Mortgage lenders have been reducing rates generally and fixed rates for 3 and 4 years are now under 3.0% and 5-year rates at 3.5%. While the economy is probably going to mean that the Bank of England interest rate will remain low for some time still to come, those who want some future security should consider moving to one of the new fixed rates for 3 years or more.

However, these best rates are really only available to those whose borrowing is 70% or less of their property value and who can prove adequate income and have no credit problems. For those not in this category, rates are not going to be as competitive and it may be best to stay with your present lender. Feel free to give us a ring to check it out for you. We make no charge to investigate what might be available for you.

CUTTING COSTS

The cost of living is increasing. That includes food, heating, travel and electricity. It is time to check to make sure that you remain in the Happiness Zone. To qualify for the Happiness Zone you need to have more money coming in than going out. If you are already there, pat yourself on your back. For those not there, it is worth looking at some ways to make some savings.

1. Reduce the cost of your credit. If you have ongoing, ‘never-ending’ credit card balances, you will be paying a very high interest rate. Check out possible personal loans to see if you can save on the costs. Changing it into a loan will also mean that the debt will eventually be gone! If your debts are too high to deal with by means of a personal loan, find out about remortgage possibilities. You may be able to score twice – once by lowering the costs of your credit, and secondly by lowering your mortgage payments by getting a better mortgage interest rate from another lender. It will cost you nothing to find out what your options are. Just give us a ring.
2. Really face up to your financial situation. Take the last 3 months and see what your spending has actually been. List out everything. Then compare it to your average income. You will soon see how much you need to cut back. Or, if you are already in the Happiness Zone, you can look at savings for the future.
3. Make sure you are not paying more tax than you have to. If you are employed, you should check your Tax Coding to see if it is correct. The Tax Man has certainly been known to make mistakes. If you are over 65, check to see that you are making the most of the extra personal allowance to which you are entitled. That can save almost £500 a year in tax. If you have investments, do not forget to take advantage of your Capital Gains Tax Allowance. It allows you to take profits out of your investments of up to £10,600 without having to pay any tax at all.

MAXIMISE YOUR INCOME

1. Maximise the income on your savings. Keep in touch with how much interest you are receiving from your cash savings. One poor soul received 0.1% interest for over two years before he finally wised up. There are various websites you can use to search out the best savings rates such as: www.moneyfacts.co.uk and www.moneysupermarket.com
2. If you are aged 55 or over, look at possibly taking some of your pension benefits such as the Tax Free Cash immediately to augment your income. Note: some people may have lost track of pension benefits they have had, but there is a tracing system to allow you to hunt those down. Contact us for more information on this.
3. If you are really struggling with making ends meet, but have a house with little or no mortgage, look into Equity Release options. Here again it costs nothing to find out what is possible and we are happy to research your options for you without charge.
4. If appropriate, find out if you are eligible for any benefits such as Pension Credit or Working Family Credit.

UPS AND DOWNS

The world’s Stock Markets are moving rather wildly up and down as investors worry about the problems that many countries face in meeting their debt obligations. They include Spain, Portugal and Italy, as well as the United States. In these circumstances it is worth reviewing the following Investment Tips that have proven their worth in the past.

• Buy what’s right for you.
• Diversify (don’t put all of your eggs in one basket).
• Invest for the long term.
• If an investment has risen substantially, consider selling it (don’t be ashamed to take a profit).
• Never buy what you don’t understand.
• Know when to say goodbye to a bad investment.
• Be your own person – don’t follow the herd.
• Review your investments regularly.
• Don’t believe everything you read!

COMING UP TO RETIREMENT/AGE 55?

Whether you are just coming up to age 55 and want to start taking your pension benefits, or approaching 65 and State Pension Age, it is worth learning how to get the most from your pensions. There are some important decisions to make which can significantly affect how much money you can get in retirement. For example, if you have your pension with one company, you are not restricted to taking your benefit from them. You may find you can get more by taking advantage of the Open Market Option, which allows you to compare what other companies would offer you. Also remember that you do not have to stop working if you start taking your pension benefits.

ANOTHER GOVERNMENT WHITE ELEPHANT?

A COMPULSORY WORKPLACE PENSION

Regardless of political party, you can almost guarantee that each Government will change the pension rules when they come into office. This has been the case consistently for the last 40 years or so. New ideas are introduced, then changed, and then dropped completely. A good example is what was originally called the State Earnings Related Pension Scheme (SERPS) started in 1978. Its purpose was to augment the Basic State Pension for those who were employed. After some years it was found to be too expensive, and the Government sought to lure people out of it by making it possible for them to contract out of SERPS. This proved to be of little use in cutting costs and is now being wound up in the current tax year. By 2002 SERPS had been replaced by what is called the State 2^nd Pension.

Confused? We do not blame you. So are the legislators.

So now what is around the corner? Now in their wisdom we have a compulsory pension scheme being introduced from 2012 which requires all employed persons to join it, and requires all employers to make it available to all of their staff AND CONTRIBUTE TO IT! This is called NEST (The National Employment Savings Trust).

Why? Certainly the average worker in the UK is not now making adequate pension provision, and the Government is seeking to do something about it because, otherwise, it knows that the costs of providing income assistance to the elderly is going to increase hugely. One of the main reasons that we have reached this point is that successive Government actions have made it too expensive for companies to continue to offer the good pension schemes they were able to provide in the 60s, 70s and 80s. The other factor is that people move jobs much more often now than they did in the past.

How will this affect you?

Self-employed – It does not affect you. You can pay into a pension for yourself, or not, as you choose.

Employed – If you are aged 22 or older and under age 75 earning approximately £6000 or more per annum, you will be automatically enrolled into the pension scheme of your employer (unless your employer is already providing a scheme at least as good). Both you and your employer will be required to contribute into the scheme. It will take a few years to phase in, but eventually it is intended that the employee contribute 4% of his wages and the employer adding the equivalent of another 3%.

Employer – You will have no choice. Unless you have an alternative scheme in place providing benefits at least as good as the NEST scheme, you will need to set up a pension plan and deal with collecting the payments and automatically enrolling all of your eligible employees into it. You will be responsible for it being done correctly and there will be penalties for failure to do so.

To find out more you can go to

www.nest.pensions.org.uk or www.thepensionsregular.gov.uk

We will be automatically assisting those companies whose pension schemes we look after and those individual clients whose pensions we look after. Those employers who will want assistance are welcome to contact us to explore how we may be able to assist.

 STRIVING TO MEET EXPECTATIONS

By survey what you want from us is our advice on financial matters, utilising our extensive knowledge and long experience over the last 30 years. We enjoy helping in this way and continuing to assist our clients and their friends, and now their children!

Those that have used us do know they can rely on us again and again. In recent service questionnaires when asked why they chose to use Sovereign Finance we received answers such as the following:

"Because of first class service in the past." Mr IG

"You always give such super service." Mrs LF

"We have used them on several occasions for mortgages, pensions, etc. and each time they have provided excellent service." Mr & Mrs ER　

Yours sincerely