Family Finance Weblog

Author: Dot Piper

There has been a tremendous boom in overseas property ownership. Whether for personal use as a family, holiday or retirement property or as an investment property, the market shows no sign of slowing down.

In the excitement of making the decision to go ahead, it’s easy to overlook the importance of taking professional advice with regards to the legal situation.

The law in respect of property and mortgages abroad is very different from that in the UK. Local practices, customs and regulations are very different and vary from country to country. One of the most common mistakes made by people purchasing overseas property is to assume that everything will be similar to the UK and there can be nasty shocks in store when the reality of the very different legal system strikes them. Television programmes have highlighted problems in proving ownership, lack of planning permission or plans for three lane highways cutting virtually cutting through the garden.

It needn’t be like this. Expert advisers are in a position to guide buyers through the maze of foreign property purchase and to help them to get independent and specialized advice from professional people such as surveyors, architects and the all-important solicitors.

As far as financing the purchase, it is usual to think about either raising the money on existing UK property or alternatively to arrange a mortgage using the foreign property as security, via an overseas lender.

Assuming you own property in the UK and are buying your overseas property as a holiday home or investment, the easiest route to take would be to arrange a loan on the equity in your home. By releasing this equity you would be able to complete any deal without undue delay.

Alternatively, it may be possible to get an improved interest rate by raising a mortgage on the overseas property you plan to buy. There is an added advantage in this option, in that the legal title of the property would be checked by the lender, who would ensure that all other aspects of the purchase would be in order, such as registration in the buyer’s name, valuation and checking of any building certificates, regulations and planning permissions.

European interest rates are generally lower than those in the UK. Because of this, with Spanish property, most buyers are advised to take out a Euro mortgage, although technically you could choose all major currencies. If buying property in France or Italy then a Euro mortgage is required.

Euro mortgage repayments must be in euros. There will be some currency fluctuations and this should be taken into account when planning your monthly repayments.

Your adviser will be able to help you with the choice of which mortgage is for you. For instance, if you intend to rent out your Spanish property via a Spanish agent, any income will be in euros. Rental received can be paid into a Spanish bank account to help to fund the mortgage repayments, thus avoiding any fluctuation in currency when transferring money each month. Obviously in this case a Euro mortgage makes sense.

A sterling mortgage would avoid the fluctuating currency problem if the property is purely for personal use and there is no foreign income. However, the savings on interest rates still make a Euro mortgage an attractive proposition.

For help on overseas mortgages, we strongly advise you to take some guidance from the experts. This can be found by going on-line to find a broker, where you’ll find their knowledge of the whole foreign property market invaluable.

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Author: Richard Norfolk

With ‘unsolicited mail’ campaigns and extensive advertising, it appears that car insurance is very popular amongst providers. The sheer variety of schemes being offered to satisfy different requirements, when multiplied by the number of companies active in the market, presents motorists with a choice of routes as complicated as a road map.

Most providers have some sort of restrictions in place to filter out the higher risk drivers. These, including the apparently accident prone and those who flirt with the law by amassing points on their licences, are not popular with most insurers. Their cover is left to specialist companies who are prepared to take them onto their books in exchange for very high premiums.

There are also what might be termed ‘specialised exclusions’, where drivers are excluded by a company because of their record. For example a driving ban will result in refusal of cover from the Halifax, whilst a drink driving offence or 12 penalty points on your licence will result in a ‘no’ from MoreThan.

If you are in the sort of category where you are penalised for misbehaviour, then it is only right that insurance companies avoid passing your hefty costs on to more conventional customers. If you are anxious to get driving again, you could find it hard work trying to shop around for a company which is prepared to take you on. In these circumstances a broker will do a lot of the ‘leg work’ for you, and than can be no easier way to set this enquiry in motion than a visit to brokers web sites.

The remainder, those run-of-the-mill motorists who manage to negotiate life’s roads with only the occasional bump, are then faced with such a variety of choice that deciding on which insurer to go with could easily occupy far more time than the decision is worth. Perhaps the best start is to decide if you fall into one of the special categories which offer advantageous terms.

Gender is perhaps as good a starting point as any. Chauvinistic male motorists should consider the fact that their female counterparts can get special terms, based on the statistically safer driving of female motorists. However, the ladies should examine the terms and costs on offer rather carefully, as it does not necessarily follow that the best deals are offered by the specialists.

With any insurer it will pay to look beyond the ‘puffing up’ of the adverts and check out the finer detail. Will your no claims bonus be protected? Will the approved repairers supply a courtesy car? Is breakdown cover included within the basic cost? There tend to be a lot of extras available which in some cases will be covered in the basic cost, but where they are not provided as standard they could really load your premium.

Amongst the questions to be answered will be what level of excess you are prepared to pay, where is the car normally parked i.e. road, drive or garage, is an alarm or immobiliser fitted, do you need cover to drive other cars, and even – are you married? Single drivers often pay a higher premium, but don’t try getting married just to cut your insurance costs!

On the other hand you need to ignore ‘benefits’ which you are unlikely to need. Free cover for motoring abroad for example, is a waste of money if your car will never leave these shores. In this case you have to remember that there is a cost factor built into the premium for any ‘free’ service, unless of course you have discovered the contradiction in terms – the totally altruistic insurance company!

Many other groupings exist, where favourable terms may be offered to drivers meeting specific criteria. These can relate to age, employment, driving experience, even the make of car to be covered.

Whilst age can be used to apply ‘penalties’ in terms of cost for older drivers, where possible loss of alertness or slower reaction times are felt to make accidents more likely, the slightly younger can have an advantage. For example, those just retired are likely to cover less miles per year, and will almost certainly do the greater part of their motoring when the roads are less busy outside the rush hours.

Civil servants have for many years been able to get advantageous terms on a variety of insurance cover needs, with deals negotiated on their behalf on the basis of the large numbers who are likely to respond to the offers. It may be worth enquiring if your employer or your trades union has any such arrangement.

Owners clubs, comprising enthusiasts who drive a specific make or type of car, sometimes make similar arrangements for members whose choice of car could invoke insurance cost penalties. Classic cars of even recent vintage can be very costly to repair, especially when parts are difficult to obtain, and performance models have obvious dangers for drivers and insurers, including repair costs for drivers as well as cars!

It is all a bit of a minefield, so your best move has to be to go online and find a broker who will do most of the hard work for you, but first of all decide on the options which you need and which ones you can manage without.

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Author: Emma Mayo

Speed cameras are already the bane of the driver’s existence. There’s a lot of dispute as to whether they do help save lives, but one thing’s for sure, the Government is making a lot of money out of our collective inability to keep within the speed limits.

If you thought it was bad before, a new speed camera is being tested at the moment that could take the concept of being watched on the roads many steps ahead of its current format.

The new device, manufactured in South Africa, is a digital red light camera and speed camera that can be used both in mobile speed traps and fixed-camera setups. The strength of the device lies in its ability to perform more than one task – meaning double trouble for motorists. Not only can it take up to 100,000 digital images, it can also monitor three lanes of traffic at once. And it can be used as a mobile hand-held camera by police during the day shift, and then stored in stationary housing to continue its job throughout the night. It can also be controlled remotely so the camera can focus and zoom in as required.

Every picture that’s taken is accompanied by GPS time, date and location information, all thanks to WiFi and GSM systems, then the information can be downloaded to a remote base using mobile phone technology. Made by Truvelo, the ‘D-Cam’ will be ready to go on Britain’s roads just one year after it’s approved by the Home Office, which is set to happen imminently. It’s already proved popular in South Africa and Brazil.

At £30,000, the system isn’t cheap, but if you take into account the cost of a speeding fine - £60 – and then multiply that by 100,000 (the amount of pictures the camera can store) and that’s a significant profit margin for the authorities! Truvelo make around 20% of the speed cameras currently on British roads, they can only take 700 film pictures, so they need reloading on a regular basis – so the difference between the two technologies is quite significant.

So what does it mean for motorists? It means there’s even more chance of getting caught speeding. And if you receive a speeding fine, that will affect your car insurance premiums. With a quarter of British households having at least one speeding fine, which gives you three points on your driving licence, it’s a big issue, and it’s giving the car insurers an opportunity to cash in.

Recent AA research found that a driver with a speeding offence could expect to pay an average of 20% more on car insurance. Even if your record was as clean as a whistle before, you will be penalised. Don’t be tempted to withhold the information from an insurer either, as if you come to make a claim and the information is discovered, your policy will be declared null and void.

So if you get caught speeding, and the chances of that are likely to increase once the D-Cam is introduced, what can you do to keep your car insurance at an affordable level? Be extra sure to shop around. Never blindly accept a renewal from your insurer without checking out the competition, and get as many quotes as you can to make sure you’re not paying more than necessary. Many drivers pay more than they should because they fail to get a few quotes – and if you have points on your licence for speeding, it’s more important than ever to keep on top of things. Go online for the cheapest quotes, and be sure to get as many quotes as you can!

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Author: Catriona Singfield

In the UK, as with the rest of Europe, we are now living longer than at any time in the past – and the figure is rising. The average lifespan for a British man is now 76.2 years, with a woman living even longer at 80.7 years. This is excellent news, but sadly there is a downside – we may be living longer, but we’re not as healthy as our fellow Europeans.

According to an EU survey on the subject, conducted over a sample of 60,000 people, longevity is not the only index of old age we should be paying attention to. The survey made a study of age of death, sickness and overall health. Healthy life years, the amount of time we can expect to enjoy an active, able old age, are just not matching up to lifespan.

Out of a average life of 76.2 years, a British man can expect to enjoy only 61.5 years in good physical condition. In the European league table of health, we are fifth from the bottom.

However, it is important not to jump to conclusions too early because as yet, no-one is sure exactly why the study has come up with these findings. There are wide variations across Europe, with cardiovascular disease being far more of a risk the further north you live. According to action group Help the Aged, we are putting ourselves at risk because we do not take one simple factor as seriously as we should - the cold. Failure to wrap up can lead to thickening of the blood, perhaps even a fatal clot. Surely an incentive to keep warm!

The healthiest Europeans are the Italians, with an average of 70.9 healthy life years over a total lifespan of 76.8 years. It’s well known that in Italy, the national diet includes a lot of vegetables and fish, with few saturated fats, which may be one reason why the Italians are living more healthily for longer. Again according to Help the Aged, these differences could be caused by several factors: better diet, the quality of the Health Service, the weather, and prevalence of smoking.

Indeed, in a recent league table comparing healthy life years and lifespan, Italy is number one. Next come Spain, Germany, Poland, the Netherlands, and the UK, followed by France, Hungary, Portugal and Finland.

The figures are interesting. For example, a Finnish woman can expect to live for 81.8 years, but only 56.5 years will be free from ill health, defined in the study as a disabling condition.

Taken together, all these factors point to one conclusion: the average man or woman would be well advised to look for good critical illness cover, not only life insurance. Consider this sobering fact: the average age of retirement now comes after the average age at which ill health sets in – by between three and a half and eight and a half years. The recent rise in official retirement age is matched by many people’s expectations of being not just available, but able to work into their 70s.

So what is critical illness cover? Briefly, this is insurance that pays out if you are diagnosed with a serious condition, for example cancer, a stroke, or heart disease. Be sure to check the policy carefully, as not all policies cover the same conditions. Consider that such an illness can affect your entire lifestyle. You may need to change or even give up your work, or alter your house or car. If you have good critical illness cover in place, at least you can be sure that your needs can be met financially.

If you have a family, you may like to consider what the effect would be were you not there for them. No-one likes to think of the worst happening, but it is only sensible to take a careful look at your life insurance options.

Fortunately, it’s easy to find out good information on these types of insurance, for both cost and cover. Go online and find an Internet insurance broker, who will be able to search for you to find the most competitive quote.

Once you have your plans in place, there’s only one more thing to do – beat those tables and enjoy your old age!

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Author: Catriona Singfield

Searching for mortgage information these days has never been easier – if all you are looking for is another advert promising you the best, simplest, cheapest, most wonderful product ever! How do you unravel the meaning from all these fantastic claims?

Not to worry – help is at hand! Here we sort out the different mortgage types from each other, and offer some advice on choosing the best one for your needs.

We begin with that first-time favourite, the discount variable rate deal. The good side is that this mortgage has an interest rate tied to follow the company’s standard variable rate, and also offers a cost reduction. The downside of this particular variable version is just that: it varies and may therefore rise unexpectedly.

A slightly different type, the tracker variable rate, is also tied in but this time to the base rate. Tracker rates change only when the base rate changes – and this rate is set by the Bank of England, which may give more stability. Trackers are a friendly face in the mortgage jungle, being simple in concept and easy to understand. They are also available in two variants, short term and lifetime.

A common way to try to make sure you stay with the best rate out there is to re-mortgage after a favourable deal ends. This is a sound idea, as long as you manage the all-important timing just right. You also need to find a new deal that matches (or betters) your old one. If you don’t make the change fast enough, you can end up paying the lender’s standard variable rate instead. It can be a useful strategy, but you’ll want to remain open to switching to a good longer term deal if one comes around.

Speaking of long term, it isn’t necessarily the case that a longer duration means a worse rate. Look into your options carefully. Additionally, some borrowers actually prefer to have a longer term plan in place, especially if they were used to making regular rent payments of a fixed amount.

Longer term mortgages can be worthwhile too if you are considering a repayment mortgage. This type reduces the capital you owe over time, as you make payments. If you find the inconvenience of searching around for a good mortgage deal every couple of years troublesome, then investing in a sound long term package could be your answer. And the amount you’d save by changing is often not that large.

Another mortgage sweetener often used to attract new buyers is the cashback mortgage. It can seem tempting to have a cash-in-hand sum, especially when there are a host of things you’d like to do to get your new home just as you’d like it. But beware! Just like many welcome gifts, it often comes with a less impressive interest rate attached. There is a longer tie-in period too – the length of time before you can change to another mortgage without paying a fee. Worst of all, if you do switch, your cashback may have to be repaid!

There are low-fee deals on offer. These may come with no arrangement fee, but with a correspondingly higher interest rate. Consider if over time, it would work out cheaper for you to pay the fee. Remember: there are no free features with a mortgage! It’s also quite possible that the fee can be added to the mortgage total anyway, softening the blow.

It’s a slightly different case if you are offered a free valuation, or free legal work, as these are incentives which will actually reduce costs you’d otherwise have to pay. But as always, check the interest rates carefully. These are the main feature of any mortgage.

So what’s your best avenue for up to date market advice and tips? An online broker is trained to look for exactly what you need, and can match your requirements with the very latest and most economical deals. They can also sometimes find special discount mortgages that are only available via the Internet.

It makes sense to look at the ever-changing mortgage market from all angles. Your knowledgeable broker is your best ally, so make sure they work for you and find that fantastic new deal!

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Author: Richard Norfolk

The time was when you started to pay your mortgage off whilst relatively young, perhaps 25 or 30. This meant that with the usual 25 year mortgage it was fully paid up at 50 or 55, and the problems of old age could be approached without the distraction of those monthly payments.

O.K., you now owned your own house and had to face the cost of maintenance, but somehow it was easier to bear. You also had a fairly accurate idea of what your pension would be worth, and if you had also paid for a company pension you had a reasonable idea of what your retirement income would be.

Sadly that accuracy is now largely a thing of the past. Government pension increases have fallen well short of matching inflation for a long time now, so the value of that pension has been steadily eroded. Many company pensions have hit difficulties and in some cases they have vanished altogether. And then there is your house – at what age will you cease to pay for it?

Currently, well over half a million pensioners still have outstanding amounts to pay on their mortgages, and it is not always the last few payments which are facing them. Figures indicate that over 20,000 of those still paying are over the age of 80; in terms of monthly payments, that is 180 or more made since they became pensioners, and they are still paying.

This situation has arisen because some have gone in for improvements to their home, or have decided to move house as retirement approaches, or in too many cases because of an endowment mortgage shortfall.

Prudential have researched the situation, and they reveal that almost 25% of pensioners are not in a position to find the funds necessary for a worry-free retirement. There is a major problem here which needs to be faced, and the fixed income which most pensioners have to cope with is only likely to exacerbate the difficulty of finding a solution.

Some people are now planning their lifestyle to ensure that property ownership will fund a part of their pension, with 13 million intending to take that route. Over 1½ million are banking on it providing in excess of half their retirement income. This is perhaps a reasonable approach if you have been able to plan for this nest egg, but if you are approaching retirement with only your home as security, you will need to hold off booking that world cruise for the foreseeable future.

Equity release is one possible solution, making use of your home’s locked in value. It is possible to obtain equity release on a home which still has a small outstanding mortgage balance, but expect to be required to use the funds released to pay this off. You will find that you must exceed a minimum age and your house must meet a minimum value before you can be accepted – the older you are, the larger the sum which you may borrow. Repayment of the loan plus interest charges will be required when the last occupier (of a maximum of 2) leaves the property, if necessary this repayment will be funded by the sale of the property.

Another approach which 1 in 6 pensioners are prepared to consider is to rent a room to a lodger. This is not a route to be taken lightly. Adapting to having a stranger moving in could be very difficult for many people, and in addition the financial implications need to be examined.

First you must get approval for the idea from anyone who has a financial interest in your home. Your insurer and any mortgage provider must give it their blessing, and it would be wise to talk to your tax office; they will give you a clear picture of what you need to consider from an earnings point of view. In this context you need to check the possible effect on any benefits which you currently receive.

Another route is to look at a the possibility of a re-mortgage but you are unlikely to obtain this if you are over 75, and the interest rates may be prohibitive. You would almost certainly have to use your home for security on the loan which, to put it simply, means that if anything goes wrong you could lose your home.

If you feel that you are too young for this situation to concern you, think again. The younger you are when you make your pension arrangements, the cheaper they will be. Wait 10 years and you may find that the payments for the pension you want have moved beyond your ability to pay

Shakespeare said ‘all the world’s a stage’, so act now!

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Author: Catriona Singfield

As winter draws near, around 10,000 of the UK’s motorcyclists begin to make plans for storing their bikes away for the cold season. Snow, ice and biting winds make riding a motorbike a less attractive prospect, so many savvy bikers pack their machines up and save on the tax and insurance until biking season comes around again. Unfortunately, thieves know this too and every month around 600 motorcycles are stolen from their garages.

This could be a problem if you are the unlucky victim of such a theft when you are temporarily uninsured. A useful compromise is to reduce the cover to the minimum needed, usually just fire and theft.

Compared to car insurance, motorcycle insurance has some unusual features. That old favourite, the no claims bonus, is almost unheard of for bikes and it’s only a select few insurers who offer any comparable discount.

So how does a typical motorbike policy work? As with cars, there are a variety to choose from, such as third party, specified rider policy and specified bike policy. Specified bike policies cover the machine, not the rider, which means that several riders can be insured for the same bike.

Specified rider policies apply the other way around, to a specified rider on any bike of a size agreed by the policy.

Comprehensive insurance is the most expensive type, but like the familiar car version it covers you for the repair costs for accidental damage, and may or may not include breakdown cover. If you need to make a claim, you pay a specified excess and the rest will be paid for by your insurance company.

Third party insurance covers you for the legal minimum, and is thus the least expensive. It includes any damage you may cause to property, or injury to people. It doesn’t cover you for damage to your bike or repair costs, and still includes an excess payment.

Unfortunately, the exhilaration of getting a new bike is tempered for many young riders by much higher premiums on all types of insurance. This is because the chances of a new rider being involved in an accident are so much higher, due in part to lack of experience on the road. Motorbikes are also notorious for offering little protection in the event of a crash, and such accidents can have tragic consequences.

Premiums are also calculated on how long the rider spends travelling, for example a daily journey to work, or touring. This is because the longer a biker spends on the road, the greater the likelihood of an accident occurring. If you have had the misfortune to make a claim for a driving-related accident recently, this will also affect the rate you will be offered.

So what else goes in to the complex mix of tailored bike insurance? Well, the size of the engine and the make of the machine will be factors, so owning a vintage Harley is likely to be a costly affair! Any previous convictions for speeding, dangerous driving or even a disqualification will affect it adversely too.

It seems sensible to do what you can to reduce these fees. A security device, especially an immobiliser, steering lock or alarm should also secure a discount, as may completion of a specialised motorbike training course.

With so many things to take into account, it may seem tempting to be economical with the truth to save costs. This will certainly invalidate your insurance, leaving you with an expensive payout and no claim. It’s also illegal to drive without insurance, so honesty is definitely best for your policy!

Naturally, you’ll want to find the best deal, so try an online insurance broker. They can find you a policy to suit your specific requirements, and shop around for the best quotes to match your budget. Not only do they have the experience to help out, but they often have access to special discounts only available online.

So shop around, make sure you get the right insurance for your needs and have a safe drive!

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Author: Dot Piper

Life is taxing enough without parting with more of your hard-earned cash than you need to. There are lots of ways in which you can trim down your tax bill.

The current tax allowance for people under 65 is £5,035 per annum. This is a tax free amount and when your income rises above this, income tax will become due. It may be that your spouse is either not earning or is a low earner. You could think about transferring investments to him or her to make use of their allowance.

Is your tax code correct? If not, you could be paying more tax and national insurance than you should. It’s very easy to check your tax code and the government website offers a full explanation of how to do this. www.direct.gov.uk

If you’ve left your job and not applied for unemployment benefit you should be able to get a tax repayment. You will need to apply to your tax office for a repayment form P50. You will also need the P45 which your employer gave you with your final wage payment.

Her Majesty’s Revenue and Customs and the Department of Work and Pensions have £2.9bn of tax credits on offer. You may be entitled to one of three credits. There’s child tax credit, working family credit or pension credit. www.taxcredits.inlandrevenue.gov.uk is the place to check.

An ISA offers a way of earning tax-free interest. You can have £7000-worth of stocks and shares, or alternatively invest £4000 in stocks and shares and £3000 in cash. As long as the ISA is in place, the interest will be tax-free.

Building society and bank interest is normally paid after deduction of tax. If you’re a non tax-payer you can request that you receive your interest gross. Should you have already had tax deducted, you can claim a tax refund. The Taxback Helpline phone number is 0845 077 6543.

The taxman will help you with your pension contributions too. This varies according to your tax rate. If you’re a basic rate taxpayer, for every £100 invested in a scheme, the tax man will contribute £22, so you only part with £78. Higher rate taxpayers would only need to contribute £60 for £100-worth of investment.

If your estate is worth £278,000 or more, it would come into the inheritance tax bracket of 40%. It may well be that your home alone is approaching that figure. To lessen the tax burden on your heirs, it may be worth considering gifting money; you can give up to £3000 per year tax free.

You are allowed to earn up to £4,250 by renting out a room in your home. This is free of tax, but apparently you should declare the fact that you are taking advantage of this scheme. You can find details and help on www.hmrc.gov.uk

There is a Capital Gains allowance, which is currently £8,800. This is a yearly tax-free allowance. This is transferable between spouses to maximise assets.

Charity Begins at Home? Lastly, if you donate to charity, the use of a tax-efficient deed of covenant, payroll giving or Giftaid means that the taxman will give his support too!

Author: Bridget Carter

So you think it is impossible to get enough money together to convince the banks to offer you a mortgage on your first home? You are still renting and have given up getting your first foot on the property ladder?

It can be soul destroying for those trying to acquire their own piece of property, especially for those trying to go it alone with respect to buying a house. You can see how easy it can be for people to just give up.

Well, it actually does not need to be as difficult to buy a house as the headlines and statistics suggest. Ask yourself this question. Have I really, I mean really tried hard to save the money for the deposit on my first home?

Building up money reserves does not have to mean skipping a holiday or trying to go without any rewards. What it does require is making small daily changes to your everyday life then routinely putting an amount of money aside week after week.

You need to change your lifestyle – buying coffee for example can cost £15 a week and £720 a year. So do you really need it? And what about lunch? Do you buy your sandwiches each day or do you make your lunch? Health benefits aside, bringing your own lunch to work each day stops you spending more money or something that turns out to be of a higher cost than you thought. If you do the calculations in your head, by the time you have spent £2 on a coffee, perhaps up to £3 on a sandwich and a further £2 on snacks, you can see how easy it could be easy to spend £70 a week on daily food and more than £3000 a year.

Why don’t you get a credit card with zero interest? If you are in debt, you would end up spending the money on reducing the balance rather than paying the interest. Likewise, shop around for the best deal on a savings account. There are high interest saving accounts or you could try a tax-free Investment Savings Account. Cancel extra memberships and subscriptions that you just do not need.

Of course people become despondent with the house market with headlines like ‘House Prices Continue to Rise’ and ‘First Time Buyers Continue To Struggle’.

After all, ten years ago people only need to get together £4000 for a deposit on a house. These days you pay closer to £12,000, so naturally, the age of your average house buyer is now early to mid thirties.

But if you can work out how much you can commit to with respect to your mortgage you are half way there. You can then establish the amount of the deposit and the monthly payments. This can be done by simply having a look on the internet. Once you have a goal to work towards, the saving part is easy. It’s all about making small changes and getting into a saving routine – and sticking to it!

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Author: Dot Piper

The buy-to-let market is buoyant, with buy-to-let mortgages up by over 475% in five years. As falls in share prices dent the confidence in the stock market, many buyers have moved to this more “hands on” type of investment, and most are very happy to have done so. Typically you may get a couple who already have a property each deciding to move in together, and they may decide to rent out one or both of their properties to fund their new start.

Failure to “cross the t’s and dot the I’s” at this stage can lead to problems later and as a new television series, entitled, rather worryingly, “Tenants from Hell” shows us, it may not all be plain sailing in your new life as a landlord.

Tales of cannabis farms being set up in a London property, expensive homes being wrecked by a revenge-seeking unhappy tenant or finding you’ve let a home, lovingly refurbished maybe, to a convicted criminal are featured in the programme.

There are steps that you can take to lessen the risk of nightmare tenants. Two of the most important things are to ensure the tenant signs a contract and pays at least a month’s deposit before being given the key. Also, always obtain and follow up, references, including that of their employer. It’s also a good idea to check with the employer just how long the tenant has been employed. References from previous landlords are invaluable, try to speak to them personally if possible. It is also possible to use a credit referencing service, at a cost of around £25.

It may be possible to secure a guarantor for the tenant, which would be an excellent move. No matter how pleasant and easy to get on with the prospective tenant appears to be, it’s easier at this stage to ask for a copy of their passport and make a note of their national insurance number. If it comes to tracing them later, you’ll be glad you took this step.

If you do, unfortunately, find yourself lumbered with a bad tenant, despite all the precautions, the courts are busy and understaffed and you may find yourself waiting five months to obtain a repossession order, which is frustrating and costly.

We heard of a case recently where someone rented out a terraced house with a value of just under £120.000 to a single woman on housing benefit. The first month’s rent and a further month’s deposit were paid, but no more money was received. By the time the tenant was evicted, the house was in a total mess and in addition to the almost £5,000 rent owed, there was £2,000 needed to redecorate and rubbish removal costs.

To avoid getting into this situation it might be as well to consider employing an agent. They will thoroughly vet any prospective tenants and are experienced in spotting potential problems and acting quickly to minimise the consequences. They are there to protect your interests.

An agent who is registered with the Association of Residential Lettings Agents, otherwise known as ARLA, or the National Association of Estate Agents (NAEA) is a good choice. Both stick to good codes of practice.

So, take care when choosing your tenants. Buy-to-let continues to be a sound investment if you can avoid the, fortunately rare, tenants-from-hell.

For details and quotes on buy-to-let mortgages, search the internet for a broker. You’ll then be offered details of what’s on offer, but remember to follow all the rules for a good relationship with your tenant.

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Author: Dot Piper

There’s a new critical illness policy on the market which attempts to go some way with regard to sorting out the perplexity regarding exactly what is, and is not, covered when it comes to claiming on the policy.

Traditional critical illness policies tend to cover up to 35 listed medical conditions. Policyholders could become seriously ill with a condition that doesn’t fall into the scope of the policy and find that their illness is not covered, whilst others may be diagnosed with a listed illness with a lower “grading” which is relatively easily treated, for which they get a full payout.
Because of this inequality, the Financial Services Authority is uneasy with regard to insurers failing to fully understand that cover is restricted to certain specific illnesses.

This new product is marketed by the Prudential, under the name of the Flexible Protection Plan, and is unusual in that it claims to cover an amazing 140 medical conditions. However, cover is based on the severity of the condition which could possibly cause some uncertainty regarding the grading of these illnesses.

This is how the plan works:

Listed in the policy are practically all serious illnesses and the payout when one these is diagnosed will be graded according to the severity of the condition. The Prudential says that by tying payments to the degree of seriousness of the illness means that more payments can be offered to people with debilitating illnesses, who may otherwise get nothing at all. An example of this is that should you lose the sight of one eye; the Prudential policy will pay 25% of the sum assured. Normally, critical illness policies would only pay out when total blindness occurs. In all, 140 severe conditions are covered.

A spokesman for one of the specialist financial advisers welcomed the range of the policy, but voiced some concern regarding the implementation of these severity-based payments, saying that it would be open to argument as to what level of severity some illnesses would be graded as. It was felt that it would not be advisable to enter into this type of policy unless you had a very clear understanding of exactly how it would work. We quote “It will be up to the consumer to decide whether a guarantee of getting a smaller payment is better than possibly getting nothing.”

The cost of this new policy is approximately twice as much as conventional critical illness cover.

If your main concern regarding insurance cover should you become critically ill would be the financial outcome, it might be better to consider life insurance. Particularly, if you have a family to support, you may need something that is going to guarantee their lifestyle in the worst case scenario and with the addition of some income protection cover, which would meet outgoings in the event of you becoming unable to work due to illness. This type of cover, unlike the critical illness policy, protects you against common conditions, which result in you being unable to carry out your work.

The best course of action would be to contact a broker and check out the alternatives. The internet’s a good place to start and there are some good internet discount’s available, along with plenty of advice. A good broker will be able to compare the products available and come up with the right insurance product for you.

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Author: Dot Piper

There’s a new critical illness policy on the market which attempts to go some way with regard to sorting out the perplexity regarding exactly what is, and is not, covered when it comes to claiming on the policy.

Traditional critical illness policies tend to cover up to 35 listed medical conditions. Policyholders could become seriously ill with a condition that doesn’t fall into the scope of the policy and find that their illness is not covered, whilst others may be diagnosed with a listed illness with a lower “grading” which is relatively easily treated, for which they get a full payout.
Because of this inequality, the Financial Services Authority is uneasy with regard to insurers failing to fully understand that cover is restricted to certain specific illnesses.

This new product is marketed by the Prudential, under the name of the Flexible Protection Plan, and is unusual in that it claims to cover an amazing 140 medical conditions. However, cover is based on the severity of the condition which could possibly cause some uncertainty regarding the grading of these illnesses.

This is how the plan works:

Listed in the policy are practically all serious illnesses and the payout when one these is diagnosed will be graded according to the severity of the condition. The Prudential says that by tying payments to the degree of seriousness of the illness means that more payments can be offered to people with debilitating illnesses, who may otherwise get nothing at all. An example of this is that should you lose the sight of one eye; the Prudential policy will pay 25% of the sum assured. Normally, critical illness policies would only pay out when total blindness occurs. In all, 140 severe conditions are covered.

A spokesman for one of the specialist financial advisers welcomed the range of the policy, but voiced some concern regarding the implementation of these severity-based payments, saying that it would be open to argument as to what level of severity some illnesses would be graded as. It was felt that it would not be advisable to enter into this type of policy unless you had a very clear understanding of exactly how it would work. We quote “It will be up to the consumer to decide whether a guarantee of getting a smaller payment is better than possibly getting nothing.”

The cost of this new policy is approximately twice as much as conventional critical illness cover.

If your main concern regarding insurance cover should you become critically ill would be the financial outcome, it might be better to consider life insurance. Particularly, if you have a family to support, you may need something that is going to guarantee their lifestyle in the worst case scenario and with the addition of some income protection cover, which would meet outgoings in the event of you becoming unable to work due to illness. This type of cover, unlike the critical illness policy, protects you against common conditions, which result in you being unable to carry out your work.

The best course of action would be to contact a broker and check out the alternatives. The internet’s a good place to start and there are some good internet discount’s available, along with plenty of advice. A good broker will be able to compare the products available and come up with the right insurance product for you.

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Blogg entry for Wed 9th Aug

By Melinda Varley

Over 200,000 homebuyers in London during 2005 took out an interest-only loan according to the Council of Mortgage Lenders (CML). None of whom had a repayment vehicle in place and of these, 60,900 were first-time buyers.

There are no figures available for the total number of homebuyers with interest-only loans. However, figures for new interest-only house purchase loans have been running at between 10 and 20 per cent for all new first-time buyers over the past 10 years, and roughly the same for other homebuyers.

With more than half of all mortgages now arranged through an intermediary, mortgage brokers could be in the firing line for claims of mis-selling if the homebuyer’s loan reaches maturity and there is not enough cash to pay off the loan.

The CML is keeping close tabs on the situation and has set up a shortfalls working group to look into ways of encouraging consumers to act now to address any shortfall on interest-only mortgages.

“We are suggesting that when a mortgage comes up for review, for example, when it reaches the end of a concessionary rate, then it would be prudent to check on how the borrower intends to repay the loan,” said a spokesperson for the CML.

Using an interest-only mortgage will keep your monthly payments down until you can afford the higher monthly payments of a repayment mortgage.

But because you’re not paying anything off the amount you owe, you will probably end up paying more interest in the long run.

Interest only mortgages are a high-risk strategy that could come back to haunt advisers that set up the arrangement. An increase in interest rates could also hit these clients hard as they would have no fall-back option of reverting to an interest-only mortgage.

Simply enough, to combat the issue clients must be told that if they can not afford to pay for a mortgage, don’t take one out.

Here’s what you need to know. With an interest-only mortgage your monthly payments only cover the interest on the loan and do not actually pay off the loan itself.

If you take this option you will need to make separate arrangements to pay off the loan when the mortgage ends. You can make your arrangements through your lender – but it isn’t compulsory.

If you don’t arrange the funds at the end of the mortgage you may very well lose your home. Essentially, the money you pay to the interest only mortgage goes no where – you may as well rent.

You will have a substantial amount of time (depending on the actual agreement) to save regularly in order to make payments into a savings or investment scheme in order to build up a lump sum to pay off the mortgage when the time comes.

However, the returns offered by banking or building society accounts are usually too low to be used to pay off the amount borrowed.

Instead, it is common to accept some risk in the hope of a higher return by choosing schemes where returns are linked to the stock market. Although the risk is with these stock market linked schemes, there is no guarantee that your money will grow enough to pay off the mortgage in full by the end of the mortgage term.

Another option is to change to a repayment mortgage later. This might be a suitable option if your earnings are low now but are expected to be much higher in future.

Using a lump sum from somewhere else such as an inheritance or selling something such as another property or a business is another option and is also a risky one. You need to be sure that the inheritance will materialize and think about what would happen if your business was to fail.

Selling the property to pay off the loan is probably your last option. This is suitable only if you won’t need to live in the property such as if it is a buy-to-let property or a second home, or you are buying something cheaper.

Whatever plans you make to repay your mortgage, remember to review them from time to time to make sure that they are still on track. In the first place, interest only loans should be a last resort and should always only borrow what you are guaranteed to be able to pay back.

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Author: Michael Challiner

Thinking of giving up smoking? Maybe the thought of England’s 2007 smoking ban in enclosed public places is niggling away. Could this be the spur you need to finally kick the habit? Think of what you could buy with the money saved – that holiday the family have been talking about, your son’s new bike, simply more money to spend maybe?

Here are some more thoughts:
· Several thousand people have given up smoking since the ban came into force in Ireland and Scotland.
· It has been found that the average smoker spends over £90,000 in a lifetime.
· The Health Development Agency tells us that smoking is “the biggest single cause of illness and premature death, killing some 83,200 people a year in England alone.”
· Become a non smoker and you’ll save around 50% on your health and life insurance premiums, not to mention living longer!
· Your health will undoubtedly benefit. Also the health of your family. Passive smoking creates risks too!

Life and critical illness insurance premiums are rising. The popularity and ease of access to the internet over the past few years has encouraged people to search for lower and lower insurance rates. Insurers have cut the cost of cover as much as they can in order to be competitive, but the underwriters have now decided the time has come to redress the balance. The insurance company will publish their standard rate, which will be based on fit and healthy individuals. There will then be an increased premium for those that the insurers feel are at risk of health problems. That means you!

It doesn’t take long for the insurance companies to consider you’re a safer bet for them. Most companies accept you are a non-smoker after 12 smoke-free months, although a few require a little longer and it can be as long as 5 years. Once you’re successfully over this (normally 12 month) period you can start to think about your future insurance needs. The first thing to do is to contact your insurer and ask for you policy to be re-assessed.

Be completely truthful – any claims will be thoroughly checked and your Doctor will be asked to confirm that you are a non-smoker. If anything is out of order, the claim will be rejected under the insurer’s non-disclosure rules.

The new quote will show a big reduction in the premium. You may well be able to save even more money by searching the internet to find out what other companies have to offer. If you decide to change insurers, don’t cancel your original until you’re certain that you’ve been accepted by the new company, after they’ve checked your application form including details of health records. Cancellation charges won’t apply to the old policy, so it’s simple to change insurers. You don’t even have to let the old company know, simply cancel your direct debit and when it’s queried just say that you no longer need the policy.

No one said it would be easy, but it has to worthwhile. For the sake of your health. Good Luck.

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Author: Richard Norfolk

Student life is usually gregarious, with plenty of like-minded company to relieve the possible tedium of study. However, when it comes to dealing with debt, each student has to sort out his own salvation. The theory says that after graduation, the students of today will be the high earners of tomorrow. Doubtless in some cases this is correct but……..

The unavoidable expenditure on student loans to cope with day to day living costs, plus the credit card bills and overdrafts which occur when those costs become too great, have a way of accumulating. This results in students leaving university with, on average, debts reaching £10,000 or more. This is the current debt level. Expectations are that this will increase threefold within a very few years.

Unfortunately no-one can bank on a highly paid job to clear their debts immediately on leaving university. Even if such a job is ‘in the offing’ there is likely to be a significant delay before the actual earning power comes to fruition. In the meantime, i.e. when first starting at university, it is necessary to evaluate the costs you will be facing and plan how best to cope with them.

First – the cost of the course itself, that is the tuition fees. Below a certain level of family income there will be nothing to pay; above this level there is a sliding scale. In earlier years the total cost was paid by the government but this had to be altered when increasing numbers attending university pushed the total costs upwards. It was also claimed that increased earnings as a result of gaining a degree would leave ex-students better able to pay their costs during their working years.

Currently there is however a ceiling on payments, which restricts the value of same to 25% of the cost of the course. This is still a significant sum at around £4,000 but thankfully any balance will be paid by the government.

Don’t forget that this cost is purely to pay for your proportion of the course work – day to day living costs have still to be covered. This and any other needs should be discussed with your Local Education Authority as soon as you know what your tuition fees will be.

The LEA will then calculate the value of loans available to you. You then contact the student loans company and arrange for the necessary funds to be paid into your account ready for the start of the new student year. These are unsecured and will be provided at an interest rate which ties in with inflation, and will not be repayable until the end of the tax year after you graduate.

At this point the repayment threshold comes into operation, so that no repayment will be required until your earnings reach the specified level. Even then your repayments will not (under present legislation) exceed the actual amount borrowed, and will be set at a value that is suitable for your earnings level. If you should decide that despite your educational achievements, the life of an impoverished artist (or other poorly paid artisan) would best suit you and your earnings never reach the threshold figure, then, if you reach the age of 65 without starving to death, your debt will be written off!

So much for student loans – what else is available to you? Credit cards are an obvious source of credit (otherwise they would be called by a different name) but they really should be avoided if possible. With no special terms for students in most cases, the interest rates are high and the amount of credit available to students is low. A lot of money can easily be spent paying interest charges whilst having a maximum debit balance, which makes you pay out regularly but allows you to spend nothing.

A bank loan is another possibility but this too is dangerous ground. The possibility of an interest free student overdraft of £2000 is very attractive, but go just over the limit and the rules will be applied rigorously. This means you are likely to be hit by a very high interest rate PLUS charges for an unauthorised overdraft. The whole of any overdraft will have to be paid off as soon as you leave university, otherwise the entire sum will attract interest charges.

You are going to have to exist without real income for quite some time. Arrange your finances to the best of your ability for the avoidance of interest charges and your lifestyle for the avoidance of unnecessary expenditure. It will seem like a long drag but well worth the effort in the long run.

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Author: Emma Mayo

It might be predicted that it would be hard to get life or private medical insurance once diagnosed with cancer – but travel insurance? Well that is exactly what has been happening, as the charity Cancerbackup has revealed.

Its survey found that 9 out of 10 people suffering from cancer found it either difficult or impossible to get travel insurance, and 7 out of 10 people found the experience of trying to get travel insurance distressing. This didn’t just apply to people suffering from cancer at the time of application, but also people that had been diagnosed in the past and were now cancer-free.

7 out of the 10 people surveyed were completely fit to travel, but they were still quoted very high premiums if they were not rejected at the offset. As a consequence, one in 20 of the people surveyed decided to travel without getting insured first – not a recommended action. However, the other option is not ideal either, as one in 10 people cancelled a trip because they were not able to get travel insurance.

Some travel insurance companies will not even consider people that have suffered from cancer, basically putting a blanket ban on the whole matter. Other will insure, but at vastly inflated prices. Considering that travel insurance covers a whole host of potential situations such as lost or stolen items and flight cancellations, it seems very unfair to force cancer sufferers into this difficult position.

The Association of British Insurers (ABI) has pointed out that travel insurance is available for cancer sufferers, although perhaps not with the mainstream, cheaper companies. The Cancer Research website directs people towards insurers that specialise in these areas, companies like A and B. They may specialise, but they’re not cheap, as this example shows: a 48 year old woman who has suffered from breast cancer within the 5 years previous to making the application would be charged £248.70 with Company B for 17 days worldwide cover. Compare that to a woman of the same age with no medical issues and the premiums fall to just £20 for a cheap policy.

The cost of the travel insurance for the cancer sufferer could potentially be more than the cost of the flight – so of course anyone diagnosed with cancer has to wonder if it really is worth buying, and taking a gamble instead.

The ABI does not recommend this course of action, and suggests that people that have been diagnosed with cancer try out the specialist insurers. Company A agree – saying that in a time of difficulty when morale is low, a holiday is often just what is needed. As a spokesperson for the company said, “Being refused insurance can have a terrible impact on their morale.”

A spokesperson for a charity has also added to the discussion, pointing out that with over one million people that have been diagnosed with cancer at some point, the issue is only going to get worse. They also said: “The insurance industry needs to recognise that not all cancers are the same and treat people accordingly.”

The ABI has offered to discuss the issue with the charity. Perhaps they will look into the issue to see if cancer sufferers are being treated unfairly. They will also be wanting to make sure that cancer sufferers are not diverted from getting insured as a result of Cancerbackup’s survey results.

In the meantime, we advise cancer sufferers not to give up, and to look on the Internet for specialist companies that can help. The Cancerbackup website (www.cancerbackup.org.uk) and Cancer Research website (www.cancerresearchuk.org/) both contain lots of useful information.

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Author: Dot Piper

When it comes to home contents insurance, it’s so easy to get left behind in your valuations. It’s simple enough to go through the rooms, in your mind. Lounge – carpet, sofas, display cabinet and contents. Bedrooms, carpets again, beds, furniture ……. And so on. All things moveable in your home should be covered by your contents insurance. It’s also simple enough to overlook things. For example, don’t the above rooms also have curtains, framed pictures, the odd painting or two? The pictures may mean a lot to you but their frames will be very tempting to a thief. Then there are the garden and outbuildings contents. Garden furniture and tools, the children’s bicycles, outdoor toys and even the plants in the garden. All of these need to be taken into consideration.

The range of expensive electrical goods is even more tempting to the thief. Not easily identifiable and easily sold on in the case of theft, also expensive to replace in the case of accidental damage. Include all the television sets, CD and DVD recorders and players, computers (don’t forget the lap top/s), CD’s, DVD’s (Norwich Union tell us they allow £10 per CD, so your collection can easily add up to a fair sum.) Then there are the iPods, Game Boys, mobile phones and accessories. The average family home contents are typically valued at around £45,000.

If you’re under insured, any claim that you make on your policy will be down rated accordingly. Some insurers, Norwich Union Direct for example, will simply pay out up to the limit of the sum initially insured and then you have to make up the shortfall. Other companies will simply reduce the payment in proportion to the amount understated. If they consider your contents to be worth £30,000 and your cover stands at £20,000, then whatever your claim, it will be reduced by one third.

More Than are one of the companies using the second example shown above. Furthermore they have taken action to solve the problem and have recently decided to enforce increased cover for their clients, to the tune of 25% as their cover comes up for renewal. This will apply to all of their 470,000 clients.

You would be well advised to re-assess the value of your home’s contents. There’s a helpful website run by the Association of British Insurers. There you will find advice and a handy checklist to download and use. Their address is www.abi.org.uk

Our advice so far has referred to home contents insurance, but it may be as well to consider values on Buildings cover too. The sale value of your home can easily be calculated by whatever price similar properties in your area are achieving. The insurance value differs in that you don’t have to cover the value of the site. The cost of demolition, clearing of the site and rebuilding the property will be the key factors. The easiest way to find this out is to contact your insurer and ask them to recalculate the value of the property. The way they carry this out is to take the number of rooms and their use. They then come to a value, based on your post code. In this way they will arrive at the estimated rebuilding costs of your property.

So, it may be time to assess your home and contents insurance generally. Then relax and enjoy the benefits.

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By Dot Piper

According to the consumer watchdog, Which, about 5 million of the 28 million of us who have been targeted by fraudsters, have lost money as a result. Someone is clearly finding fraud highly profitable.

So what are the most common scams and how do you avoid them? Here are five to be thinking about.

The “Money locked up in an account” scam.

This is a really common fraud. It normally starts with an e mail giving a long and involved sob story about someone or some business, which has a very large amount of money tied up in an account and, through the most unfortunate of circumstances, they cannot get the money out. To do so, they need a UK bank account to have the money paid into. Of course, if you help them they will give you a big slice of the money. And the money is always held in a some obscure country, often in Africa.

Once you have replied and taken the bait, they come up with a story that for the money to be transferred to your account, they need you to send a payment, often thousands, to cover the administration or legal costs of enabling the money transfer. The actual details always change but the essence of the story remains remarkably consistent.

Will the payment arrive and will you ever get your money back? Of course not! In fact after you’ve made a first payment, they’ll ask for more! The up front payment needs to be increased and unless the extra is sent, the money you’ve already sent will be lost. You think you’re now in a catch 22 situation. But if you send more money, we can guarantee you’ll never see it again.

Millions of these emails go out each month, so if you get one delete it.

Boiler Room scams
This is a hard-selling technique to persuade you to buy investments on the promise of great returns that turn out to be worthless. Others sell shares in companies that don’t even exist. There are also related scams which involve investment currency or futures or options.

More often than not the initial contact is by telephone and a typical target will be a middle aged professional man ho has some investment experience. They often trace their targets by examining the share registers of UK quoted companies.

If you receive a cold call from a company trying to sell you investments, ask for their registration number with the Financial Services Authority. If they won’t supply the number, put the phone down. If they give you a number call the FSA’s helpline and check out that the firm is indeed registered (0845 606 1234). Never commit yourself until you are absolutely sure that the company selling the investments is reputable. 9 times out of 10 it will not be – so you have been warned!

Credit Card Fraud
The requirement to use PIN numbers will greatly reduce card fraud. But purchases through the Internet use the “card holder not present”, not PIN numbers.

That means that if a fraudster gets your card details he can happily buy on the Internet and fade into the mist with the goods he has purchased and sell them for cash.

To reduce your chances of being caught by this sort of fraud, you should sign up with Verified by Visa or Mastercard Secure Code. You’ll find further advice on www.getsafeonline.org and www.cardwatch.org.uk.

Phishing
Fraudsters are also very active on the Internet trying to persuade you to divulge details of your bank accounts, PIN numbers and security codes.

The fraud starts with a bogus e mail supposedly from your Bank. The e-mail normally asks to you confirm your account details for security purposes. Sometimes it says that unless you complete the confirmation, your account will be frozen. But security is the least of their aims – once they have your details, they’ll simple empty your account!

Be aware that Banks will never ask you to send details of your accounts etc to them by e-mail. If for any obscure reason they did need some confidential information, they would ask you to visit a Branch.

Identity Theft
It has been estimated that an identity theft takes place in the UK every four minutes.

If fraudsters can pretend to be you, they can apply for credit and open bank accounts in your name. This inevitably leaves a trail of debt and criminal activity all conducted in your name.

All they need is a credit card statement and a utility bill in your name. Watch out for the bin men! Better still, buy a shredding machine and shred any personal letters, bills and documents you want to dispose of.

By: Catriona Singfield

Vets’ fees are set to rise, and over the next three years will increase by up to 20%. Given the expense as well as the stress and worry of an unwell pet, are pet owners underestimating the need for adequate pet cover?

When you keep an adult dog as a pet, you can expect to pay around 40% of your pet care budget on unexpected visits to the vet. Yet only about 12% of Britain’s 13 million dog owners take out specialised insurance.

Financial research company Defaqto know that choosing the right pet insurance can seem daunting. According to their research, pet owners are often confused as to what cover offers, and which policy is the right one for their needs. They may even be put off buying pet insurance altogether. Because some policies pay out on claims on a yearly basis, and others pay per condition, it can be hard to compare them for the best deal. In addition, some cover has built-in limits that place cut-off points on payouts when a claim is made.

High premiums can also put owners off. By way of example, a cat has a typical lifespan of 14 to 15 years, and can run up a total cost in medical care of up to £9,500 during that time. The family dog doesn’t do much better at an average yearly cost of £500 to £1,000 over a typical canine lifespan of 13 years. And a caring cat owner can pay up to £200 a year for insurance in London.

Pet insurance can help enormously towards costs if a pet should become ill, but what a policy covers can be very limited and it pays to check the details.

Good pet cover should include veterinary fees, long term treatment, money for rewards if a pet is lost or stolen, and dental care, as well as benefits if a pet should die of illness or as a result of an accident.

Many policies fall short of this, however. Some will not cover repeat claims for the same condition; some will allow this, but cap the amount you can claim per year. Yet others have a limit of £5,000 on any one claim.

As with all insurance cover, there are many variations. In the same way that car or contents insurance policies have an excess charge – the amount it will cost you before a claim pays out – pet insurance will also impose this fee. Defaqto warn that the cheapest cover can carry an excess of up to 35%, underlining the fact that the lowest premium may not represent the best value for money.

So what should you look for in a policy? Choose one that will last the whole lifetime of your pet. Make sure that it does not exclude any conditions already experienced – some will not pay out on any conditions dating from a year before the cover was taken. Others exclude older pets, or refuse to cover pets younger than six to eight weeks old.

However, there are benefits to having pet insurance that are often overlooked. For example, if a car driver should swerve into a wall while avoiding your dog, a good policy will cover you for damage to the car – and even the wall if necessary! You may not know it, but you are legally liable under the Dangerous Dogs Act for damage to people or property caused by your dog. If Fido goes for the postman, you may well be taken to court, but at least you can arrange cover for your legal fees.

If your pet is well but you have to go into hospital, some insurance will include a kennel stay. This might be especially useful for an elderly person, or someone living alone. Some plans also include cancellation fees if your holiday plans are upset by a sick or injured pet.

It is usual for a policy to cover costs for advertising if an animal goes missing, including a reward. Some will pay for a replacement pet should your own be stolen or even die. But because insurance is designed to cover unexpected problems, it won’t include vaccinations, booster shots, worming treatments, nail clipping, spaying or neutering.

It is common for dogs to cost more to insure than cats, with extra charges for pedigree breeds or big animals. There may even be an extra charge for the smaller, more delicate varieties of dog. Premiums may also be affected by the vets’ bills in the district where you live, being higher in cities, especially London.

As always, there are a wide range of insurance policies for pets just as there are for people. The best course of action is to decide what level of cover suits you best and shop around. Watch out for that excess though – it can be between £25 and £65. Be aware too that many companies set a maximum payment, either per year, or per illness or accident.

Look at your needs carefully, and make sure that what you require for your pet is actually covered by your policy. You may find a better combination online, so do your research and don’t neglect this resource – a good policy can save both your wallet and your peace of mind.

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Blogg entry Fri 14th July

Author: Emma Mayo

It looks like some life insurance policies are forever – because people have been forgetting to tell their next of kin just exactly what they did with their policy documents. It’s not that quite simple, there are many reasons why a life insurance policy may sit unclaimed – but as a result it is estimated that at least £2 billion in life insurance claims have been left unclaimed. Surely that’s more than careless!

There are a myriad of reasons why life insurance policies get forgotten:

People forget that they took them out in the first place.
People often don’t leave a Will; as a result relatives have no evidence to show there was a policy, unless they come across some paperwork.
One in 16 people move house and forget to inform financial companies that they have moved, and lose touch completely.

It can get even more complicated. There were a lot of life assurance policies sold in the later half of the 20th Century which doubled as savings vehicles, and were very popular at the time. As times have changed and companies have been bought by larger companies, they have disappeared off the radar, but the money will still be there – waiting to be claimed one day.

If you have a life policy and the company no longer exists, the Internet is the best place to look. Search on the company name in Google then you should be able to get some information relating to the company that now owns the policy. If that fails, then try the Association of Friendly Societies on 020 7216 7436 (www.afs.org.uk) - a trade body that has old records relating to friendlies and mutuals from the past.

If that doesn’t work – call the Mutual Societies Registration on 020 7066 4916. The old Register of Friendly Societies, they are a government body that has now been swallowed up by the Financial Services Authority, but they will be able to tell you what happened to the company that used to hold your policy, and who you should now contact.

If you don’t even have the name of the company, but you know that you have a life policy out there somewhere – then even then all is not lost. There is a service called the Unclaimed Assets Register (www.uar.co.uk, 0870 241 1713) that can help you. They have a huge database containing details of financial products across the board, from dividends and unit trusts to pensions and life policies. If it’s a basic enquiry, then the service may be free of charge; otherwise they charge a one-off, fixed charge of £18.50 to find an answer to your query. 10% of that fee goes to charity. You can make the enquiry either over the Internet or by post, and you will need to provide a certain amount of detail such as date of birth and previous addresses.

In making any of these enquiries incidentally, you must either be the policyholder or have power of attorney over another’s finances.

In an ideal world, everyone would keep all their financial documentation in one place. But the very nature of a life policy means that they sit around for years and often get forgotten. Our advice is, whether you are the policyholder or if you have power of attorney, find as much information as you can before starting your search. And don’t give up – the information is accessible, it may cost you just a bit of time and effort, and possibly £18.50, to find it.

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