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How are pension contributions invested?

How are pension contributions invested? Phases Retirement planning has two phases which are: 1. Accumulation Phase – This is the phase where the pension fund is built up by adding funds to it. 2. Decumulation Phase – This is the phase when the benefits of...

Fixed-Interest Securities

Fixed-Interest Securities Bonds A bond is essentially a tradeable commodity where the issuer of the bond owes the holder of the bond a debt and is obliged to pay the holder interest or to repay the principal amount at a later date (maturity). A bond is a generic name,...

Buy To Let

Buy To Let Mortgages Buy To Let Mortgage A buy-to-let mortgage is designed to enable an individual to finance a property for letting rather than for owner-occupation. Lenders treat buy to let borrowing separately from borrowing to buy a property to live in; this means...

Self Build Mortgage

Self Build Mortgage Self Build Mortgages 1. Self Build Mortgages are targets for borrowers who wish to purchase land and finance the construction of a house.  2. There are a limited number of lenders that provide self-build mortgages. 3. Lenders usually release the...

Islamic Home Finance

Islamic Home Finance Introduction Islamic home finance is based on Islamic finance principles and was developed to allow Muslims to raise finance to purchase a property without compromising religious principles. There are two types: Ijara and Murabaha  Important note:...

Guarantor Mortgage

Guarantor Mortgages Guarantor Mortgage A guarantor mortgage is designed to allow first-time buyers to purchase a home when they do not have the full deposit or do not have sufficient income at the time of buying the home, however, they anticipate they would be able to...

Sub-Prime Mortgages

Sub-Prime Mortgages Sub-Prime Mortgages Sub-Prime mortgages are specialist mortgages for ‘credit impaired’ borrowers and those with County Court Judgements (CCJs). Sub-Prime mortgages are considered high-risk, and due to this, they have higher interest...

Foreign Currency Mortgages

Foreign Currency Mortgage Foreign Currency Mortgages A foreign currency mortgage is one where the borrower’s income is in a different currency from that applying to the mortgage.  1. An example of a foreign currency mortgage is where an individual has a UK...

Product Incentives

Product Incentives Product Incentives Lenders offer incentives to encourage a borrower to take out a mortgage with them. The incentives could be: 1. Legal Fees – The lender may offer to pay all of the legal fees; 2. Cashback – The lender may offer a...

Offset Mortgages

Offset Mortgages Offset Mortgage With an offset mortgage, the account holder’s mortgage and savings are held in linked accounts. 1. The savings are offset against the mortgage account, this means that the mortgage interest is only charged on the balance; 2. The...

Flexible Mortgage

Flexible Mortgages Flexible Mortgages There is no real definition of a ‘flexible mortgage’, but it’s generally accepted that it will have the following basic features: 1. daily interest calculation; 2. ability to make overpayments within specified...

Capped Rate Mortgages

Capped Rate Mortgage Capped Rate Mortgage The capped-rate mortgage varies with the lender’s SVR, however, it has a maximum cap. Essentially there is a limit (cap) on what the borrower pays. 1. If the SVR is reduced then the rate the borrower pays is reduced.  2....

Fixed Rate Mortgage

Fixed Rate Mortgages Fixed-Rate Mortgages The rate and monthly payments for a fixed-rate mortgage are fixed for an agreed period, usually between 1 and 5 years. 1. Once the fixed-rate period has ended, the rate normally changes to the lender’s standard variable...

Tracker Mortgages

Tracker Mortgages Tracker Mortgages Tracker mortgages are variable rate mortgages that follow a stated interest-rate benchmark. Base Rate Tracker The Base Rate Tracker is the only variable rate mortgage that directly tracks the Bank of England Base Rate. 1. Lenders...

Discounted Rate Mortgage

Discounted Rate Mortgages Discounted Rate Mortgage The Discounted Rate Mortgage is a variation of the SVR mortgage. Essentially a Discounted Rate Mortgage offers a discount on the SVR for a certain period. For example, if the lender’s SVR is 5%, the discount...

Unit Trusts and OEICs

Unit Trusts and OEICs Unit Trusts and OEICs 1. OEICs and Unit Trusts are pooled collective investments made by regular payments or by single lump sums that are opened-ended (There is no limit on the number of units/shares that can be issued). 2. Unit Trusts are...

ISA’s

ISAs ISA Mortgages The previous unit discussed ISA’s and this section. This section will focus on how ISA’s can be used for interest-only mortgages. Key Characteristics of ISA Mortgages: 1. Only interest is paid during the term – The capital will...

Review Requirements & Complaints

Review Requirements & Complaints Endowment – Review Requirements 1. The FCA requires endowment providers to review the performance of all endowment plans that are being used as mortgage repayment vehicles. The reviews must be carried out at least every two...

Endowments As Qualifying Life Policies

Endowments As Qualifying Life Policies Endowments As Qualifying Life Policies 1. An advantage of endowment policies is their ‘qualifying’ life policy status.  2. In 2012 measures were introduced to limit the premiums payable on qualifying endowments issued...
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