Market update
The average Scottish House price continues to rise – the most recent quarter showed a 4.9% growth annually. This is the fifth quarterly rise in a row which is positive for all homeowners. The average price for a property in Scotland is now £186000.
The number of house sale completions continues to rise with the average number of house sales per year sitting just under 100000 and this is the 4th quarter in a row showing a positive rise.
Mortgage Update
Mortgage approvals continued to rise with just under 7000 first time buyer mortgages and just over 6000 home mover mortgages showing the willingness of the mortgage lenders to lend continues to improve.
Mortgage rates continue to be steady with small reductions in February and May 2025 and the Bank of England base rate is holding steady at 4.25%. This has allowed the mortgage lenders to be more accurate with their projections for affordability – this had impacted many new mortgage applications since 2022 as the lenders had to take into account affordability if there were significant increases in Bank of England base rates so restricting the amounts they were prepared to lend.
There is now more confidence in the market so clients may find better affordability than this time last year or even 2 years ago.
Insurance Update
In this edition we will focus on life insurance – the most basic and most well-known insurance which many of us have arranged mostly from a mortgage or other financial adviser. It is important to understand whether you have a level term, an increasing term or a decreasing term policy.
Decreasing term
The most often used policy type to protect a mortgage and it was the least expensive type of cover – there is a very good reason for that – if you had taken a £150000 mortgage over 25 years and matched this with a decreasing life insurance policy of £15000 for 25 years then every year as your mortgage decreases so the amount of life insurance you have decreases until in the last few years of the mortgage your life insurance may only be worth £10000 – £20000. This may pay off the outstanding mortgage but may not leave anything for your family as a legacy.
A slight increase in premium cost allows a
Level term policy
– if we use the same example of a 25 year £150000 mortgage this time with a level term policy then even in the last few years of the mortgage the life insurance payout is still £150000 – enough to clear the outstanding mortgage but also a surplus to leave to family members as a legacy and cover funeral costs etc. The main downside to this type of policy (particularly over longer terms) is the impact of inflation. £15000 in 20 years time will not have the same buying power as now. Think about the cost of a tank of fuel or your weekly shop now compared to 20 years ago and this gives an indication how inflation works in real terms.
A third option is available – an
Increasing term policy
– e.g. if we again start at £150000 over a 25 year term then you can preset an increase to help counteract inflation. You can either set the increase yourself (between 1% and 10%) or set it to the RPI (a measure of inflation) To give an example a typical £150000 life insurance policy for 25 years for a 30 year old non-smoker would typically cost around £6 per month on a level basis. A typical annual increase from the insurance company would be an increase in premium to £6.36 for an increase in cover to £154500. These increases are normally optional which means you can say no and leave the cover exactly as it is.
It is definitely worthwhile exploring all your options with regards life insurance and we offer a free, no obligation review of all your current policies and can offer recommendations for any changes to bring your policies in line with your needs.
As an independent broker we have access to many insurance companies and can guarantee that at the very least we deal with all 10 of the top ten rated UK life insurance companies so you can be confident you are in good hands with us.
Estate Planning Update
In this blog we will focus on Wills and how straightforward it can be to put a Will in place and the consequences of ‘not getting around to it’
This is a sensitive topic and many of us put off this crucial aspect of future planning as it can be upsetting to think about what happens after you die but I can say with 100% confidence it will be many times worse for your family if you die and have not left a Will to describe your wishes.
Typically a professionally prepared Will for a couple who jointly own a property (maybe with or without children) of a few hundred pounds – well worth it for the peace of mind this gives to you and your family.
Currently, (and usually increasing) the average solicitors fees for dealing with an intestate (no will) estate range between £2500 and £7500. The process can very often take 1-2 years to complete.
A professionally, well written will that is accurate can be reasonably expected to be followed by non-legal professionals much quicker for a fraction of the costs. You will likely nominate executors whose job it is to distribute your estate (potentially including your life insurance policy) as per your wishes.
Top Tip – your beneficiaries can be (and often are) also the executors of the estate.
Why not ‘grasp the nettle’ and make a free, no obligation, appointment to discuss the options for writing a professional will.
The Will Writer for the business is Andrew Dillon and he can also advise on power of Attorney requirements and any Trusts that are required.
Energy Update
Once again we have an increase in the energy price cap of another 2% taking the average energy bill from £1720 to £1755 per year. Remember this is an average and you may be paying significantly more if you have a larger house or use more energy. This is disproportionate for elderly people who may be at home more during the day or new mums with small children again who have the heating on and using more electricity during the day. In addition we are all paying in the region of £300 per year as ‘standing charges’ whether or not we switch on a light or turn the heating on. There has never been a more important time to review your energy bills and we can do this for you with a free, no obligation appointment to ensure you are on the best deal for your usage.
