenders.*
AIMI has pointed out that an independent financial adviser has access to almost 15 times the number of financial products accessible direct from lenders, with a typical bank adviser looking at an average of just 20 products.
The total mortgages market in the UK is nearly 15 times larger than the 1,300 products available direct from lenders, AIMI said.
With over 96% of advisers offering a ‘whole of market’ approach, the advantages of taking independent advice are clear – and those seeking first time buyer mortgages in particular stand to benefit.
Take the tax out of your savings with ISAs
If you have cash resting in a bank or building society account, then ‘resting’ is the operative word, because your money is simply not sweating to provide you with a best return.
This is because the interest on deposit account savings is subject to tax at source. You are needlessly giving more of your cash to the taxman, having paid income tax on that money once already!
Savings advice from an independent financial adviser can clue you in on savings deals that keep the taxman’s fingers away from your stash of cash.
You can, for example, invest up to £3,600 today in a cash Individual Savings Account or ISA (£5,200 if you are over 50), which combines the security of the bank account with tax-free growth.
If you prefer the slightly more risky, but potentially more profitable strategy of putting your funds into stocks and shares, then the tax-advantaged savings option of the stocks and shares ISA may be for you.
You can access both ISA types, investing up to £3,600 this tax year in each (i.e. by April 5th), or use the stocks and shares ISA to invest your full allowance of £7,200.
The total ISA allowance has already risen to £!0,200 for over-50s, and will switch to that level for everyone on April 6th.
*AIMI Association of Mortgage Intermediaries / YouGov survey / 2009
