Mortgages

Those of us with mortgages – and this is the biggest debt most people will take on – should realise that the management of it is very important. There is a whole range of types of mortgage - if your income is relatively low and you want the security and certainty of knowing what your out-goings will be each month then a fixed-rate mortgage is a good thing for you - you will pay a bit more per month for the security it brings. Every two or three years I review my mortgage and change according to my circumstances. I would recommend that you take out a mortgage with a ‘mutual society’ rather than a bank. This is because they are not making profits for shareholders but for their members and so they give better interest rates.


In recent years in this current economic era new mortgage borrowers have found that the size of the deposit/down-payment required from them has increased and so it has become more demanding financially. You need to review your mortgage arrangements regularly and move or consider moving regularly. There are comparison websites you can look at, or mortgage advisors you can talk to, who will give you current information on this.

Many people do not realise that if you can over-pay on your monthly mortgage payments, even by a few pounds, it will make a massive difference in later years. This is allowed to a certain extent by the terms of most repayment mortgages, other types (e.g. endowment mortgages) may not let you do this. If you can’t manage, say, an extra £25 a month, then consider rounding up your monthly payment to the nearest £10. Done early on in the life of a mortgage, even this small move could save you two or three years of payments at the end of your mortgage term!

Another thing to consider is to shorten the term of your mortgage. This will mean you pay more per month over fewer years. Mortgages of 25 years were the standard that was set up because there were no computers to work out all the different payment options for shorter-term mortgages - it can all be calculated very quickly now. And make sure that your interest rate is calculated on a daily basis rather than an annual interest rate – that will also make a massive difference.

This series of blogs is based on the annual Stewardship seminar from King's Church London

Retirement and long-term planning

You need a plan for what you are going to live off when you get to 65 or 70+. I have given more thought to this recently as I approach my 50s. From 0 – 20 if you are lucky, you are leaning into your parents, from 20 – 50 you get started in life and support yourself - but from 50 onwards you need to think about what you are going to live on from 70 through to 95 (possibly!) as we are tending to live longer these days! Ideally you may want to be putting money aside in your 20s and 30s so that by the time you are 50 you have an amount building up.


The government want us all to get to the situation where everyone makes provision for their retirement through a pension. People talk about pensions a great deal but aren’t so hot on doing something about it! On the whole, less and less people are in a company pension now but if you are in a government pension they come out well in comparison to those in the private sector. I would suggest that in this area it would be good to talk to a professional pension advisor, someone who is trained and competent.

If your family has handled money well in previous generations then it could well be that you will inherit money from them in due course. If you are likely to inherit money then I would suggest that you would need a long-term financial plan - like my 25-year plan. In my family my Dad has always been open about money – he has told me how much he is earning and how much he has in the bank. This is not a common approach for British people of that generation - but it is one of the reasons that I am open about money in the church!

Think ahead! I would repeat - please make a will. It will cost you about £100 to set up a basic will with a qualified legal person but you can go to W H Smith and get a basic form if you can’t afford £100. You will need a witness for your signature to make sure that it will stand up legally. It is better, for the peace of mind of both you and your family, to have something rather than nothing at all.

This series of blogs is based on the annual Stewardship seminar from King's Church London

Investments!

Earlier in this series of blogs we looked at the money that you spend - but what are you going to do with the money that you have in your savings? This is essentially about your attitude to risk! And be clear-eyed – there are no schemes that can guarantee speedy riches so, if you see those and are remotely attracted by them you need to realise - if they worked as well as their proposers say they do... we would all be doing them!


You have to make a judgement about the level of risk involved in any investment – low, medium or high - and these will change all the time depending on the economic environment. Up to this point in my life I have been a decidedly low-risk investor. My Dad taught me – only go ‘high-risk’ with money you can afford to lose and I have never got to the point yet where I have enough money that I can afford to lose any! I am ‘low-risk’ by inclination but I want to be tax-efficient too, so I have put our savings into ISAs - a mixture of ‘cash’ and ‘share’ ISAs - and some into pensions. There are also medium and high risk investments available – if you have that amount of disposable income you should definitely get some impartial professional advice about such investments.

This series is based on the content of the annual Stewardship seminar from King's Church London

Making things easier for your family

In looking at financial matters, make it as easy as possible for those who will sort out your estate if you were to die. Imagine a situation where a husband dies and has always looked after all the financial affairs for the family. Suddenly his wife has to take over this important area and has to find out where she can get the money to pay the household bills, buy food – or even pay for the funeral. She may be completely unaware of how much money is available to her. Many couples would identify with that scenario and realise that only one of them knows what’s going on financially.


It would be a good idea to go through the following questions together and to write down the relevant details:

• Who do I ring if I need to get access to money?

• Where do I find any paperwork?

• Who should be contacted regarding pension payments? This is very important following a death.

These practical details can be helpful, saving a lot of time and a great deal of worry for grieving family members at a time of particular stress, so it’s a considerate thing to have sorted out ahead of time.

Make a ‘To Do’ page - a list of the order in which things should be done following a death and where to go. It may not only be helpful in the case of a death but also in the case of aging parents who may not be functioning as well as they used to and need some-one else to take care of their affairs when they can no longer do so.

This series is based on the annual Stewardship seminar from King's Church London