It is exciting to find a new home that we love
But getting a mortgage can be a stressful experience and most of us just want the best deal, up and running as soon as possible.
However, once you have your new home, the whole of your financial planning needs could change too.
Why not get them looked at, with a home buyer’s financial review, at no additional cost to you, when you take out a mortgage with us?
Meet Matthew, Rachel, James and baby on the way
Matthew and Rachel Wilde are in their 30’s. James is 4 years old and they have another on the way.
The Wildes represent a young, growing family; typical clients for Brighter.
Matthew and Rachel secured a mortgage with Brighter and then went on to have a financial planning review arranged by one of Brighter’s Independent Financial Advisers.
Matthew and Rachel earn £40,000 between them. They have a pension fund (from both personal and employercontributions) totalling £15,000
The Wildes decide to opt for a home-buyer’s financial review after securing a mortgage with Brighter.
When they meet with the Independent Financial Adviser they are provided with the following:
The graphs below show what these income models looked like for the Wildes.
Graph 1 showed Matthew and Rachel that they have a reasonable income to retirement (albeit that they are likely to see an increase during this time)
Around retirement age, Matthew and Rachel will be relying solely on their pension savings to stem the gap before they receive State Pension at age 68 years old.
Matthew and Rachel will receive £1700 a month from their pensions (£20,400 per year ) which only just covers their retirement expenditure
The Wildes are left with very little left over for house maintenance or last- minute trips and holidays, things which a retired couple value.
Matthew and Rachel wanted to know what would happen if they increased their expenditure to £2000 a month to help them with their expenditure, unforeseen expenditure and ad hoc leisure in retirement. This quickly showed them that they would soon run out of money, altogether, apart from the State Pension at the age of around 77 years old. See Graph 2 below.
|Matthew and Rachel's Expenditure||Cost Per Month|
|Broadband & Sky||£80|
|Food & eating out||£550|
|Car maintenance / Running Costs||£200|
|Leisure & Sundries||£50|
Management of the pension portfolio to improve performance of the personal pension.
How we could do this? We consider how to improve the growth rate of the pension.
E.G. If the growth rate of their current savings is 4% we try to improve this to 5%. This can make a difference to the final pot, taken at 65 years old from circa £55,000 to circa £75,000.
Assistance to help them achieve their desire for £2000 a month spending budget in retirement.
How we could do this? We identify savings from additional protection and mortgage savings that could be put towards the pension pot.
E.G. If we make savings of just £50 for Rachel and Matthew to put towards their pension pot and increase the performance of this pension they could have a fund value of circa £138,000 against £55,000 if they stayed as they were today.
Matthew and Rachel receive the above recommendations as part of their home-buyer’s financial review. They are under no obligation to take the recommendations further.
However, if they wished to proceed with the recommendations on offer we would then introduce them to our advice process and show them our Terms of Engagement which can be accessed here