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Life throws the unexpected, and its bills, at us. If you have maxed out your mortgage, then life’s hiccups can make things difficult, and anything more than a hiccup can bear significant weight. If you are lucky enough to be in a job where your progression and earnings are constantly improving then things will be easier. But this is not the case for many. It pays to plan and to build yourself some leeway. You can soon calculate your regular payments, but it’s good to be prepared for some of the major, but less obvious, costs that can crop up unexpectedly.
There are plenty of ‘set-up’ costs when you have a new child. The Money Advice Service details these, and beyond this states that the cost of raising a child until they are 18 is well over £75,000, excluding childcare. Eek. Of course, many of the outgoings are wrapped in your regular monthly costs, but as kids grow up there are plenty of extra demands. If they get into sports, music or the like, along with school trips, technology requirements, etc., it can be quite astounding. It’s good to be prepared.
We love our pets, but they can be expensive. Again, many of the costs are regular recurring ones. Pet owners can also opt for pet insurance as a sensible option to be sure medical conditions can be covered. But pet insurance only covers certain illnesses and circumstances and only to a finite level. If you find yourself outside these limitations, it can be incredibly stressful to find the resources. ‘Self-insurance’ involves putting money aside to cover the unexpected.
It’s an awful thought. The loss of a family member unexpectedly would be enough of a trauma to deal with, without having to find the money to contribute to, or pay for a funeral. The average cost is over £4000. Such a loss might be unlikely, but the consequences if it did occur with no financial allowance, could make it all the more strenuous. A funeral plan is one option that allows you the peace of mind of knowing this cost is covered. The Funeral Planning Authority regulates and offers advice on this industry.
Making the decision that a parent needs to move into a residential or care home can be very distressing. It’s also a massive cost and one that is often not considered or prepared for.
Different local authorities are more likely to help than others, so it can be pot luck. Fees are scarily high (averaging £25K a year for a residential home or £34K for a care home). Even if your parents have a home to sell to cover the costs, these funds can soon be spent. Choice of care home will depend on what can be afforded and you may find yourself facing top-up fees. This is Money has a good guide.
The threat of losing our income is something we try not to think about, but the consequences can be crippling. There is a complex world of mortgage payment protection (we’ve all heard of PPI thanks to the mis-selling by now!) and critical illness cover. It is generally noted that there is no such thing as fail-safe redundancy cover. Different plans cover for different time limits and circumstances, and as you cover for more, the costs rise rapidly. Whatever you opt for, it’s considered a sensible bet to ensure you have around 3 months of essential outgoings saved.
Finally, the cost of owning a home comes with plenty of surprise costs. A boiler breakdown, a leaking roof, a kaput washing machine or similar. A couple of these in a short time-frame can make you dig deep.
The lists goes on, a major issue with your car can cost a fortune, and dental work can hurt in more ways than one. The Bank of England has admitted the uncertainty of interest rate levels, although now the general election has taken place, and Brexit is a priority for the government, there may be more confidence in the economy in 2020. The multiple insurances available for everything could soon eat all your cash. Overall, the key is simply to be sensible with you estimated mortgage payments because life can be expensive. Know your spending habits, clear your debts and have a fall-back. Then sit back and see what life throws at you.
Moving and Improving Business Director, Amanda Cryer, is passionate about helping people make the best choices at the right times with regards to their homes, finances and family.
‘If there is one piece of advice I would give regarding your mortgage, it would be to use a professional mortgage broker and review your mortgage every two years. I personally would recommend a mortgage broker who has access to whole of market products and not one that is linked to a specific lender.
Interest rates and the value of your property will change as well the equity you have accumulated and all of these factors affect the interest you pay. Our mortgage brokers can make sure you have the best deal in the market for your current circumstances and save you money.
A Financial Advisor can also help you plan for all eventualities and give recommendations and advice on all aspects of financial planning. This may include income and critical illness protection, pensions, savings or even advice on policies to protect against the future costs of care for you and your elderly family members.'
Meet Robert Haddrick, one of the mortgage brokers, rated and recommended by Moving and Improving. We asked Robert why he would recommend using a mortgage broker
‘I can assess your requirements with a simple chat – whilst listening to your needs and assessing your financial situation – time and money is precious.
I make recommendations that put your needs first – once I have assessed your situation, and I search the market using our nationwide contacts, having access to over 90 different lenders so you’re not just restricted to one bank or building society. Having this flexibility gives you much more choice to find the right deal for you. I also have access to deals you can’t get by going direct! In fact, some lenders only accept applications via a broker!
I deal with the application so you don’t have to worry – once you’ve decided on the mortgage product, you can then leave it in my hands, you don’t have to waste your time filling out application forms.
I can deal with everything else – Life insurance assessment, checking the market for the best deal for your requirements, looking after the application process. I can even help with home insurance quotes and finally solicitors and valuations all covered in the service without having to leave the house.
And I will contact you 3-6 months before your deal is due to come to an end and repeat the process so you know you are always getting the best deal for your needs. You never know what the future holds, you may wish to borrow more money, you may want to get a bigger place, downsize, consolidate debt, just find a better interest rate. All your needs are assessed on an ongoing basis and your mortgage and protection are tailored to you throughout your journey.’
This article has been written for us by Aaron James. Aaron is a freelance writer based in Sussex specialising in Lifestyle and Business.
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