Posted by & filed under Auto-enrolment, Pension.


Welcome to the second part of this 2-part blog post. If you haven’t read through the first part, which goes through the basic fundamentals about Auto-enrolment in general, you can do so by clicking here.

Kindly Note: The value of pensions and investment can go down as well as up and you may not get back as much as you put in. Auto enrolment is not regulated by the Financial Conduct Authority.

How much will an Auto-enrolment scheme cost for my business?
So this is what it all boils down to. How much will Auto Enrolment cost? Well, it’s no surprise that the main costs will be your contribution to the pensions of the eligible staff.

The Government has set minimum contribution requirements to ensure each worker has adequate pension provision and in an attempt to lessen the impact on employers, the contribution levels are being introduced on a phased basis and can be found below:

• Before October 2017 | 1%
• Oct 2017 – Sep 2018 | 2%
• From October 2018 | 3%

The corresponding rates for worker contribution are 1%, 3% and 5%.
It’s important to note that these are the minimum rates, (you may wish to reward your staff with more) and that the rate applies to “qualifying earnings”. For the 2018/2019 tax year, this is earnings between £6,032 and £46,350. (These statistics can be found on the GOV.uk Website)

The pension regulator provides a handy tool to enable you to calculate your contributions, you can view it by clicking here:

Outside of your contributions, there are likely to be other costs associated with implementing and maintaining automatic enrolment. You may need to bring in external help to set up the process, you may need to take on an additional member of staff to manage it and if you are managing it in-house, you’ll need to make sure you have the right software in place that can handle the requirements of auto enrolment.

Many modern payroll systems will have this, but if yours doesn’t or you don’t have any at all, here are some question to ask payroll software providers:

Can it identify whether your staff need to auto-enrol?
Can it calculate pension contributions?
Can it handle opt-in and joining?
Can it handle opt outs and refunds?
Can it support you in generating and issuing letters to your staff?

If you’re selecting new software, it’s important to ensure that it’s compatible with your existing systems too.

With all these additional changes, it’s a good idea to take on third party advice, such as from an accountant or a financial adviser. Feel free to contact us here at Credius, we’re more than willing to guide you throughout all the steps. You can contact us by clicking here.

Which is the best Auto-enrolment scheme for my business?

Choosing an Auto Enrolment scheme can be a real headache and it’s important to stress that not all schemes are created equally.
Whilst it may be possible for you as an employer to make the selection alone, we would strongly recommend using an independent financial adviser. They’ll have access to a wide range of products and can tally your needs with the right scheme for you.

Many organisations might simply see Auto-Enrolment as a burden but making the right scheme choice, may lessen some of this burden as well as have a very positive impact on your employees so it’s important to do your research.

Some good questions to consider when selecting a scheme are:


• Are communication costs covered (the scheme provider should report on a regular basis to each enrolled employee on their pension status)
• Is there a setup fee applied to small employers?
• Do they have simple requirements and on-boarding process?
• What are the ongoing costs?
• Will employees have to make a series of complex investment choices to save for their retirement?

Most employers are likely to use a defined contribution (DC) scheme for automatic enrolment. This is largely because these types of schemes do not promise the member a guaranteed size of pension at retirement. For you the employer, this means you’re only committed to paying a finite amount of contributions to the scheme in respect of eligible workers.

Obviously the core thing to consider when choosing a pension scheme for your staff is that it meets the criteria set out in the regulations, but it’s important to also choose a good quality scheme that provides value for money and protects your staff’s retirement savings and this is where a financial adviser will be worth his/her weight in gold with hundreds of schemes at their fingertips and an in depth knowledge of the sector in general.

The pension regulator provides a handy tool for you to double your scheme meets the regulations, you can find it by A group of people in the shape of an umbrella, weather, isolated on a white background.
Communicating the change to your workforce is a vital part (and a legal requirement) of the Auto Enrolment plan and should not be taken lightly. The more communication you have, the more likely you are to uncover any unforeseen problems early on in the process and the less likely you are to receive kick back from staff members.

A good idea is to begin communication early on in the process and on an incremental basis, starting with a high-level ‘heads up’ message and as time goes on, educating your employees so that they understand what the effects are to them and what category of employment they fit into with regards to Auto Enrolment.

So what do you need to communicate?

Well for Eligible jobholders, they need to know that they will be automatically enrolled into a pension scheme. They will need to know what automatic enrolment means for them. For example, a small amount of money will now be diverted from their salary into a pension pot. When this will happen and how it will work.
They’ll need to be advised that they can opt-out (and if they choose, in certain circumstances opt back in).

If their pension savings are in a contract-based DC scheme or personal pension, they’ll need to know the terms and conditions of the arrangement and where they can find out more information about pensions and retirement saving.

Non-eligible jobholders and entitled workers will receive the same information as eligible jobholders except they’ll need to know that they have the right to ask to join instead of being automatically enrolled.

And lastly, if you have employees who are already members of an existing pension scheme, you’ll need to confirm to them that their current pension scheme meets the criteria for automatic enrolment and you’ll need to give them details of their pension scheme again, even if it has been supplied to them in the past.
Your employees will need to have access to all of this information before they are enrolled to ensure they can make an informed decision about staying in the pension scheme or opting out.

To learn more about your requirements and to explore scheme options contact Credius today on 020 7562 5858 or email info@credius.com.

What is the procedure for postponing Auto Enrolment? Why should you consider doing so?

businessman waiting  time and looking at a clock

So we said earlier that you can only move your staging date forward and not backwards and this is true. However you can postpone Auto enrolment for individuals (or groups of individuals) for up to 3 months in certain circumstances.

The period of time you can put off automatically enrolling an employee is known as your “Postponement Period”.

Why might you want to do that?

A classic example would be for a new starter. If this person started part way through the month, it would mean that their first month’s income (which would only be a fraction of their normal month’s income) might not qualify them for auto-enrolment.

You would then, by law, have to send them notification that they are not eligible for Auto-enrolment. Confusingly though, the next month when they receive their full month’s income, they will be eligible and you’ll have to send out a further communication stating that they are now eligible.

It’s an admin headache and confusing for the new starter so postponing auto enrolment for them until their first full month is a very reasonable thing to do.
Another example might be when you employ temporary staff that you know will not be with you for longer than 3 months. You can choose to postpone their Auto-enrolment for 3 months and ultimately not need to enroll them at all.

The date to which you postpone the enrolment of an employee is known as the deferral date. On the deferral date you assess the employee to see if he or she is an eligible jobholder. If they are eligible you will have to automatically enrol the person into pension saving.

Postponement can also be used company-wide at your staging date if you require more time to integrate the requirements of automatic enrolment into your existing processes. It is also useful if you wish to align the calculation of auto enrolment to be in line with your “pay day”.

A key point to note with postponement is that each time you postpone an employee’s enrolment you have to issue a notice to each person affected stating your actions. Employees can still overturn this however, as they have the right to save into a pension during the period of postponement and you are duty bound as an employer to pay contributions as if you had not postponed their start date.

The overall Auto-enrolment action plan

We’ve given you a hefty amount of information so far in this 2 part blog post and so we thought you might like a useful timeline below to guide you through the process. Enjoy!

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To do right now

Go to the Pensions regulator Website by clicking here and check your staging date:

9-12 months before being ‘Auto-Enrolment’ ready

• Read the Pension Regulators Guides to fully understand your responsibilities as an organisation
• Create your project team across Payroll, Finance, HR and I.T.
• Provide 2 points of contact to the Pensions Regulator
• Speak to your pension provider where you have an existing arrangement.
• Speak to an Independent Financial Adviser to full uncover your scheme options

6-9 months before being ‘Auto-Enrolment’ ready

• Review your internal software – does it need to change?
• Choose an Auto Enrolment Scheme
• Begin initial high level communication with workers to advise them of the upcoming changes

3-6 months before being ‘Auto-Enrolment’ ready

• Complete a worker assessment and format your worker data
• Build automatic enrolment costs into your financial model
• Decide on a level of contributions you want to make
• Plan how it will be managed (internally / externally)

0-3 months before being ‘Auto-Enrolment’ ready

• Implement new software and train relevant staff
• Review worker data for categorisation and measurement of qualifying earnings
• Communication in depth with staff

Onward after being ‘Auto-Enrolment’ ready

• Enrol staff
• Manage opt-outs
• Complete a declaration of compliance
• Monitor ages and earnings
• Maintain records

What are your ongoing responsibilities in running the auto-enrolment scheme for your business?

We’ve concluded our 2 part blog post, but your work certainly isn’t finished just yet!

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So you’ve assessed your workforce, chosen a scheme, communicated it effectively and rolled it out to your workforce – what next?

Well, as an employer I’m afraid the buck doesn’t stop there. It’s your legal duty to maintain accurate records to show that you have complied with regulations. Keeping accurate records also makes good business sense because it can help you to defend yourself against a dispute with an employee and avoid costly litigation.

So what data must you hold and for how long?

By law, there are two different types of records that an employer must keep. The first is records about jobholders and workers and includes:

• National Insurance number (where one exists)
• Date of birth
• Gross qualifying earnings in each relevant pay reference period
• The contributions payable in each relevant pay reference period by an employer to the scheme, and the amount payable. This includes contributions due on the employer’s behalf and deductions made from earnings
• The date contributions were paid to the scheme
• Any opt-out documentation
Records must also be kept about the pension scheme itself, and this would include:
• Pension scheme reference
• Scheme name and address
• Any evidence showing that a scheme meets the regulatory criteria

All Auto enrolment records need to be kept for a minimum of 6 years, except for opt-out documentation which only needs to be kept for 4.
We’d like to say that this should serve only as a simple guide and for a full list of requirements you will need to visit this link.

In addition to maintaining accurate data, do be vigilant in monitoring staff ages and earnings. If you currently employ people under 22 or pay workers under £10,000 you’ll need to ensure they are automatically enrolled once they reach the qualifying age or earnings threshold.

Similarly, you’ll also need to revisit all employees that have chosen to opt out every 3 years and automatically enrol them again.

So that’s the end of our blog sequence on Auto Enrolment. We hope you have find it useful and informative.

We’ve tried to cover as much as possible but if you need a little more info why not click here to visit our website? Want to be kept up to date with regular monthly economic and property market reviews sent straight to your email? Click here to subscribe.
If you have not yet spoken to us about your options, drop us a call today on 020 7562 5858 or email info@credius.com. We look forward to hearing from you shortly.

Posted by & filed under Auto-enrolment, Pension.

Welcome to our no-nonsense guide to Auto Enrolment. Over this 2-part blog we’ll be guiding you through everything you need to know on the subject. This includes what it is, how and why it affects you, how to prepare and the consequences of not being compliant with the new regulations.

Kindly Note: The value of pensions and investment can go down as well as up and you may not get back as much as you put in. Auto enrolment is not regulated by the Financial Conduct Authority.

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A really important point we should get across right at the start is that unless you are a sole trader – this DOES affect you and your organisation, regardless of its size.

So what is it then and what do you need to know?

Well, the government has introduced new pension legislation for businesses. Under these new rules, employers must automatically enrol eligible workers into a qualifying company pension scheme, if they aren’t already in one and make contributions into their pension pot.

We’ll be looking at who counts as an eligible worker later in this blog sequence, but essentially if an employee is over 22 and earns more than £10,000 per year – they’re eligible. Other’s outside of this bracket may be eligible too so it’s worth reading our “Who is eligible?” section later on in this blog.

When do the new rules come into effect?

They are already in effect and staging dates (dates by which organisations must be in compliance) have been set and will vary dependant on the size of the organisation. For the largest organisations, the staging date was back in 2012 and for the very smallest it may be as late as 2018. As we’re already in 2018, it is a must for all businesses to comply with these regulations. If you haven’t done so already, or struggling in the process, Credius is here to help you do it the right way, at the first attempt. It’s better to have auto enrolment setup as soon as possible as it could take you as long as 12 months to prepare for it.

What happens if I don’t comply with the new regulations?

The Pensions Regulator is taking a pretty hard line on any organisation that does not comply and has significant powers to ensure compliance. Pleading ignorance is simply not be an option, nor is already having a pension scheme in place if that scheme does not meet the required standard.

Any organisation falling outside of the regulations will have to back pay into a pension scheme for the time it has not met the regulations in addition to paying escalating daily penalty notices of between £50 and £10,000 per day so get ready to start your preparations as we continue this blog post to ensure you don’t fall foul of the new regulations.

When do I have to be ready for Auto Enrolment?

The first point of call for any organisation in regards to Auto Enrolment is to find the staging date which is relevant to them. This is the deadline by which the scheme MUST be in place and functioning and is dictated by the size of the business. However, as mentioned before, 2018 is the last stage for all business to comply with the regulation regardless of the business size.

What’s really important to stress here is that getting ready for Auto Enrolment may mean significant changes to your systems and processes including HR, Management, IT and Payroll so you need to begin planning 9-12 months before your staging date to ensure everything is in place come the day.

Here’s a quick glimpse of what is involved in Auto Enrolment:

• Eligibility Assessment of all employees
• Registration with the Regulator
• Ensuring compliance of any existing pension schemes
• Sourcing of new schemes
• Communication and management of the enrolment process for all employees
• Management of the opting out process
• Management of contributions
• Re-enrolment of opted out employees on a regular basis
• Keeping accurate records of all the above

Can you change your staging date?

Yes you can, you can bring it forward if you want, but I’m afraid you can’t put it back.
If you decide to bring it forward, you’ll need to inform The Pensions Regulator at least one month before the revised date.
You can also postpone some of your duties by up to three months so they fit in better with your business. The period you postpone for is called a ‘postponement period’.

If you do choose to postpone, you’ll still need to have a qualifying pension scheme set up and communicate this to your employees within six weeks of your staging date and of course you’ll need to advise the Pensions Regulator well in advance that you require a postponement period.

Before you begin – How to create an Auto-enrolment project team?

Depending on the size of your organisation and what you currently have in place already in regards to a pension scheme, your journey to becoming Auto Enrolment compliant could be a tricky one.

Teamwork of businesspeople that works on a new creative project

In this section of the blog, we’re going to be going through the initial preparation that you will have to do in order to be in compliance with this regulation.

A great starting point then, in taking on this significant task is to decide who needs to be involved in the initial planning process and share some of the responsibilities.

Some questions you should ask yourself are:

1. Who is going to be communicating the changes to your employees? How and when is this going to happen? A HR representative would be ideal to take on this task.

2. Who will identify an appropriate pension scheme or determine whether your current scheme is compliant? A financial adviser or accountant might be the best point of call for this.

3. Who will identify which workers are eligible for Auto-enrolment and who will manage the opt-out process? Perhaps a payroll representative would take on this task.

4. Are there any technological changes that need to happen? Do you need upgraded payroll software? If you do need new technology, perhaps the IT department, procurement and training staff need to be identified.

5. Who is going to be the key point of contact (and secondary point of contact) to the Pension Regulator? It is important that you advise the Pensions Regulator well in advance. You can do that by clicking on this link.

6. Who is going to take overall responsibility for ensuring timelines are adhered to and all requirements are met? This might also be the person you have nominated as the primary point of contact which could be someone from your finance department.

Obviously if you’re a small organisation that doesn’t have a Finance, HR, IT or Payroll department this could be a really difficult task to undertake but these responsibilities need to be undertaken by someone. Failing to be compliant on time can have significant financial implications as we’ve mentioned before.
What’s more, there’s also a need for regular compliance checks once the scheme is underway so if you don’t have expertise internally we would strongly recommend taking on the services of a 3rd party consultant or adviser.

Want to have an unbiased chat around Auto Enrolment? You should consider reaching out to us to organise a free confidential initial meeting session see how Credius can be of any assistance regarding this matter.

Are all my employees eligible for Auto Enrolment?

It’s a great question, but unfortunately there is no simple answer to this.
According to the Pensions Regulator, employees are split into three categories with regards to Auto Enrolment:

• Eligible jobholders
• Non-eligible jobholders
• Entitled workers

All employees will therefore need to be assessed to determine which category they fall into BEFORE the staging date.
Additionally you’ll need to monitor those that are not currently categorised as Eligible Jobholders, to ensure that if their circumstances change (a pay increase or they move into the qualifying age criteria) they are automatically enrolled.

To understand who’s who, let’s first look at employees that automatically qualify for Auto Enrolment and must be placed onto a company scheme.
These are known as “Eligible jobholders” and meet ALL of the following criteria:

• Are not already an active member of a qualifying scheme
• Work or usually work in the UK
• Earn more than £11,850 a year*
• At least 22 years of age but under State Pension age

*The figure of £11,850 applies to the 2018/19 tax year and will be reviewed every year by the government.(These statistics can be found on the GOV.uk Website)

Now let’s look at the other two categories.

Non-eligible jobholders:

Non-eligible jobholders are workers in the UK aged between 16 and the State Pension Age and earning upwards of £5,772 but not fitting into the category above.
A non-eligible jobholder is entitled to opt into a Qualifying Workplace Pension Scheme from the staging date and so must be provided with information on how to do this in advance. If they do opt in then employers must pay contributions to this scheme for them at a level set out in the legislation.

Entitled workers:

Entitled workers are workers in the UK aged between 16 and 74 and who earns less than £5,772 (2014/15 figures annualised).
An entitled worker is entitled to access to a pension scheme and the employer must provide them with information in relation to this in advance of their staging date. The scheme that they are given access to, does not have to be the same scheme that eligible and non-eligible jobholders are given and the employer does not have to pay any contributions to the scheme in relation to them.

What is the procedure for opting out of Auto-enrolment? Is it possible to persuade your employees to opt out?


For those of us that remember the old SERPS (State Earnings Related Pension Scheme) – you’ll know there was an option to opt out of it and make your own pension arrangements.

Well this is still the case, however the process of “opting out” is a little different.

With Auto Enrolment, everyone that is entitled to Auto-Enrolment must by default be auto enrolled in to a scheme, regardless of whether they want to or not.

If a staff member then chooses to opt out, they will have to fill in the Opt-Out Notice form given to them by the Pensions Provider when they receive their pensions pack and this would need to be completed within 1 month of the policy starting.

Why so complicated?

The Pensions Regulator has designed this process to ensure the employee has full control over the decision to opt out and is not being influenced by the employer in any way. This means an employer cannot use opting out as a point of leverage when offering employment.

As an employer, any encouragement to staff (or potential staff) to opt out will be could considered an ‘inducement’ and is punishable with a heavy fine.

So I couldn’t offer my employees a pay rise and encourage them to take out a pension themselves instead?

That’s right. It’s a big NO-NO I’m afraid. Whilst it might be financially better for the business and would certainly reduce the workload, employers can be fined up to £5,000 per person for breaching inducement rules.

What’s more, the Pension Regulator will be cross checking its records with HMRC’s RTI (Real Time Information) database to make sure all those that are eligible are accounted for.

Other examples of inducement include asking some to opt-out in exchange for:

• An extended or renewed contract in the case of a short-term worker
• A one-off payment
• A higher salary level
• A promotion

In short, any encouragement to your employees to opt-out could land you in very big trouble so we recommend against it in the strongest terms.

Ongoing “Opt-Out” responsibilities

One last thing we need to mention on the topic of Opting-Out is your responsibility as an employer to anyone who has opted out. All “opted-out” employees must be automatically re-enrolled every 3 years and they must then chose to opt out once more if they wish to do so.

Contractual vs Automatic Enrolment, What’s the difference?

There’s no doubt about it, implementing and complying with auto-enrolment will be a burden (at least initially) to every organisation.

Among the many requirements, as an employer, you will need to track different workers, auto-enrol those who become eligible in each pay reference period, deduct contributions and issue appropriate communications within the required timeframes.

So it’s hardly surprising that some employers (particularly those with schemes already in place) have asked the question

“Can’t I just auto enrol everyone?”

This is known as contractual enrolment and whilst it is possible, it does create a number of challenges.

Firstly, contractual enrolment requires the workers consent (whilst auto enrolment does not), which is typically included in a workers employment contract.

If you do not already have consent, as an employer you will need to ensure all employment contracts are amended to permit contractual enrolment for every employee. This in turn could create further complications as there may well be staff who choose not to accept the change.

One particular group who refuse a change in their contract is those on lower pay, who due to means testing, might ultimately see no additional benefit on retirement. An employer who contractually enrols everyone could therefore be inadvertently penalising its lower paid workers if they are required to make member contributions.

Another complication is that workers on a contractual enrolment scheme do not have the option to Opt Out. Once they are in, they’re in.

However, if they refuse to sign up for contractual enrolment in the first place, and they are eligible for auto-enrolment, you must provide them with an auto-enrolment scheme from which they can manually opt out themselves once enrolled. This messy circumstance is not likely to go down well with employees.

Running 2 schemes together, will undoubtedly make the burden on your business even greater. What’s more, many employers already using contractual enrolment are putting more workers into their pension scheme than are required by automatic enrolment costing them more money.

The message here then, is contractual enrolment may look the easy option, but do your homework and speak to a financial adviser.

We have reached our halfway point! If you feel that you need additional advice / information regarding auto enrolment, why not see if Credius could help? Contact us directly at info@credius.com or call us today on 020 7562 5868 to arrange an appointment, or click here for our contact page.

To continue to the second part of the blog, please click here

Posted by & filed under Life Insurance, Mortgages.

In the process of applying for a Mortgage, often people question ‘Is it a legal requirement to have life insurance in place before applying for a Mortgage? or ‘Will having life insurance improve the chances in being accepted for a Mortgage?’.

Credius is here to help. In this article, Credius aims to help provide the answers for these questions. Furthermore, we want to help you understand the importance, if any, of having life insurance, within the context of mortgages. In addition, we’d like to provide a step by step guide in getting approved for mortgages.

Can you really get a mortgage without life insurance? The short answer is yes, yes you can, meaning it’s not a legal requirement in the UK. However, that being said, you shouldn’t completely disregard the idea.

Life can be very unpredictable, and it’s in generally in your best interest to prepare for the worst. Death, or critical illness, would often hinder your income.

Having the proper life insurance policy in place would significantly help in paying off the mortgage left in your name. Without life insurance, your loved ones would often have to settle the mortgage repayments.

What is life insurance, and why would it help with your potential mortgage?

Life insurance is something many of us would never dream is relevant to them. I mean, it’s not like we’re going to die any time soon is it?

Well – not wanting to state the obvious, but none of us really know when we’re going to die. It could be in 50 years’ time or equally it could be next week (we’re sorry to be the barer of such gloomy news).

Either way, it’s never nice to think about it but that doesn’t mean we shouldn’t.

Life insurance is a vital part of financial planning for anyone who has dependents. By ‘dependents’, we’re referring to those whose circumstances and material well-being would be affected by your death. So that means your partner, your children or anyone else who is financially reliant on you.

It can make the difference between your loved ones struggling financially and maybe having to move home or, in this case, them being able to pay the mortgage / rent and maintain a similar standard of living while coming to terms with your death.

So how does life insurance work?

Life insurance comes in a variety of forms. At its simplest, it pays out an agreed amount, either as a lump sum or as a regular income if you die within a specified period, known as the ‘term’. Hence it is often called term insurance and this term can be anything, typically from a minimum of 10 years upwards.

Just like with any insurance, you will need to choose a level of cover. Remember, this is the amount you’re dependents will receive if the unthinkable happens so make sure it will cover all the bills and allow them to live comfortably.

Most policies will have some exclusions. For example, they may not pay out if you die due to drug or alcohol abuse, and you normally have to pay extra to be covered when you take part in risky sports so it’s important to check the small print.

If you have a serious health problem when you take out the policy, your insurance may also exclude any cause of death related to that illness.
One last thing to remember is that life insurance is just that, it’s insurance for your life (or lack of it) and will not cover you for illness or loss of earnings in any other circumstances.

If you suspect that you’d benefit more from a critical illness cover, or critical illness cover in combination with life insurance – feel free to contact us by clicking here. Let us talk about how we could help you in finding what you’re looking for.

Where can I find the best mortgage for me?

But before we answer that, let’s understand first – “How much can I borrow?”

The focus of lending has now moved from the traditional multiple of a person’s income to what an individual can reasonably afford and this means lenders will analyse your spending patterns from the last 6 months (for a typical borrower) before determining a “safe and appropriate” commitment that you can make.

They must also include in this payment, an allowance which ensures you would still be able to afford the payments should interest rates increase.

Is the borrowing criteria the same for everyone?

Unfortunately not. If you fit into one of these categories you may need to provide 2-5 years of financial information before a decision can be made.

– Self-employed
– Directors with 25% equity
– Sole Traders
– Partnerships
– Contractors
– Directors of limited companies

So how can I maximise my borrowing capability?

The key to maximising your borrowing potential is preparation. With a lender requiring access to your previous 6 months finances, planning well ahead is key. Here are some quick tips for improving your borrowing capability.

– Clear any short term debts such as small loans and credit cards
– Cut down your regular spending – perhaps put big shopping trips and expensive holidays on hold temporarily
– Use the money you’re saving on cutting down your spending to increase you deposit (an increased % deposit can significantly increase your borrowing power)
– Make sure you are on the electoral role
– Avoid Job Changes
– Check your credit report using a service such as Experian, Equifax, or Call Credit and make sure there are no hidden surprises

Want to know exactly how much you could borrow?

No matter how challenging your circumstances, Credius’ expertise will help you maximise your borrowing potential and ensure you get the deal that’s right for you. Contact us by clicking here.

Alternatively why not check out our Mortgage Income Multiplier and Mortgage Payment Calculators here – Please note these calculators should be used for guidance only.

Which mortgage is the best?

Now you know how much you could borrow, which mortgage is best? Choosing the right mortgage can save you thousands of pounds, but what is the right option – Is it just a case of choosing the lowest monthly payment? There are multiple aspects to consider, and we can help find the most appropriate mortgage for you.

Fixed rate mortgages

If you’re stretching yourself buying a property and want to ensure your monthly payments remain consistent and manageable for a number of years this could be for you. This mortgage brings stability to your monthly outgoings however, your payments are likely to be higher than other products on the market.

Tracker mortgages

Tracker mortgages follow the Bank of England base rate + a small % on top. This means if the Bank of England lower their rates, your mortgage payments are guaranteed to go down. However the same is true in reverse. It’s a gamble which in the right circumstances, could save you £££’s but if the market goes against you, it could really bite into your monthly income.

Discounted mortgages

The favourite mortgage of a first time buyer. These mortgages typically have very low headline rates which are discounted from the standard variable rate for a number of years. They might be great if you want to make the lowest monthly payments possible, but the rate will not remain constant, so you may find your payments increasing over time and you will be locked in for a number of years.

Cashback mortgages

The headline sounds great and could be ideal if you need a bit of extra cash for furniture when you first move into your property. However dig a little deeper and you’ll probably find that you’re paying a higher interest rate and a higher monthly payment so that the lender can claw their money back.

Offset mortgages

Offset mortgages have the potential to save you thousands of pounds over the duration of your mortgage IF you manage your money and save well. With an offset mortgage you’ll only pay interest on the sum amount of debt between your mortgage, your savings and current accounts (providing they are with the same lender).

Repaying your mortgage

So you’ve chosen your mortgage type, now you need to consider how you want to pay it back. Mortgages can be paid back in two main ways. The first – known as a repayment mortgage, pays off a little of the underlying debt each month, as well as interest on the loan and at the end of the term the mortgage is cleared.

The second is called an interest only mortgage. With this type of mortgage, you pay-off the interest on the loan but not the capital. At the end of the term you will be expected to repay the capital in a lump sum. How you fund this is up to you.

With so many options to choose from, taking impartial and professional advice could save you thousands of pounds over the life of the mortgage. Contact Credius today for a free initial meeting by clicking here.

What documents do I need to apply for a mortgage?

Back “in the day” applying for a mortgage used to be a simple case of bringing in 3 months of payslips, a proof of residence and proof of ID – job done. The self-employed could simply fill in a form stating their earnings and everything would be fine.

Now however, the rules have changed so take a look at our checklist below to make sure you’re prepared for when you take that step.

Proof of your identity:

This will need to be a valid passport or driving licence.

Proof of your current address:

Such as a household bill in your name no less than 3 months old

Proof of your income:

Your latest P60 and at least 3 recent salary slips (this will depend on the lender)

Prove of affordability:

Evidence of how you manage your money. This will include at least 6 months of statements (it totally depends on the lender) from your current account and details from any loan / credit accounts.

Additional Income:

If you have documents to prove any other income you wish to be considered in your application such as Child Benefit, Maintenance Payments, Disability Allowance, Pension – you’ll need to show these with your application too.

Special Circumstances:

If you fit into one of the following criteria it is highly likely you will need additional documentation:

– Self-employed
– Directors with 25% equity
– Sole Traders
– Partnerships
– Contractors
– Directors of limited companies

The additional documentation will include at least 1 year of trading accounts, signed off by your business partners and your accountant and a corresponding tax statement from HMRC.

Although all lenders will ask for documentation to enable you to apply for a mortgage, they will all have different attitudes to risk and different lending criteria. Credius has access to a wide range of lenders which can accommodate the majority of personal situations so for more advice and the potential to save £££’s on your mortgage. Don’t hesitate to contact us for a free initial meeting by clicking here.

What’s next?

Kindly note: Your home may be repossessed if you do not keep up repayments on your mortgage.

So assuming you have all the necessary paperwork in place, now what’s next is to secure the mortgage for the property of your choice. We could have several paragraphs to guide you through this process, however we think it’s best we provide free initial meeting on this matter (Contact us by clicking here). As this part can be completely different from person to person, depending on each individuals’ circumstance. After the property and mortgage has been secured, we can now move onto the final step – completing the sale!

Completing the sale – The final step for your mortgage!

Kindly note: Your home may be repossessed if you do not keep up repayments on your mortgage.

This is it, the final step to owning your dream home.

In England and Wales, the Exchange of Contracts is the last stage of the legal process after which you cannot pull out (without losing your deposit and any legal costs you may have incurred).

The final contract between you and the seller is prepared when:

– The solicitor (or licensed conveyancer) and you are satisfied with the final outcome of all the enquiries
– The surveyor’s report has been received and any necessary action taken
– The lender has completed their valuation report and you have received you formal mortgage offer
– Arrangements about the payment of the deposit have been made
– The date of completion has been agreed.

Both you and the seller will have a copy of the final contract which you must sign. These signed contracts are then exchanged and at this point both you and the seller are legally bound by the contract to move forward with the sale / purchase of the house.

If you drop out at this stage no matter what the reasoning, you are likely to lose your deposit.

So when do you pick up the keys?

Completion of the purchase takes place between 1 and 4 weeks after the exchange of contracts. This is the perfect time to arrange removal companies and schedule in any maintenance that might need to take place on the day or first few days of you owning the property.

On the day agreed for completion:

– The mortgage lender releases the money.
– The deeds to the property are handed over to your solicitor or licensed conveyancer.
– The seller must hand over the keys and leave the property by an agreed time.
– You will receive your legal documents about 20 days after completion after your solicitor has sent them to the Land Registry – Congratulations! We hope you enjoy your new home.

We hope you have found this guide useful. Furthermore, We understand that we may have not have completely answered all questions regarding your situation. For a free initial meeting assessment on how we could help find the most appropriate life insurance and / or mortgage deal that suits you. Please contact us by clicking here.

Posted by & filed under Mortgages.

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The great news is that even with the tighter restrictions on lending that were introduced in April 2014 you can still have more than 1 mortgage providing you meet the lending criteria. In fact, you can have as many mortgages as you can afford. Let’s take a look at some examples of the criteria for additional mortgages.

Mortgage for a second home
It is possible to get a mortgage on a second property or a holiday home, provided it is for your benefit and will not be let out for commercial gain.
Affordability rules still apply, meaning all outgoings (including the mortgage payments, council tax and utilities on your main residence) will be taken into account when calculating how much you can borrow and you might find that you also need a larger deposit. Usually second home mortgages are limited to a maximum of 75% of the property value.

Buy to Let / Holiday Let Mortgages
Buy-to-Let and Holiday Let Mortgages are calculated in a very different way to a traditional mortgage.
Potential borrowers have to show that the rental yield for the property in question will exceed 125% – 145% of the interest payment of the mortgage (dependant on the lender’s interpretation of the Prudential Regulation Authority’s (PRA) rules.
In addition to this, you’ll need to pay a deposit of at least 20-25% and prove that you have an income which in the event that the property remains vacant for a number of months, is enough to pay the mortgage.
The lending criteria for Buy to Let and Holiday Let Mortgages means you can potentially have an unlimited number of mortgages, provided each property purchase is made with a sizeable deposit and exceeds the income tests and interest coverage rules at the time.

Alternative methods of raising capital
If you don’t meet the criteria for an additional mortgage by yourself, all hope is not lost. There are still a number of options available to raise the capital you need:

  • Refinance your first property to release equity
  • Buy with a partner. Providing the partner manages their finances well, this could increase your borrowing potential
  • A Guarantor Mortgage. If you have a poor credit rating or a smaller deposit – a guarantor with sufficient equity in their property could provide you with leverage to obtain the capital you need
  • Take a second charge – lenders that arrange a loan secured on the property after the first charge lender can sometimes take a more lax view on income multiples and income streams, allowing you to borrow more

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Doing it right can save you £££’s
With multiple methods of borrowing and a wide array of products on the market, making the right choice could save you thousands of pounds over the life of the mortgage so it’s worth getting it right at the beginning.

At Credius, we offer a free initial consultation to ensure you get the most appropriate product for your borrowing needs. Call us today on 020 7562 5858 to learn how we can help.

Posted by & filed under Mortgages.

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It is fairly normal when you start looking for something to buy that you know how much you can spend. Imagine walking in to a shop without knowing how much cash you had in your wallet until you got to the till – it would make picking out something to buy quite tricky. What if you really liked something you’d picked but didn’t have the cash to buy it. That would be quite the let down…
Since the “new” affordability rules came in to play in April 2014, calculating your borrowing potential has become something of a dark art.
The focus of lending has now moved from the traditional multiple of a person’s income to what an individual can reasonably afford and this means lenders will analyse your spending patterns from the last 3-6 months (for a typical borrower) before determining a “safe and appropriate” commitment that you can make.
They must also include in this payment, an allowance which ensures you would still be able to afford the payments should interest rates increase. This is often referred to as a “stress rate” calculation.
Is the borrowing criteria the same for everyone?
Unfortunately not. If you fit into one of these categories you may need to provide 2-5 years of financial information before a decision can be made.

Self-employed
Directors with than 25% equity shareholding
Sole Traders
Partnerships
Contractors

So how can I maximise my borrowing capability?
The key to maximising your borrowing potential is preparation. With a lender requiring access to your previous finances, planning well ahead is key. Here are some quick tips for improving your borrowing capability.

  • Clear any short term debts such as small loans and credit cards
  • Make sure your regular spending does not result in you going over your overdraft limit or incurring charges from your bank for poor planning
  • Use the money you’re saving on cutting down your spending to increase you deposit (an increased % deposit can significantly increase your borrowing power AND reduce the rate of interest you will pay)
  • Make sure you are on the electoral role (this is critical)
  • Avoid job changes / career changes / changing from an employed role with a fixed salary to being self employed (self employed applicants usually need 2 year’s track record of income)
  • Check your credit report using a service such as Experian, Equifax, or Call Credit and make sure there are no hidden surprises (we’ve seen people declined a mortgage over a £20 late payment on a mail order catalogue)

Your home may be repossessed if you do not keep up repayments on your mortgage.

Want to know exactly how much you could borrow?
No matter how challenging your circumstances, Credius has a wealth of expertise to help you maximise your borrowing potential and ensure you get the deal that’s right for you. Call us today to arrange an appointment on 020 7562 5858.

Alternatively why not check out our Mortgage Affordability and Mortgage Cost Calculators here
Please note these calculators should be used for guidance only

Next time: Can I have more than 1 mortgage?

Posted by & filed under Investment.

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If you’re tired of the pitiful interest rates offered to you by savings accounts at the moment, you might be tempted to invest some of your hard earned money into the stock market. But if you’ve never had any dealings with the stock market in the past and are afraid you’re a bit too much of a novice to consider it, where’s the best place to start? The answer is right here with our complete beginner’s guide to the stock market.

So where shall we start…?

Well the stock market is a complex system for trading company shares and it’s actually made of many stock exchanges around the world. The main stock exchanges are the New York Stock Exchange (NYSE), the NASDAQ, the London Stock Exchange (LSE) and the Japan Exchange Group and within each stock exchange you are likely to find indexes.

What’s an index?

An index is a way of splitting up the market, partly as way of being able to measure it and report on it. On the London Stock Exchange (LSE) for example, you have the FTSE100 – an index composed of the 100 largest companies listed on the (LSE). You have the FTSE250 – these are the next 250 largest companies on the stock exchange and you also have the FTSE Small Cap which is anything outside of the top 350 companies. By measuring the performance of these groups of companies we can get a good idea of the state of the economy and this might influence how we make (amongst other things) investment decisions in the future.

Can I buy stock in any company?

No – not every company is listed on the stock market – only ones where the owners have taken the company “public” to raise funds.

What makes the market go up and down?

There are many factors that determine whether stock prices rise or fall. These include the media, the opinions of well-known investors, natural disasters, political and social unrest, risk, supply and demand, and the lack of or abundance of suitable alternatives. The combination of all of these factors creates a certain type of sentiment (i.e. bullish and bearish) and that will determine whether investors want to buy or sell their shares. If you have more sellers than buyers – the stock price goes down and conversely if you have more buyers than sellers, the stock price goes up.

The value of investments can fall as well as rise. You may get back less than you invested.

What should I invest in?

Well, if there was a standard answer to that, we’d be millionaires. The truth is, everybody invests for a different reason, everybody’s financial situation is unique and we all have different levels of risk that we’re willing to take. Investing is for everyone, as long as the risks are explained accurately upfront. We’ll be taking you through a range of different investment options to help you become better informed and understand whether the investment world is right for you, and if so in what capacity.

An important step to make if you are considering investing, is to find a Financial Adviser that you can trust to help you make financial decisions that are right for you. Here at Credius we’ve got a great team ready to help so why not call us today on 020 7562 5858 or email us at info@credius.com. We’d love to hear from you.

Posted by & filed under Investment.

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These days you don’t have to be a ‘Gordon Gekko’ or ‘Jordan Belfort’ to start investing. Opportunities are everywhere and in the age of the internet, you can open an investment account and buy shares in some of the biggest companies in the world in just a few minutes. But even though investing your money has become as simple (in principle) to buying your Nan’s Christmas present off eBay or Amazon – that doesn’t mean it’s suitable for everyone.

Risk

Key to choosing whether you should save or invest is your attitude to risk. One of the great things about investing is that it can deliver an unbeatable return on your investment when compared to savings accounts… especially at the current rates. The downside however, is that there is always a possibility that you can come away with less than you started and if you cannot afford for that to happen or you’re simply not willing to accept the risk of that happening – investing is probably not for you.

Are you in it for the long term?

Another key consideration when choosing whether to save or invest is the length of time you’re willing to let your money be “out of arms reach”. Whilst you might have dreams of investing for just a few weeks, making the perfect choices and then sailing off into the sunset with a boat load of cash – typically investments are made for the mid-long term (5 to 10 years plus). You’re only likely to make it big in a few weeks, if you’re already an experienced, long time trader living and breathing investments, with hundreds of thousands of pounds to play with on a daily basis… and even then there’s no guarantee. With that in mind, if you are going to invest for the long term – it’s important not to let yourself “get spooked” by the market. Markets are by nature volatile beasts and reacting to the short term ups and downs rather than buckling down for the long term will likely see you lose a sizeable part of your initial investment.

Having said that, investing can be a fantastic way of turning a relatively modest post of money into something really worthwhile if done correctly. The best place to start is by talking to a Financial Adviser who can fully explain the risks involved, assess your attitude to risk and capacity for loss, then provide you with a wide range of investment options that match your risk profile and are suitable for your needs. What’s more – an Adviser can add further value by actively managing your investments and proactively advising you when to make changes or invest more money.

The value of investments can fall as well as rise. You may get back less than you invested.

If you would like to learn more about investing, why not speak to a member of the Credius team today on 020 7562 5858 or email us at info@credius.com. We’d love to hear from you.