Investing to try to improve deposit savings
We were approached by a retiring couple on retirement in 2013 when they were seeking some annuity advice.
A key part of their post retirement activity was going away on short trips with friends as well as looking after the grandchildren most weeks. They had a combined net annual income in excess of £27,000 derived from state & private pensions.
As a part of their annual review we discussed the level of savings they held in the bank. They felt that they had too much money on deposit earning very little interest and nothing after taking account of income tax and inflation.
They wanted to obtain an improved return with some of this money for capital growth purposes. They had not taken advantage of this year’s ISA allowances and were keen to do so.
They were prepared to invest a lump sum of £125,000.00 over the medium to long term and wanted it invested in the most tax efficient manner for capital growth.
We discussed the different types of funds available such as multi asset multi manager, single manager multi asset, tracker type and passive funds as well as their circumstances in relation to the principles of risk and reward and agreed their risk profile was balanced.
We agreed on an investment of £95,000.00 into a Collective Investment Account (CIA) combined with an investment of £15,000.00 each in to an individual equity ISA each. Each year we can transfer monies from the CIA into their ISA’s which improves the overall tax treatment applicable to the investment.
This type of ‘tax wrapper’ account supports the different tax treatments available for invested money including ISA's, Pensions, General investments (such as in OEIC's and Unit Trusts) and Bonds wrappers. It provides investors with access to a wide range of funds with a simple charging structure which they can understand.
We are committed to continue to provide a full review service to our clients and review their pension needs and investment objectives on an annual basis.
Securing a Mortgage with 12 months Trading Accounts
Purchase Price: £245,000; Mortgage Required: £208,000; Term: 21 Years
A small business owner was referred to us by an existing client; she had been running a successful Fish and Chip Shop in Gloucestershire for just over one year and wanted to purchase her first home.
After approaching her bank for a mortgage and searching online she continued to come up against an obstacle – the company only had 1 year of trading accounts. The standard response she was met with was “come back in 2 years’ time”.
When we were first approached by her we were confident that the mortgage could be placed with a specialist lender. We initially completed an AIP (Application in Principle) which gives an initial decision based upon the clients’ income, regular outgoings, monthly expenditure, credit score and the amount that they want to borrow. This came back as an ‘accept’ with the next stage being to gather numerous additional documents and progress to a ‘full application’ stage.
With all the supporting documents (personal and business bank statements, I.D., certified accounts, SA302, proof of address for her current and previous home and proof of deposit funds) in place, and accepted, we had to wait for the underwriter’s response.
Initially, they stated that there may be a problem with the qualification that her accountant holds as it did not meet their requirements. Her Accountant confirmed that he was not registered with the ICAEW or ACCA - this presented a slight hitch. After much careful consideration we contacted a suitably qualified accountant in her area who was able to liaise with her existing accountant to complete, submit and fully sign off the accounts.
Our client then found herself in a legal dispute with the local council as a sign post in her front garden meant that part of the land within her property boundary did not belong to the property. We liaised with her solicitor and the local council to ensure that the problem was resolved. During this period of time her mortgage offer expired so we contacted the lender to request an offer extension - after completing several forms this was granted.
Our client was then able to complete her purchase and move into the property.
Offer of Commercial Lending secured within 3 days
We were approached for help by a property investor who had purchased a plot of land to build 10 houses. He had a good working relationship with his bank and had approached them to secure lending. After almost 2 months all he had was a proposal to lend him just 50% of the value of land and 50% of the build costs.
This of course was of no use to him and there were a multitude of conditions that made the deal very expensive to progress. His frustration was very evident. Following a full review of his circumstances and plans, we were able, in just 3 working days, to obtain for him 65% of the gross development value (GDP) which was more than sufficient for the build cost and the land.
This was done on a draw down basis which meant he only paid interest on the facility for the money that he drew down and there was also no exit clause. Needless to say our new client was extremely happy.