Hi, my husband and I really need sound, independent financial advice. I’ve found an ‘independent financial advisor’ by searching on the Unbiased website (from the Money Saving Expert’ website).
My question is, how do they make their money? When asked by the person I contacted I was told it’s related to the amount we have to invest/need advice about. As we are in no position to invest I wonder about their motivations when providing advice.
Our initial meeting is free but I’m concerned that they’ve asked us to provide very detailed personal financial information about our situation during this meeting. If could provide all this and then find out the advice is to invest etc, something we don’t want to do. Is it worth it?
We have a very large mortgage and need to know if we should sell my previous home (currently rented out) to clear the mortgage. Whilst manageable at the moment the fix rate will end next year and our repayments will triple.
I wish we were savvy enough to make this decision ourselves but I feel you need a degree in economics and a crystal ball in order to make any measured decision these days about the future.
I’ve found an ‘independent financial advisor’ (from the Money Saving Expert’ website) – So..
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Laura
Sounds to me like a practical, logical, common sense thing, do you really need a financial advisor?
Can you afford your higher mortgage payments (yes/no), do you need to do something about it (yes/no), if so your options are downsize to a more affordable property and keep your rental, generate more income somehow (pay rise/second job/start a business, take in a lodger/use a room for an air BnB), reduce other payments (get a cheaper car, cancel unneeded subscriptions, find cheaper deals, don't go on holiday) or sell the rental to cover the mortgage on your current home.
That's about it, those are your options, you just have to pick the one that works for you.
Don't miss: Those that have renewed their mortgage recently and were offered 2 year or 5 year fixed. Which did you go for?
Can you afford your higher mortgage payments (yes/no), do you need to do something about it (yes/no), if so your options are downsize to a more affordable property and keep your rental, generate more income somehow (pay rise/second job/start a business, take in a lodger/use a room for an air BnB), reduce other payments (get a cheaper car, cancel unneeded subscriptions, find cheaper deals, don't go on holiday) or sell the rental to cover the mortgage on your current home.
That's about it, those are your options, you just have to pick the one that works for you.
Don't miss: Those that have renewed their mortgage recently and were offered 2 year or 5 year fixed. Which did you go for?
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Ruth
Use the financial advisor they receive payment through any services they arrange for you but the payment comes from the provider not you
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Eleanor
Watch out for a hard sell of investments they get a commission for . Do not sign up for anything on the day.
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Becky
They will ask personal financial questions to understand the full picture of where you are and where you want to get to you have to be open and honest otherwise the advice won't be accurate, they will offer good sound advice on what to do now, they may also suggest ways to invest anything left over to make the most of it but yilou don't have to do anything they say of you are not comfortable with it
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Norma
For investment, they usually charge a % of the money invested. Advice fee basically.
Once invested, the fund manager usually gives the IFA a % of the fund value on say a monthly, quarterly or annual basis, based on what the IFA prefers their income trail to be.
The ' charges' are usually split between fund charge, platform charge, IFA fee etc. Not unusual to see it split 3-4 ways.
So there is opportunity for earnings with investment.
For mortgages, ask the mortgage advisers.
Don't forget to take a look at: We have no money after paying our mortgage and utility bills
Once invested, the fund manager usually gives the IFA a % of the fund value on say a monthly, quarterly or annual basis, based on what the IFA prefers their income trail to be.
The ' charges' are usually split between fund charge, platform charge, IFA fee etc. Not unusual to see it split 3-4 ways.
So there is opportunity for earnings with investment.
For mortgages, ask the mortgage advisers.
Don't forget to take a look at: We have no money after paying our mortgage and utility bills
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Lea
I sold my house that I rented and cleared my mortgage on the one I own now and with the money left over I put it in ISAs which were at the time 3% and 12 months later dropped. We then withdrew the money from the ISAs and extended the property we live in.
We didn't use a financial advisor.
We didn't use a financial advisor.
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Wendy
They can't give good accurate advice without knowing your full financial details. At the end of the day they are giving you advice, you don't have to take it. Any actions you take will be up to you and down to personal preference.
As far as selling up is concerned, only you know whether to do this but the FA may be able to cover the pros and cons of doing so.
As far as selling up is concerned, only you know whether to do this but the FA may be able to cover the pros and cons of doing so.
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Kathy
I would share your concern about providing so much personal info. You have the reassurance of your previous home, & the collateral in it (if it has no debt on it) so don't worry too much. You could write out for yourselves your concerns & choices, & see if you can resolve any particular aspects.
The Gov't allow Rent a Room, without attracting tax, for example.
Maybe not for you, but something for others to consider, who will be interested in your post. Maybe forego some luxuries & chip away at mortgage, as allowed. Best wishes.
Would you also like to explore: It’s better to never fully pay off your mortgage?
The Gov't allow Rent a Room, without attracting tax, for example.
Maybe not for you, but something for others to consider, who will be interested in your post. Maybe forego some luxuries & chip away at mortgage, as allowed. Best wishes.
Would you also like to explore: It’s better to never fully pay off your mortgage?
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Suzanne
With section 24 and your deal ending I'd be looking to reduce your large mortgage.
How you do that is dependant on your numbers.
What is your outstanding balance on your mortgage?
How much equity do you have in the rental?
What % are you currently locked into?
How many months bills do you currently have as an emergency fund?
Do you have any savings or investments?
Can you access 25% tax free lump sum from a pension?
How you do that is dependant on your numbers.
What is your outstanding balance on your mortgage?
How much equity do you have in the rental?
What % are you currently locked into?
How many months bills do you currently have as an emergency fund?
Do you have any savings or investments?
Can you access 25% tax free lump sum from a pension?
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Rayne
If you sell your rented property you will have capital gains tax to pay, also if you have a mortgage on that property and it's still in its tied in period you will pay penalties in paying it off. Your rented property is generating an income (presumably).
On your residential property, when the mortgage comes up for renewal you could extend the term, so instead of say 25 years extend it to 30 or 35 years, this will keep your monthly payments down, you will be allowed to overpay 10% of your borrowing amount per year without penalties, whilst in the tie in period.
This way your 35 year mortgage will be paid off much quicker. Dependant on mortgage rates at the time I would probably choose a 5 year fixed not a two year, everytime you remortgage there are fees. If you add these fees to your mortgage it will cost you a lot more with the interest, so always better to pay these up front. Hope this helps (I am a fully qualified IFA) xx
Suggested: Has anyone on here got advice or experience of getting a mortgage under these circumstances?
On your residential property, when the mortgage comes up for renewal you could extend the term, so instead of say 25 years extend it to 30 or 35 years, this will keep your monthly payments down, you will be allowed to overpay 10% of your borrowing amount per year without penalties, whilst in the tie in period.
This way your 35 year mortgage will be paid off much quicker. Dependant on mortgage rates at the time I would probably choose a 5 year fixed not a two year, everytime you remortgage there are fees. If you add these fees to your mortgage it will cost you a lot more with the interest, so always better to pay these up front. Hope this helps (I am a fully qualified IFA) xx
Suggested: Has anyone on here got advice or experience of getting a mortgage under these circumstances?
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Natalie
I worked for a financial advisor years ago. They need all your personal information for them to give you correct advise on your finances. Otherwise they will be giving you false advise.
They do a free consultation and then it's up to you weather you want to proceed with their services. Either to help you to invest or take out insurance policies with them or whether you want them to help you with inheritance tax.
If your interested I could provide you with their number, like I say its free.
They do a free consultation and then it's up to you weather you want to proceed with their services. Either to help you to invest or take out insurance policies with them or whether you want them to help you with inheritance tax.
If your interested I could provide you with their number, like I say its free.
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Sharon
I have used our financial advisor for years & for the fee he charges its well worth the money as there are many factors to consider such as what is your outgoings what loan to value rate are they looking at & your personal circumstances & affordability and they can search the entire internet for the best deals & guide you to making an informed choice
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