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Long term financial thinking

All of us need to plan our financial futures. This can involve planning for our housing needs, protecting our families in the event of sickness, redundancy or death, and making provision for our old age. With the age that you can claim the state pension rising to 68 for those born after 1978, and further changes expected in the coming decades the average person’s working life will be fifty years or more. Over that time, you can anticipate many changes in your circumstances and expectations. 

Since the 1960’s the average first-time buyer’s age has risen from 23 to 30. The average period for repayment of a mortgage is still 25 years. But, according to research by mortgage broker L&C Mortgages, the number of first-time buyers taking out a 31 to 35-year mortgage has doubled in the last ten years. While the benefits of lower repayments in the early years may make this attractive, there is a penalty in the additional interest you will pay over the longer term. The ability to overpay on your mortgage as your circumstances change is worth looking at when considering which deal to look at. The other point to consider is, how old will you be when the mortgage finishes if you opt for a longer term, as this can vary between lenders. The answer to this is that you need to keep reviewing your mortgage. We have discussed the benefits of fixed rates over 2 or 5 years in the past. We can expect the mortgage market to change over the next few years as much as it has changed in the recent past, so the ability to switch to a more appropriate mortgage as your circumstances change is easier than it has ever been. 

With the average age for people to have their first child is now over 30, the financial provision we make to secure our lives and families need to reflect the fact that we may have young children well into middle age. The potential for changes in health, employment and person circumstances is greater between 30 and 55 than at any other time of life, according to an article in The Independent last year. This means that insuring you have the cover to protect your income and lifestyle whatever life throws at you is an important consideration. The main thing to consider is that life changes and that the cover you had five years ago may not be relevant now, so regular reviews of your situation should be part of your plan from the start.

The changes taking place in the wider world will affect interest rates, employment prospects, savings and the provision you need to make for your family. Who would have predicted Brexit ten years ago for instance? At Spot On Mortgages we work with our clients to ensure they are informed and up to date about the latest developments and thinking in the world of mortgages and insurance. Please get in touch if we can help with your personal circumstances.     

 

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