financial planning Archives - Holborn Assets Cyprus

How to Remortgage as an Expat

user — Tue, 21 May 2019 08:37:49 +0000

Fixed rate, tracker, standard variable – todays mortgage market has more products than ever and finding the right one requires extensive research. Remortgaging is no different, it requires careful consideration.

In a nutshell, remortgaging is where a new mortgage is taken out to either replace your current mortgage or to borrow money that is secured against your property.

As an expat looking to remortgage a UK property there are some things to be aware of.

What are the benefits of remortgaging?

Remortgaging can potentially save you thousands a year. Shopping around for a better deal is something people do with their phone contracts but might not consider when it comes to their mortgage.

Like other lending products, banks usually offer an introductory fixed rate on their mortgages. These are sometimes referred to as headline offers and they can last anywhere from two to five years.

Once the offer has ended your mortgage will usually revert to the lenders standard variable rate. This will more often than not be a higher rate than what you were paying and can increase monthly repayments.

The benefits go beyond savings. Let’s say you have just been offered a job abroad, you might be wondering what happens to your UK property and your current mortgage.

Switching to a buy-to-let mortgage is one option for expats who want to rent out their property while they are overseas for a long period. Remortgaging to a different mortgage type isn’t something to rush into and it’s best to speak to an independent financial advisor before making a decision.

Remortgaging can also give you flexibility. A mortgage that suited your financial situation when you took it out may not be the best fit now. If your salary has increased and you want to up your monthly payments, or even pay off the remainder of the mortgage, you might be restricted.

Some lenders will have an early repayment charge and the ability to increase your monthly payments may be limited. Remortgaging can help you secure a more appropriate deal for your current situation.

What are the drawbacks?

Earning a salary in a currency that isn’t pounds sterling can cause problems with some UK lenders which is why expats may consider an off-shore lender.

One of the main advantages of using an off-shore lender is your salary currency won’t be an issue.

If you do go with a UK lender, be aware that checks are more stringent than they used to be due to changes in the industry. The FCA introduced new rules in 2014 in an attempt to stop people taking out mortgages they couldn’t afford. The mortgage market review (MMR) outcome means that lenders must now ask for proof of income and plans for repayment. This includes a review of not just repayment at the introductory rates but also higher rates.

With these changes there is a chance that you or your partner no longer meets the lenders criteria for remortgaging. Being rejected by too many lenders will ruin your credit score and make borrowing in the future more of a challenge.

The amount left on the mortgage should also be a consideration. Some providers in the UK will not take on a mortgage of £25,000 or less, and if they do the fees may outweigh any savings you would make.

You have decided to remortgage, what’s next?

Switching to a new lender can take up to two months so start early and explore your options.

Some UK lenders will allow you to secure todays rates but start the repayments up to six months later. This allows you to protect yourself against rate increases that may be introduced by the bank in the near future.

Checking your credit rating should be a priority. Money Saving Expert suggests polishing your credit score before approaching lenders to reduce your chance of being turned down. If you are turned down, work on improving your credit score rather than going to another lender only to be rejected again. Remember, too many rejections will have a negative impact on your credit rating.

With a healthy credit score it’s time to sort out your finances. Speaking with an IFA can help you get your finances in order – this is something a lender likes to see when they make a decision.

A final word on rates.

We touched on the potential savings to be had by remortgaging and avoiding hikes in interest rates. Increases to rates set by the bank are different to those influenced by the Bank of England.

If you go with a UK bank then bear in mind that the interest rate set by the Bank of England heavily influences the standard variable rates offered by lenders. For example, if the rates set by the Bank of England have increased during your fixed term, you may want to consider other fixed term options to avoid the variable rates.

Our expert mortgage advisors can help guide you through the potentially tricky process of remortgaging. If you would like some more information specific to your circumstances you can reach us by using the contact form below.

The post How to Remortgage as an Expat appeared first on Holborn Assets Cyprus.

6 Months Until Brexit – Where Are We Now?

user — Tue, 30 Apr 2019 08:08:21 +0000

It’s coming up for 3 years since the first Brexit referendum. The UK has yet to leave the EU and may never do so. Uncertainty continues to prevail. If you are a UK expat, make sure your finances are Brexit-proof (and non-Brexit proof!) by speaking to an IFA.

So when is the UK leaving the EU?

Currently, British MPs have agreed to a 6-month extension of Brexit until 31 st October 2019. The UK may leave the EU sooner than that in the event that agreement is reached between British MPs and the EU. And all sorts of things can happen otherwise…

Can Brexit still be cancelled?

Yes – if the UK parliament says so: “the European Court of Justice ruled on 10 December 2018 that the UK could cancel the Article 50 Brexit process without the permission of the other 27 EU members, and remain a member of the EU on its existing terms, provided the decision followed a “democratic process”, in other words, if Parliament voted for it.” (bbc.co.uk)

Can Brexit be delayed?

Yes, if all EU countries as well as the UK agree.

Could there be another referendum?

Yes, if changes are made to UK law. The Government could do this theoretically. Some academic experts have said that another referendum would take a good five to six months to organise with all the appropriate legal mechanisms in place correctly. The first UK Brexit referendum took place almost 3 years ago now – on 23 rd June 2016. There was less than 4% of the vote in it – with Leave winning by 51.9% over Remain’s 48.1%. That’s very close! No wonder now UK politicians are failing to find a clear way forward. There wasn’t much a consensus to begin with!

How much does UK owe the EU if/when we do leave?

£39bn. That’s the sum which the current withdrawal agreement prescribes. It’s an irony of the Brexit process that Leave voters were promised that leaving the EU would save money for the UK.

Brit Expats in the EU: what happens if the UK leaves with a No Deal?

Widespread disruption to most areas of UK life – but particular worrying times for UK expats living in the EU: “for British citizens in the EU after a no Agreement Brexit, they will become third country nationals and will need to bring themselves within either EU law on third country nationals or national law of the Member State where they are living. Very few of the EU 27 have set out detailed instructions for their authorities on how to deal with British citizens after Brexit in that case.” (Professor E. Guild, Queen Mary University, London)

Brit Expats in the EU: what happens if the UK leaves with a Deal?

Until 31 st December 2020, British expats living in the EU will be able to stay as they are – if the UK Brexits according to the terms of the withdrawal agreement. Expats will need to ensure they are complying with the rules set out by the government of the EU country they are living in. And, after 31 st December 2020, no Brits will enjoy the automatic freedom of movement across other EU countries.

What does Brexit mean for my money?

That’s the big question! As long as Brexit uncertainty continues, the UK Pound Sterling will likely be weak. But, other than that, nobody really knows. Theories and observations bound, particularly in relation to the UK housing market.

How do I Brexit-proof my finances?

Give your financial picture a thorough review with your IFA. If you are a Brit living abroad, you need to be sure that Brexit does not deliver any personal nasty surprises in the area of:  Your status with the HMRC.  Your status with National Insurance Contributions (NICs).  Your UK state pension.  Your private and workplace pensions, some or all of which may still be held in the UK  Your cross-border investment interests, including property and funds.

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5 Tax Considerations for Expats

user — Tue, 19 Mar 2019 09:07:03 +0000

Looking to become an expat? Holborn Independent Financial Advisors (IFAs) in your new country of residence can help you out. All international Holborn offices offer a no-obligation financial review to new expats.

Financially, there’s so much to get sorted out when becoming an expat. Not only do you need to review all aspects of your big financial picture, which can be overwhelming, but you can’t just do this by simply following a checklist you’ve found online. What you need to do to protect your family’s financial future will depend heavily on your exact circumstances, so you need qualified advice as a priority.

Get in touch with Holborn before you go to get your expat finances right from the beginning.

Key expat priority – tax!

Managing your tax situation is the key priority for new expats. Maybe the very reason you are leaving your home country is to take advantage of lower income tax in your new country of residence. Great! But there’s far more to tax than income tax if you are planning to move abroad. You’re going to have a complex web of cross-border tax obligations – and opportunities!

IFAs working in expat markets excel at getting your international tax situation straight across your pensions, investments (including property), mortgages and estate planning:

Income tax

Whatever your country of origin, you will need to notify your tax authorities that you are leaving. Otherwise, you might end up paying tax on income and/or investments twice – once in your home country, and once in your new country of residence. Tax rules differ from country to country. Find out whether your home country has a Double Taxation Agreement (DTA) with your new country of residence.

Taking in your new cross-border status, you need to know for certain what tax rules apply, how they work together, and how you can make the best of them. A local IFA in your new country of residence can offer reliable support in this key area.

Pensions

Tax is a key consideration in the area of pensions. If you have a state pension (as UK citizens do, for example), you will need to clarify how that works for expats.

But what about your work pension? Expertsforexpats.com point out that, “As an Expat, depending on your plans, you may have unique opportunities available to you and an adviser will be able to discuss each of the options enabling you to make a decision.” As a UK citizen, you can move your pension pot from a workplace Defined Benefit pension into a variety of overseas arrangements and unlock great tax benefits. In the UK as in other countries, managing exposure to inheritance tax can be tackled by prudent reframing of your pension (into a SIPP, for example).

Moving pension schemes is a huge step requiring professional advice, and not one that is not often recommended (that’s certainly what Holborn IFA statistics point to). Transferring your pension might work for your financial situation, or it might not. The only way to find out is to ask an IFA or other pension specialist.

Investments

Any lump sum investments you have will need to be checked for their tax efficiency, as well any property you retain in your country of origin or elsewhere. As an expat, your investment taxation will become more complicated. But you will also enjoy access to opportunities that non-expats do not have. Offshore banking and investment often makes sense for expats; there is an old rule of thumb that says “If your Country of Origin is A, and your new Country of Residence is B, then you should keep your money in Country C.”

Mortgages

Often expats rent when they first arrive in their new country of origin, and take a while to check out the property market. But you can get going sooner if you like. You can arrange a mortgage in your new country of residence remotely via a local mortgage broker. Holborn, for example, offers an experienced mortgage desk at our Dubai HQ that has been successfully arranging mortgages in the complex UAE market for getting on 20 years. Local knowledge counts – so use it as soon as you arrive, or even before leaving!

Estate Planning

Are you planning to retire in your new country of residence? Or like many UK expats, for example, retire back home? You need to decide now what your endgame plan is, and work towards it. Whatever your plan, be sure to get a new Last Will and Testament drafted in your new country of residence. In the UAE, for example, expats can get wills drawn up in international common law with the DIFC Wills & Probate Registry.

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Jargon-busting Personal Finance

user — Tue, 19 Feb 2019 00:38:39 +0000

Does your IFA sometimes lose you when they are explaining stuff? It’s their job to explain your financial affairs simply. But there’s a lot of jargon in personal finance. You can only get so far by knowing nothing! Get a head-start on your next meeting with your IFA, as we get to the bottom of what some really useful personal finance terms mean. We bust some key jargon across all five of Holborn’s specialist service areas:

Investment

AER: Annual Equivalent Rate AER is a % figure. It commonly shows what savings rate you will get over the course of a year with a particular bank account. AER is a useful figure because it shows you the annual gain, regardless of whether the interest is paid monthly or annually. Asset Allocation Your IFA may talk about asset allocation a lot. The term broadly describes how your investment portfolio is split up – into different types of asset. Specifically, the term describes how different assets are allocated different percentages of the portfolio based on their characteristics. For example, a common rule of thumb in asset allocation is to invest 10% of your portfolio in the commodity gold. This is because gold generally holds its value when the main stock markets slump. Base Rate You may have heard about the Base Rate on television. The Base Rate is a banking term. It impacts directly on your own personal finances. How? Because it describes the rate of interest that the Bank of England is using in lending. And this Base Rate is often adopted by high street banks to determine – or, at least, influence – their own lending rates. So, if you hear that the Base Rate is high, expect high interest on your savings, and also high interest on any debts you have.

Retirement Planning

Annuity An annuity is a type of financial product related to pensions. An annuity allows you to transform some of your pension pot into a guaranteed income for life. Annuities derive their name from the fact the fixed income they provide is paid annually. In the UK, it used to be mandatory to buy an annuity with what are known as Direct Contribution (DC) pensions. Now taking an annuity is optional. It is just one of many choices available thanks to the Pensions Freedoms introduced by the UK Government in 2015. DC & DB pensions In the UK, there are two main types of pensions. There are DC (Direct Contribution) pensions and DB (Direct Benefit) pensions. DB pensions are workplace pensions that are dying out because they are too expensive to run for employers. DB pensions are paid by your employer with the payout based on your Final Salary. DC pensions, on the other hand, describes other workplace pensions as well as private pensions (such as SIPPs). DC pensions are characterised by a greater degree of flexibility for the pension-holder, and can be passed on as part of your financial legacy. Intestate It sounds like a painful medical condition, but “intestate” is actually a term that relates to your Will. If you are serious about your financial planning, then your Will should form the centrepiece of the legacy you pass on. So it is important. “Dying intestate” means that somebody dies without a Will – whether because they haven’t had one produced, or because they have but it has not been found; it can cause all sort of problems for surviving relatives.

Insurance

Act of God Also know as “Vis Major” (Latin), “Act of God” is a term in insurance that describes circumstances in which loss is incurred on insured assets – but over which the owner is deemed to have no control. It ain’t your fault, in other words! The precise legal definition of Act of God derives from an old legal case, Nugent v Smith (1876): ““Natural causes directly and exclusively without human intervention and that could not have been prevented by any amount of foresight and pains and care reasonably to have been expected”. Ex-gratia payment An ex-gratia payment is usually good news for a policyholder. It describes a payment that the insurer makes even though there is no legal requirement to do so. An ex-gratia payment might form the basis of an out-of-court settlement, for example. Utmost Good Faith Insurance contracts are made in what is known as “Utmost Good Faith.” This means that legally it is understood that each party must be pro-active in sharing relevant information. Utmost Good Faith means, simply, that as a policyholder you can’t get away with saying ever “I didn’t know.” Your insurer can throw a claim back in your face if it is shown that you have not acted in Utmost Good Faith.

Mortgages

AIP (Agreement in Principle) An important term, this. Your Agreement in Principle from your mortgage lender is what you show to a seller in order to provide that you can afford to buy the property. Particularly in the UAE market, it is critical to get an AIP or risk not being seen by sellers or being gazumped. Capped Rate A capped rate gives peace of mind. It means that the rate of interest charged on your mortgage will never exceed a certain level – even though the rate may otherwise fluctuate in line with changes to the Bank of England’s Base Rate. Interest Only With an interest only mortgage, you really do only pay the interest on the loan. At first! But when the term of the loan is up, you are expected to pay back to the full lump sum on which that interest was charged. This means that a requirement of interest only mortgages is that you can demonstrate an investment vehicle to account for the lump sum; property is often used. Buy-to-let mortgages are generally interest only.

Employee Benefits

Auto-enrolment This term relates to workplace pensions. Auto-enrolment is a UK government scheme – now firmly in place – which requires companies to enrol their employees automatically in a pension scheme. This means you cannot work (other than freelance) and avoid having some sort of pension (other than your state pension) – which is good news! Employee Benefits Platform This means the technology, the software, that underpins a company’s provision of employee benefits. If you are asked to “interface with the platform”, it means “ log on to our website”. Platforms allow companies to automate the administration of benefits – which cuts costs. But, to the benefit of the policyholder, a lot more flexibility is usually provided; you can make your own choices online rather than have to get an appointment with somebody and exchange emails. Core & Voluntary Benefits There’s no trick here – this is one of those few bits of jargon that does what it says on the tin. Core benefits refers – as you would expect – to benefits which come as standard to the policyholder and are paid for by the employer. Voluntary benefits are chosen and paid for by the policyholder, and provided by the employer.

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How to Get a UK Mortgage when Living Abroad

user — Thu, 16 Aug 2018 08:20:00 +0000

It is easy to get a mortgage in the UK if you’re an expat – provided you don’t go jumping in unprepared. There’s plenty of hoops to get through: waiting for an offer to be accepted, banks and solicitors’ requesting paperwork, while you keep everything crossed in the hope of a hiccup-free exchange. So slow down! You may too have an endless list of questions about the process and the possibilities. Allow us here at Holborn we reveal just how simple, and stress free, the process of arranging an expat mortgage can be. With expert advice, local knowledge and years of experience in hand, Holborn can safely steer you through this journey.

Can I get a UK mortgage if I don’t have a UK bank account?

Yes, but this is where experience, expertise and market exposure matters. The UK’s big banks usually look for proven income and a reliable record with credit rating agencies – as an expat you may not have these. Many lenders will accept foreign bank accounts and foreign currency, but you may need expert advice about foreign currency mortgages and the risks associated with investing in a foreign currency, which could you leave you vulnerable to currency fluctuations, for example. Getting expert advice, from specialists in expat mortgages, can help you navigate any initial hurdles and find the right mortgage – in the right currency – for you.

Can I get a UK mortgage if I live permanently overseas?

Yes, it doesn’t affect your mortgage eligibility if you live permanently overseas or even if you never plan to return to the UK. Whether you want to purchase a house back home to have a base to return to, or invest in a rental property, we can help find the mortgage that suits you.

Will I have access to a range of mortgages as an expat?

Many big banks have expat mortgage options available now, and buy-to-let continues to be a popular choice among expat investors. But the big banks may not offer the best deal for you, and if you don’t work for a multinational company you may find your options limited. This is where Holborn can help. Our mortgage expert Jo Phillips explains why: “With the relationships we have in the UAE and with international mortgage providers we are able to give you the best mortgages in the market.”

What is an “agreement in principle?”

The first step in buying a new home is to figure out which mortgage product is most suitable for you, and exactly what your budget is. Holborn’s market exposure and access to a range of products can help secure you that initial mortgage agreement with the lender, known as an “agreement in principle,” so that you can begin house hunting. Holborn performs a full compliance check at this point, ensuring a smooth process and avoiding time-consuming errors. Getting your “agreement in principle” can take as little as 3-5 days.

Will paperwork be difficult to organise and time-consuming?

Paperwork and applications can often leave you with a headache, but as an expat there may be specific challenges to you collating the information you need (even proof of address or utility bills for example). Gaining expert advice from the very beginning can save you time in the long run. Our expert, Jo Phillips explains why Holborn is well placed to help you through this process: “Our experience means that we know the specific criteria and requirements of the banks and we are able to get the mortgage through as soon as possible for you.” You don’t waste time figuring out the paperwork – we take care of that for you.

Top tips

Get your finances in place before you begin looking (agreement in principle)
Get expert advice from a specialist in expat mortgages from the beginning
Let Holborn do the hard work for you

At Holborn we offer an end-to-end service. This means that we not only help you with the mortgage, we assist you with all aspects of the property transaction. Over 20 years of experience, local knowledge (of the UAE, the UK & other international markets), and a focus on professionalism ensure that your purchase goes as smoothly as possible.

The post How to Get a UK Mortgage when Living Abroad appeared first on Holborn Assets Cyprus.

Should you be paying National Insurance as a UK Expat?

user — Fri, 25 May 2018 23:47:13 +0000

In a fix with your NICs?

Ahoy Brits Working Abroad! If you want to check online your National Insurance Contributions Record, UK expats need to know that – direct from the British Government’s 2018 NIC/expat webpage (www.gov.uk/national-insurance-if-you-go-abroad): “You might be able to pay UK National Insurance while you’re working abroad, depending on where you’re working and how long for.” The HMRC (Britain’s tax authorities) sees expats paying of NICs as an opportunity (rather than a burden) that UK citizens going abroad wouldn’t want to miss. For good reason! If UK citizens don’t make enough National Insurance Contributions, they might end up with no State Pension. But do you HAVE to pay NICs as a Brit expatriate worker? That’s the question. And the consensus is: Whilst living abroad, you do not have to pay National Insurance Contributions (NICs) – but you may need to in order to protect your UK State Pension, depending on how many payments you have already made. Remember you can claim your UK State Pension whether you remain an expat for the rest of your life or go back and live in Britain.

To NIC or not to NIC?

Wherever you are based as a British expat, you might be missing out if you are not already voluntarily winging NICs back to the UK. As well as your eligibility for the UK State Pension, you need to consider both what NIC rules apply according to the country in which you are expatriate as well as how the duration of your stay abroad affects your National Insurance Contribution status. As a British expat, there’s no point in weakening your UK State Pension for the sake of a few NICs you could just pay and be done with. Seek professional and independent advice if you can; cross-border retirement planning is a priority area! If you’ve got a small budget for financial advice, this is one area well-worth prioritising in order to obtain some expert guidance. But first, why not do some digging yourself? Why not find out first everything that the UK Government knows about your NICs and your State Pension? Online NIC help:

Check your NICs at the official UK Government NICs site – but first discover what you’ll need to get up and running with Ho lborn’s popular walkthrough (updated 2018) of the official NICs site.
Go to the official UK Government 2018 Check My UK State Pension site.

Do UK expatriates generally make National Insurance Contributions (NICs)?

As an expat you may not automatically have to pay UK National Insurance after you leave the country (depending on your employment status and employer, for example), but it may be in your future financial interest to do so. It entirely depends on where an expat is with their State Pension: a) how many NICs made and b) how much they want to guarantee their UK State Pension when the time comes. Having a shortfall in your NI contributions may make a significant difference to your entitlement to a UK state pension, or any state benefits you could be entitled to should you return to the UK.

Can I make NIC payments when living abroad?

Yes, you can continue to make National Insurance contributions as an expat, though this can depend on where you’re working and for how long. For example, if you are working for a UK-based employer who sends you overseas for a limited period of time (up to two years), you may be required to continue making NIC’s while you work abroad. In other circumstances, you will have to make voluntary NI contributions as an expat if you want to remain eligible for your UK State pension. The HMRC website offers a comprehensive list of the rules that apply to making NICs from abroad, depending on whether you are outside or inside the EU and EEA, for example. It is best to check your specific employment circumstances according to the HMRC guidelines for expats.

Important: UK State Pension Top Up Scheme

In 2016, changes to the UK State pension meant that, in order to qualify for the full amount, savers needed 35 years of full NI contributions – compared to the 30 years under the old scheme. This has had an impact on those who are close to retirement age. State pension top-ups were designed to allow savers to fill in any gaps in their National Insurance Contributions. The top-up scheme allows you to pay a lump sum, of no more than £741, on years where there was a shortfall, or for any years you spent outside of the UK, to qualify for the full UK state pension. This has been a particularly valuable scheme for expats, and for those who may have taken time out from their careers to look after children. You can backdate missed payments for up six years of missed contributions. To check if you have any gaps in your National Insurance record you can visit the Government’s check your State Pension service. This gives you information about how much you need to pay, and how long you have to make the payment. As an expat you are entitled to claim your UK state pension whether you return to the UK for your retirement or not.

Voluntary NI contributions from outside the UK

If eligible, you can make voluntary NIC contributions from outside the UK that will count toward your UK state pension as well as certain benefits and allowances you may be entitled to should you return to the UK. You can check your eligibility here. To start making National Insurance payments from outside the UK, you can apply to HMRC using form CF83, or visit the HMRC website for more detailed information on how to apply for social security as an expat as well.

NIC and UK State pension advice for expats

At Holborn, we have already helped thousands of expat customers around the world to claim their UK state pension. Contact your Holborn financial advisor today to start getting practical with your retirement planning.

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