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Why make a Will?

Amazingly over 70% of the people in England and Wales do not have a valid Will. So why should you make a Will? I get asked this question a lot. Most people wrongly assume that if they are married then everything will go to their spouse - wrong. When someone dies without a Will they die Intestate. This means that the state will write one for you and for most people the result is not what they would have wanted.

Statutory Wills are written by a strict code called the The Laws of Intestacy. These rules have not changed for 80 years and there is a strict hierarchy of who gets what. For a full breakdown of the process used see below.

Without a valid Will The Laws of Intestacy are just the start of the problems that the remaining family will encounter. If there is no will then the probate office will need to appoint administrators - normally family members and Letters of administration will be issued. This means that:-

a) The process takes a lot longer, this may deprive potential beneficiaries of their due Inheritance for longer and leave them in financial hardship

b) The process may be a lot more expensive especially if lawyers have to get involved.

c) The deceased estate may not go to who they wished it to go to.

d) Any gifts to people or charities outside immediate family members will not happen.

c) If there are children involved then you would  not be able to nominate Guardians of your choice - very important. 

The laws of intestacy.

1) Single person - no children

Their estate will pass to their parents if alive

If No parents then it will go to brothers and sisters in equal shares 

If No Brothers and Sisters then it will go to Half Brothers and sisters

If No half brothers or sisters then it goes to Grandparents

If No Grandparents then it goes to Aunts and Uncles

If no other relatives then it all goes to the Crown.

2) Single Person - With Children 

Thier estate will pass to their children in equal shares 

If there are No children estate will pass to their parents if alive

If No parents then it will go to brothers and sisters in equal shares 

If No Brothers and Sisters then it will go to Half Brothers and sisters

If No half brothers or sisters then it goes to Grandparents

If No Grandparents then it goes to Aunts and Uncles

If no other relatives then it all goes to the Crown.

3) Unmarried Partners 

The partner is entitled to nothing - there is a miss conception about common law husbands and wives. They can apply to the court for a share of the estate but it is time consuming and costly.

They will be treated as single people with or without children and the same rules as above apply

4) Married couples or couples in a Civil partnership 

If the estate including the house is below £125,000 the spouse/partner will inherit everything

If the estate is above £125,000 and their are children then the spouse gets the first £125,000 and a lifetime interest (i.e. any income it would produce) in half the remainder. the rest would go straight to the children

If the estate is above £125,000 and their are no children then the spouse/partner is entitled to the first £200,000 of the estate. The rest would go along similar lines as above. i.e. To the parents, if no parents then to brothers and sisters etc.

If their are no other living relatives then the spouse/partner would inherit everything.

As you can see the Laws of Intestacy could cause all sorts of problems for remaining family and in some cases of unmarried couples the remaining partner could be left with absolutely nothing. 

There is no valid reason for not writing a Will. Its is relatively simple and painless and generally quite cheap.

There are plenty of online services that you can use. We have found that Tenminute Will is by far the best in terms of ease of use, cost and the quality of the documents produced. 

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Loans: Bridging Lonas -The Basics

So You’ve found your new ideal home, and you’ve had your offer accepted.  But youve got a big problem - you havnt got a buyer for your house yet andou are at risk of loosing the one youve put an offer on.

A bridging loan may be the only way to save the situation.

Bridging Loans can be expensive and should be considered to be a last resort. But if a bridging loan is the only way to save tghe stuation then the extra expense may be the only way to stop losing money already spent in the purchase process, as well as reducing stress and making sure you get your dream home. 

The bridging-loan market is small compared to the normal mortgage market, especially during a property boom when there is rarely a problem with selling a home quickly. But when there is a down turn in the market, more and more home owners are forced to consider bridging loans. 

Types of Bridging Loans 

There are two main types of bridging loan

1) The ‘closed’ bridge Loan.

A ‘closed’ bridging Loan is for people who have already exchanged on the sale of their existing property. Few sales fall through after exchange, as exchange means that contrcats have been signed and it is very difficult for buyers to pull out once contrcats are signed. Therefore lenders are generally happy to offer closed-bridge loans.

2) The ‘open’ bridge.
An ‘open’ bridge is taken out by buyers who have found a property they wish to buy, but may not have sold their existing property. A lender will ask lots of questions and want supporting information. It will also insist on you having lots of equity in your existing property.

The basics of bridging finance loans.

The lender will want to see the mortgage offer relevant to the property you want to purchase and all the property details. The lender will also want some proof that your current property is being actively marketed i.e. estate agency details etc. The Lender will also want to know how you will meet the interest payments (affordability) and ask what your exit strategy will be if things go wrong and the sale were to fall through. 

The genral rule of thumb is that bridging loans will run for a 12-month limit on an open bridge. After that, they will probably renegotiate as long as you have paid the interest during the period and the property market hasn’t collapsed.

Interest rates

All bridging Loans have higher interest rates than normal mortgages. Generally it is the Bank of England bank base rate plus 2% to 2.5%. There may also be an arrangement fee which would be added to the loan ranging from 0.5% to 1.5% of the value of the loan.

Different lenders charge higher rates of interest and lower arrangement fees and visa versa. There are also specialist lenders that are faster at issuing the cash, but borrowers can expect to pay a high price for the privilege. 

1)  If you are confident that the sale of your existing property will be sold quickly, then perhaps it would be better to get a loan with a lower arrangement fee.

2) If you think you may need bridging finance for quite a few months, then the fee becomes a smaller part of the overall cost.

Work some figures out assuming a fast sale i.e. less than 3 months and also some figures on a longer time scale i.e. 6-12 months and see what the overall cost would be for the sum you need. Personally I would always plan for the longest time so you know you can always afford the bridging finance.

The alternative

If you are uncomfortable with bridging finance, you may consider letting your old property instead.

This is how it works: you remortgage your existing property. Use the equity released to pay the deposit for the new property. Then convert the mortgage on the old property to a buy-to-let mortgage (your lender must be informed that you are going to rent the proprty). Just make sure that the rental income would cover the motgage payments.

Just be careful though. You are not guaranteed that the property will always be let. In your calculations allow for at least 2 months per year with no rental income. If the figures still stack up great, if not tread very carefully as when the property is empty and you are not recieving any rental income you will still have the Mortgage payments on two properties to find. Make sure you research the local rental market before taking the plunge.

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