Expert Financial Advice At Aitana Financial Services

Get in touch with Paul for a no-obligation chat about how he might be able to help you Financial needs

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Meet Paul

Paul joined Aitana in 2016 after a varied career. He currently specialises in Pension, Investment and Protection advice, both for individuals and businesses, as well as offering mortgages for individuals. He was born and bred in Kent and currently resides in Bearsted, just outside of Maidstone. In his spare time he enjoys travelling with his wife Julianne.

Mortgage & Protection Advice

For most of us, buying a home will be the biggest financial decision we’ll ever make.

When finding a mortgage product that will meet your requirements, both your income and outgoings will play a part.

The EU Mortgage Credit Directive of 2015 introduced stricter lending criteria, which led to mortgage lenders having to take greater steps to check affordability – including on remortgages.

These rules require your lender to check you can afford your repayments, both now and in the future. To do this, they will need information about your income and outgoings. You will have to inform them if you expect your income and outgoings to change in a way that means you’ll have less to spend on your mortgage repayments. You will also need to provide your mortgage lender with evidence of your income.

Before you choose a specific deal, you need to decide what type of mortgage is the most appropriate for your needs.

Your monthly payment fluctuates in line with a standard variable rate (SVR) of interest, which is set by the lender. You probably won’t get penalised if you decide to change lenders and you may also be able to repay additional amounts without incurring a penalty. Many lenders won’t offer their SVR to new borrowers.

These schemes allow you to overpay, underpay or even take a payment ‘holiday’. Any unpaid interest will be added to the outstanding mortgage, while any overpayment will reduce it. Some have the facility to draw down additional funds to a pre-agreed limit.

Your monthly payment fluctuates in line with a rate that’s lower, or more likely higher than a chosen Base Rate (usually the Bank of England Base Rate). The rate charged on the mortgage ‘tracks’ that rate, usually for a set period of two to three years.

You may have to pay a penalty to leave your lender, especially during the tracker period. You may also be liable to pay an early repayment charge if you overpay on your mortgage during the tracker period. A tracker mortgage may suit you if you can afford to pay more when interest rates go up – and, of course, you’ll benefit when they go down. It’s not a good choice if your budget won’t stretch to higher monthly payments.

An offset mortgage enables you to use your savings to reduce both your mortgage balance and the interest you pay on it. For example, if you borrowed £200,000 but had £50,000 in savings, you would only have to pay interest on £150,000. Offset mortgages are generally more expensive than standard deals – but they can reduce your monthly payments whilst still allowing you to access your savings.

Like a variable rate mortgage, your monthly repayments can go up or down. However, you’ll get a discount on the lender’s SVR for a set period of time, after which you’ll usually be switched to the full SVR. You may have to pay a penalty for both overpayments and early repayment and the lender may choose not to reduce (or to delay reducing) its variable rate – even if the base rate goes down.

Discounted rate mortgages have the advantage of offering a gentler start to your mortgage repayments, at a time when money may be tight. However, you must be confident that you’ll be able to afford your repayments when the discount period ends and the rate increases.

With a fixed rate mortgage the rate stays the same, so your payments are set at a certain level for an agreed period. At the end of that period, the lender will usually switch you onto its SVR.

You may have to pay a penalty to leave your lender, especially during the fixed rate period. You may also be liable to pay an early repayment charge if you overpay during the fixed rate period. A fixed rate mortgage makes budgeting much easier because your payments will stay the same during the fixed rate period – even if interest rates go up.

On the other hand, it also means you won’t benefit if rates go down.

Capital repayment

On a repayment mortgage, your monthly payments will partly go towards repaying the interest accrued on the money you’ve borrowed and partly towards repaying the capital sum (i.e. the amount you borrowed).

The benefit of capital repayment is that you’ll be able to see your outstanding mortgage reducing each year (albeit very slowly in the early years), and you are also guaranteed that your debt will be repaid at the end of the mortgage term, as long as you keep up your payments.

On a capital repayment mortgage, the shorter the term you pay your mortgage over the bigger your monthly payments will be. By having a longer term, you may benefit from a lower monthly payment, but you will also pay more interest to the lender over the mortgage term.

You will need to think about how soon you want to be ‘mortgage free’ and weigh this up against a mortgage term that makes your monthly repayments a ordable.

Capital repayment is the most common way of repaying your mortgage.

Interest only

For an interest only mortgage, your monthly payments will only cover the interest on your mortgage balance. The capital you owe (i.e. the amount you borrowed) will not go down and you will need to repay this in full at the end of your mortgage term. This means you will need to make a separate investment or combination of investments to generate the capital required, and you will also need to prove that you can afford to do this. You should bear in mind that the value of investments can go down as well as up and you may not get back the original amount invested. For an interest only mortgage, the lender will need to see your plan for repaying the loan when the interest only period ends. If you fail to generate enough to repay your mortgage by the end of the mortgage term, you may be forced to sell your property.

With an interest only mortgage, you must be able to demonstrate how you will repay the capital sum at the end of the term.

It’s easy to underestimate the costs involved when buying a property.

Valuation fee

Lenders may ask you to pay a valuation fee. The type of valuation you choose will depend on factors such as the age and condition of the property.

Application/Arrangement fee

These are the costs your lender will charge you for arranging your mortgage. Some lenders will allow the fee to be added on to your mortgage, but this means you will be charged interest on it over the mortgage term.

Legal costs and fees

The fees charged by a solicitor will include their conveyancing fee (i.e. for the transfer of land ownership), as well as charges for legal registrations and other miscellaneous costs (known as disbursements) such as local search fees and Land Registry fees. Some lenders may offer to finance some or all of your legal costs as an incentive.

Higher lending charge

If the amount you wish to borrow is greater than a specified proportion of the property’s value (typically 75%), you may incur a higher lending charge.

Early repayment charge (ERC)

Lenders may charge an ERC if you make an overpayment in excess of any stated limit, if the loan is repaid early or if you remortgage during the early repayment period. This can amount to a significant cost, so you should always check the early repayment terms in the o er letter from your lender.

Deeds release or exit fee

Lenders may charge a fee to release the deeds of a mortgaged property to you or a new lender.

Our advice fee

Before we get started, we will explain how we will be paid for arranging your mortgage.

Stamp Duty

When buying a property you may be required to pay stamp duty.

Protection

All lenders require you to fully insure your property for the total cost of rebuilding it. Buildings insurance covers your home, as well as its fixtures and fittings.

Contents insurance protects your household goods and personal property.

This type of insurance policy pays out a lump sum if you’re unfortunate enough to be diagnosed with a specified critical illness such as cancer, stroke or heart attack. You can use the cash pay out to clear your mortgage, pay for medical treatment or anything else you might choose.

This can replace part of your income if you’re unable to work for a long period of time as a result of illness or disability. It will pay out until you return to work, the policy ends or in the event of your death. Income protection plans usually have a waiting period before the benefit becomes payable; the longer the waiting period you choose, the lower your monthly premium will be.

If you die unexpectedly, a life insurance policy will pay out a cash sum to your family. Mortgage protection is a type of term assurance where the amount of cover decreases over the term of the policy, tying in with the outstanding amount on your repayment mortgage.

MPPI helps you keep up your mortgage repayments if you can’t work because of accident or ill-health. Benefits are usually paid for 12 months, although some providers offer 24 months’ cover for accident and sickness only.

Serious illness cover pays out a cash lump sum of between 5% and 100% of the total cover, depending on the severity of the illness.

The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.

Approved by the Openwork Partnership on 31st March 2023

Pension Savings

You have now reached a stage in your life where you are considering your retirement options. How you might retire, and how your pension savings can fund that retirement. Retirement is changing and the way you access your money in retirement needs to show this. Nowadays, there are many options available to retirees. It’s important to understand the options now available to you and whether your existing plan can meet your needs. Your Financial Adviser can help you carefully consider whether the options you need are available from your current plan and if not, what you can do about it and how much it will cost.

In April 2015, the Government introduced “Pension Freedoms” which gave you greater freedom and flexibility over how to access your pension savings. Anyone now aged 55 and over can take either a partial or whole lump sum from their pensions savings. No tax will be paid on the first 25%, and the rest regardless of how and when it is taken is taxed as if it were a salary at your income tax rate. There are now essentially four main ways for you to access your pension savings. 

Buy an Annuity       

You can convert your pension pot into a taxable income for life by purchasing an annuity. There are different annuity options that would determine the level of income you would get. Not all annuities provide death benefits, so you may not be able to pass your pension pot on to your beneficiary.

Flexi-Access Drawdown

Your pension pot is invested, but you are able to withdraw an income as and when it suits you. This provides you with flexibility to set the income you want. However, the level of income, or how quickly your fund becomes depleted can be dependent on the performance of your investment, and unlike with an annuity, your income isn’t guaranteed for life.

Take it all out as cash   

You can cash-out all your pension savings. You can normally take 25% tax free and you pay income tax at your marginal rate on the rest. This could cause a larger tax bill the following tax year.

Take part of it out as cash   

You can cash-out part of your pension savings. You can normally take 25% tax-free of the amount you take with the rest taxed at your marginal income tax rate. You can do this as many times as you like until you no longer have any pension savings.

Whichever route you choose, to stay where you are, move now or if you decide to move later, it is worth remembering that you should always seek financial advice.

All pension income, other than the Pension Commencement Lump Sum (the tax-free cash element) is taxable at your highest rate of income tax. Suitable pension planning advice can allow you to access your pension savings in the most tax efficient manner and ensure you don’t pay more tax than you need to. So, it is essential that you speak with your Financial Adviser before you make any decision.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.

Approved by the Openwork Partnership on 31st March 2023

Saving Investment

Two principles which apply to many aspects of financial planning are particularly relevant when planning for your child’s financial future:

  • The longer the timescale, the more scope there is for your investments to grow
  • Taking expert advice will help you get the decision right first time and avoid potential pitfalls 

A bit of forethought will make finding the right solution a lot easier. When considering the best way to save for your children, there are three main points to consider: 

Ownership and investments

Giving ownership of a significant investment to a child under the age of 18 is not usually recommended and it is advisable to retain guardianship over at least some of the money until they are over 18. Otherwise, a child could turn an investment into cash and spend it, on the very date of their 18th birthday (16th birthday in Scotland).

Choosing the investments

If you make the decision while your children are still quite young, then you have the benefit of being able to take a long-term view to maximise the potential for growth. While a long-term perspective means a broad choice of options, it also means you should review your choice of investments on a regular basis.

Tax

Tax should never be the driving force behind your investment decision. You only pay tax if you are making money – whereas, making an inappropriate investment just to save tax could end up with you losing more. However, once you have decided on the most suitable investment, it then makes sense to invest via the most tax-efficient route.

Note: it is worth bearing in mind that the three above mentioned issues can sometimes conflict. For example, your choice for ownership may not fit with the most desirable tax treatment.

Goals

Setting a goal or goals is an important part of the investment process and can help you determine how much risk you need to take. We can help you be confident in setting your goals, once set, you need to stick to these where possible. Making changes once the investment is in full ight can incur administrative and cost issues – which may result in poorer overall returns.

Allocation

Once risk factors and goals are determined, you can start to work out what type of assets you want to invest in. Getting an asset allocation arranged is vital and is considered a key stage in the investment process.

Fund choice

When it comes down to choosing investment funds, there is a vast choice and selecting funds is much more complicated than just picking the three top performers. In any event, past performance is not a reliable guide to the future.

Even within what might seem quite small, different funds can achieve results in quite different ways. For example, table-topping funds could carry the highest risk because they may be concentrated in a limited number of holdings.

Choosing your funds may be the end of the investment decision process, but it is not the end of the exercise. After fund choice, you need to decide what type of product or ‘wrapper’ you need, bearing in mind tax considerations and the requirement for flexibility.

Currently, there are six main options, two of which are specifically designed for children:

Junior ISAs and ISAs

Any child under 18, living in the UK, can have a Junior ISA (JISA). The maximum investment into a JISA is £9,000 a year (2022/2023 tax year) and investment can be by a number of different people. Income and gains within a JISA are free of UK tax and not subject to parental tax rules.

Children aged 16 and 17 can also own a cash ISA. Unlike the JISA, this ISA can only hold cash deposits. The maximum investment for the 2022/2023 tax year is £20,000. Between 16 and 18, any tax liability arising on the interest paid will fall on the parents.

Both JISAs and Cash ISAs can be controlled by the child from age 16, but withdrawals are not normally allowed before age 18.

An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.

Child Trust Funds

Child Trust Funds (CTFs) are no longer available for new applicants, having been replaced in 2011 by JISAs. However, some CTFs will still be active and the same rules apply as before. Children can get control at 16 but can’t access funds until 18.

Note: No child can hold both a JISA and a CTF. If a JISA is preferred, there is now the option to transfer the proceeds of CTF into a JISA, usually without penalty.

Investment bonds

Investment bonds are single premium policies which can be useful for the management of lump sums placed into trust. Like collective funds, they are also available from both onshore and offshore providers. The underlying investments are usually collective funds, but the overall tax treatment is different and based on life assurance tax rules.

Indeed, it is that treatment that makes them suitable for trust investment. Firstly, income accumulates within the bond itself, minimising the associated administrative and tax issues. Secondly, onshore bonds enable the deferment of certain income and capital gains liabilities. Which means that, other than withholding taxes, tax can be carefully managed both during the investment term and also over the period in which it is finally redeemed.

Personal Pensions

Personal pensions come with no minimum age restriction and contributions are limited to a maximum of £3,600 a year.

Contributions to a personal pension are made net of basic rate tax, meaning you can start to build that £3,600 a year at a net cost of £2,880, regardless of your own tax position. No further Income Tax or Capital Gains Tax will be payable on the investments held in the personal pension, until your child starts taking benefits, which currently cannot be before age 55.

National Savings & Investments 

National Savings & Investments (NS&I) also offers a limited range of products suitable for children, with varying tax advantages.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.

Approved by the Openwork Partnership on 31st March 2023

Investment Principles

Quite simply, you put money aside to use in the future. You invest or buy something which you think will hopefully increase in value.

We always say it’s a good idea to keep an emergency fund to dip into if your car breaks down or you need a new boiler. But there’s no set amount to save. It’s individual to you and your circumstances. Over and above this you can invest, and try to make that money work for you as much as possible.

There are four big headings here: cash – which is the least risky, but because it’s low risk, it’s generally low reward. But it’s easy access and a good place for your emergency funds to be. We’re talking here about ISAs, current accounts, deposit accounts and national savings and investments.

Then there are equities – shares and things like that that tend to be higher risk. These are for people who are more adventurous, although people with a lower attitude to risk can use them to balance out their risk profile.

Next is property. People invest in Buy to Let property, residential homes or commercial property to benefit from rental income and potentially growth in value.

Finally there are fixed interest securities like gilts, which are effectively a loan from the government that pays a fixed rate of interest. These were historically called coupons because you actually had a coupon until the date of maturity. The other category here is corporate bonds, which are similar to gilts. They’re issued by a firm and you’re paid a pre-established number of interest payments, either fixed or variable. When it expires, your original investment is returned.

There are also a few alternatives like gold, art, even whisky – there are all sorts of investments. If you can buy it, you can probably invest in it.

It depends which way you go. Each asset class comes with positives and negatives. Investing can be really rewarding depending on what you do and your attitude to risk.

Higher risk generally gives you higher possible rewards, depending on how the investment performs. As I said, cash is lower risk, with little reward, and inflation can erode the value of the interest you gain.

Property is a real asset that provides possible income and capital return, but the drawback is that you face higher stamp duty and Capital Gains Tax.

The best thing is to discuss your thoughts with us and we can explore the pros and cons together.

We would look together at your individual attitude to risk and your capacity for loss. We need to make sure that if you’re investing, you’re putting your money in the right place.

If you ask somebody why they want to invest, they will say that they want to make money – we all do. But when we drill down in a conversation with them, we find that everybody’s circumstances are different and their attitude will vary completely.

We’ve got the knowledge to guide you into the right place for investing, and we can hold your hand throughout that investment journey. You will gain annual reviews with a financial advisor, at the very least, but I’m always on hand to answer questions from my clients.

The value investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.

Approved by the Openwork Partnership on 31st March 2023

Kevin Paul Manktelow trading as Aitana Financial Services is registered in England and Wales, company number 215234. Aitana Financial Services is a trading name of Kevin Paul Manktelow which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority is registered in England and Wales.

The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.

Approved by the Openwork Partnership on 31st March 2023

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