lumin news Issue 8 / Summer 2023

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Page 8 lumin news 8 / summer 2023 Pay into your ISA at the start of the tax year for maximum benefit Many investors contribute to stocks and shares ISAs at the end of the tax year, as the 5 April deadline draws near. But this can lead to a lot of money being left on the table over the years. FACTSHEET Make the most of your ISAs Request a free factsheet via enclosed response card, info@luminwealth.co.uk or call the Lumin team on 03300 564 446 FIONA READ Senior Financial Consultant fiona.read@luminwealth.co.uk Phone 01727 893 333 Every UK adult can pay up to £20,000 into an ISA each tax year. Under-16s can contribute £9,000 a year, while those who are 16 or 17 can additionally contribute up to £20,000 into an adult cash ISA equivalent. Adding to stocks and shares ISAs as early as possible in a tax year can be beneficial over the long run. Stocks tend to rise over time, and so it normally pays to be invested sooner rather than later. The ‘snowball effect’ The benefits of compounding mean that your investments get bigger over time with every roll. Paying into your investment ISA at the start of the tax year allows your ‘snowball’ to roll from the top of the hill. The illustrative example (right) highlights the difference early payments can make to investment returns over time. If a saver contributed £12,000 annually into an investment ISA at the beginning of each tax year, rather than the end, they would be nearly £27,000 better off after 30 years. Long-term rewards Share prices do of course fluctuate. In good years you can reap large gains, but there will also be lean years when your investments may decline. The average return on UK equities is just under 8% over the past 60 years. Holding other assets can help smooth out returns (this is known as diversification). ISAs – and other tax wrappers such as pensions – form a valuable part of an overall financial plan. Contact the Lumin Financial Planning team on 03300 564 446 to find out more. ISA subscription: Start vs. end of tax year Assumptions: £12,000 annual subscription; 4% net investment return; figures rounded. Illustrative Timing of top-ups investment value after: End of Start of Difference tax year tax year 5 years £65,000 £67,600 £2,600 10 years £144,100 £149,800 £5,700 20 years £357,300 £371,600 £14,300 30 years £673,000 £699,900 £26,900 Lumin and VZ: Expert and trusted financial advice Expert financial advice continues to lead to positive results at VZ Group, Switzerland’s leading independent financial services firm, which partnered up with Lumin from May 2021. What does this mean for you? As part of an exceptional and financially secure group that has been well-established for 30 years in Switzerland, both current and future Lumin clients can be confident they are in very safe hands, with the requisite range of advice capabilities and a very strong commitment to enhancing client propositions and experiences. Lumin has also been investing in an Academy to train and develop a younger generation of financial advisers to counter a general shortage of advisers in the UK. The bottom line is that you can count on Lumin as your trusted, long-term, professional partner to look after your financial advice and wealth management needs, both now and in the future. To find out more about VZ and its financial results please visit the following link: vzch. com/financial-reports. VZ Group: AUM and client numbers AUM = assets under management (in CHF millions) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2012 Total AUM 2014 2016 2018 Years 2020 Number of wealth management clients 2022
lumin news 8 / summer 2023 Page 9 Remortgaging: Ways to lessen the impact of higher rates Many borrowers face much more expensive new mortgage deals after rates shot up over the past year. But a disciplined strategy could save thousands of pounds. Welcoming our new mortgage partners JOE FISHER Financial Planning Manager joe.fisher@luminwealth.co.uk Phone 02039 887 788 Is your fixed-rate mortgage expiring soon? Some of the explosive jump in fixed-term interest rates seen over the past year has been reversed in recent months, but levels remain much higher than for most of the past decade (see chart). Unusually, rates for five-year mortgages are below two-year fixes. Variable mortgage rates have continued to rise as the Bank of England increases official interest rates to fight inflation. This article covers key considerations if your mortgage is coming to an end. Start looking early You can normally secure a deal up to three to six months Higher mortgage rates 7% 6% 5% 4% 3% 2% 1% 0% 2013 2015 2017 in advance. If you don’t act in time, you could end up on expensive standard variable rates. It may take a couple of months to remortgage, but this can be quicker if you’re switching to a new mortgage at your current lender. Tip: A good mortgage broker can often find you a cheaper rate. They may also monitor the locked-in rate and reduce it if the lender’s rates drop before your rate is due to start. Loan-to-value (LTV) The LTV measures the outstanding mortgage amount against the market value of your home or property, with the difference being your equity. The lower the LTV, the better the mortgage rate (up to a point), which means lower monthly repayments and better affordability. Market-leading mortgage rates are normally available for LTVs of 60% or below. Tip: You could appeal a lender’s valuation if you have 2019 Years 2021 2-year fixed 5-year fixed 2-year variable Source: Bank of England; interest rates on 75% LTV mortgages to households 2023 made significant home improvements, as this may lower the LTV. Providing photographic evidence can ‘build the case’ with the lender. Repayments You may be able to lengthen the mortgage term and reduce monthly repayments. This requires a full lender review of your finances. You could potentially choose to keep repayments at the same level as before, for a budgeting cushion. If needs be, you could reduce repayments to the minimum level. Interestonly mortgages are also a way to keep monthly mortgage payments in check. Tip: Interest-only mortgages tend to be more readily available on investment properties. Fixed vs. variable rates Choosing the mortgage type (fixed versus variable) or the length of a fixed-rate period can be a daunting task. Tip: A mortgage adviser can help you make this key decision by highlighting rate comparisons, and the advantages and drawbacks of different products. Don’t rest on initial offers. The basis on which banks set mortgage rates has come down, and this, together with increased bank competition, has led to cheaper UK rates. Call 03300 564 446 to learn more. Mortgage specialists Davidson Deem have recently joined the Lumin family. Joint directors Peter Stokes and Brian Keane both have a wealth of experience that Lumin clients and future clients can now readily access on an ongoing basis. Davidson Deem provides a bespoke service that sees clients deal directly with Peter or Brian. This enables them to provide a highly personalised service and has resulted in a loyal client base, with some existing clients partnering up with them for more than 20 years. Davidson Deem sources deals from across the UK mortgage market, and has particular expertise when it comes to advising high-networth individuals including doctors, lawyers, and company directors. They charge a standard mortgage advice fee of up to £400, but Davidson Deem does not charge to help you select a new rate with your existing lender. FACTSHEET Top tips on remortgaging Request a free factsheet via enclosed response card, info@luminwealth.co.uk or call the Lumin team on 03300 564 446
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lumin news Issue 8 / Summer 2023

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