Welcome to our Guide to Reviewing your Mortgage, protection and estate planning. Now that the Christmas decorations are back in the loft, the turkey has finally all gone and we’re racing toward February, why not take the time to evaluate your financial standing and ensure that your plans align with your goals? A thorough review of your mortgage, mortgage protection, and estate planning, can provide peace of mind and financial security for you and your loved ones. Here’s how you can get started:
Our Guide to Reviewing your Mortgage
Table of Contents
Your mortgage is likely one of your most significant financial commitments. Regularly reviewing its terms can lead to substantial savings and better alignment with your current financial situation.
- Interest Rates
With the financial landscape continually evolving, it’s essential to stay informed about current interest rates. If your mortgage rate is set to expire soon, consider shopping around for better deals. Even a slight reduction in interest rates can lead to significant savings over time.
- Refinancing Options
If you’ve experienced an increase in income or improved your credit score, refinancing your mortgage could secure more favorable terms. This process might lower your monthly payments or reduce the loan term, saving you money in the long run.
Evaluate Mortgage Protection Insurance
Mortgage protection insurance is designed to cover your mortgage payments in unforeseen circumstances, such as critical illness, disability, or death. Incorporating this into your financial plan ensures that your family remains secure in their home, regardless of life’s uncertainties.
Types of Coverage
- Life Insurance
Pays off the remaining mortgage balance if the policyholder passes away.
- Critical Illness Cover
Provides a lump sum if you’re diagnosed with a specified critical illness, helping to cover mortgage payments during recovery.
- Income Protection Insurance
Offers a monthly income if you’re unable to work due to illness or injury, ensuring you can continue meeting your mortgage obligations.
Regularly reviewing and updating your mortgage protection policies is crucial to ensure they align with your current needs and financial goals.
Revisit Estate Planning and Your Will
Estate planning is not solely for the wealthy; it’s a vital process for anyone who wants to ensure their assets are distributed according to their wishes. A well-structured estate plan can minimize tax liabilities and provide clear instructions for your heirs.
- Updating Your Will
Major life events such as marriage, the birth of a child, or acquiring significant assets necessitate updates to your will. Regular reviews ensure that your will reflects your current intentions and complies with the latest legal requirements.
- Inheritance Tax Planning
Understanding the implications of inheritance tax is crucial. By incorporating strategies such as gifting from income or setting up trusts, you can reduce the tax burden on your estate, ensuring more of your assets pass to your beneficiaries.
Please note that Estate Planning is referred to a third party.
Tailored Financial Options Based on Your Age
Your age plays a significant role in shaping your financial priorities and the tools you can use to achieve them. Whether you’re starting your financial journey or planning for retirement, understanding your options can help you make informed decisions.
For Young Professionals (20s and 30s)
- Build Strong Financial Habits
Establish a solid foundation by creating a budget, building an emergency fund, and starting a retirement savings plan.
- Mortgage Preparation
If you’re considering purchasing your first home, focus on improving your credit score and saving for a deposit. First-time buyer schemes may offer valuable benefits.
- Life Insurance
It’s often more affordable to secure life insurance at a younger age, particularly if you’re starting a family or have dependents.
For Mid-Career Professionals (40s and 50s)
- Mortgage Preparation
It’s often more affordable to secure life insurance at a younger age, particularly if you’re starting a family or have dependents.
- Estate Planning
If you haven’t already, now is the time to draft or update your will. Start exploring ways to mitigate inheritance tax, such as gifting assets or setting up trusts.
- Life Insurance and Protection
Reassess your life insurance coverage to ensure it matches your current lifestyle, financial obligations, and dependents’ needs. Consider adding critical illness cover or income protection if not already in place.
- Retirement Savings
Maximise contributions to your pension and other retirement funds to take advantage of compounding interest.
For Those Aged 55 and Older
- Equity Release
If you’re 55 or older and own your home, equity release can be an option to unlock the value of your property. This can provide a lump sum or regular income to support retirement, fund major expenses, or assist family members.
Things to Consider: Equity release can impact the value of your estate and your eligibility for means-tested benefits, so it’s crucial to seek professional advice.
- Early Estate Planning
This is a critical time to ensure your will is up to date and reflects your current wishes. Additionally, consider setting up Lasting Powers of Attorney (LPA) to ensure trusted individuals can manage your affairs if you’re unable to.
- Inheritance Tax Planning
Explore strategies to minimize inheritance tax, such as making use of annual gift allowances, creating trusts, or transferring wealth through lifetime gifts.
- Downsizing or Relocation
Many in this age group consider downsizing their home to reduce expenses or free up capital. This move can also simplify future estate management.
Set Clear Financial Goals for 2025
Establishing specific, attainable financial goals provides direction and motivation. Whether it’s saving for retirement, funding your children’s education, or purchasing a new home, clear objectives help in formulating effective strategies.
- Budgeting
Create a detailed budget that accounts for all income and expenditures. This practice not only highlights areas where you can cut back but also ensures that you’re allocating funds towards your financial goals.
- Emergency Fund
Aim to build an emergency fund that covers 3 to 6 months of living expenses. This fund acts as a financial buffer against unexpected events such as job loss or medical emergencies.
Seek Professional Financial Advice
Navigating the complexities of mortgages, insurance policies, and estate planning can be challenging. Engaging with a qualified financial advisor can provide personalised guidance tailored to your unique circumstances. They can help you understand the implications of various financial products and strategies, ensuring that your decisions are well-informed and beneficial in the long term.
And Finally...
Starting 2025 with a comprehensive review of your financial situation sets a solid foundation for achieving your goals. By assessing your mortgage, ensuring adequate protection, updating your estate plans, and setting clear objectives, you can navigate the year with confidence and financial security. Additionally, tailoring your financial strategies to your age ensures that your plans evolve alongside your needs. Remember, proactive planning today leads to peace of mind tomorrow.
Disclaimer
The information contained within was correct at the time of publication but is subject to change. Estate planning is referred to a third party. Neither Liddle Perrett Ltd nor PRIMIS are responsible for the service received. These services are not regulated by the Financial Conduct Authority and may have limited consumer protection.
This information is provided as a general guide and should not be taken as financial or legal advice. Your individual circumstances may vary, and we recommend consulting with a qualified financial advisor or solicitor to discuss your specific needs. Mortgage, protection, and estate planning solutions are provided by a third party and subject to eligibility, terms, and conditions, and the value of financial products can go down as well as up. Tax treatment depends on individual circumstances and may change in the future. For life insurance, inheritance tax, and pension planning, always ensure you understand the policy terms and how they fit into your wider financial goals. Lenders’ and providers’ criteria apply.
Your home may be repossessed if you do not keep up repayments on your mortgage.