The Financial News You Need To Know with Sarah Pennells – July 2015

Sarah Pennells is a personal finance journalist and the face behind SavvyWoman.co.uk. We think she does a great job at explaining financial subjects in a very clear and accessible manner. You can find her column below where she writes about the latest financial news, and helps you get more from your money.

Made a will? It could be ignored

If you’ve made a will, it could be ignored. It’s estimated that two thirds of adults don’t make a will, but a legal ruling means that it may be easier for an adult child to challenge their parent(s) will.

The case – which went to the Court of Appeal – involved a woman who was left no money in her mother’s will. Despite the fact that the mother had left a letter saying that she didn’t want her only daughter to get a penny because she’d left home at 17 and got married, the judges decided that this was unreasonable. Instead, they said she should inherit a third of the money that her mother left (over £160,000).

So, what does it mean if you have a will? Firstly, the judgment only applies in England and Wales as the rules are different in Scotland and Northern Ireland. But if, for example, you have grown up children and you’ve left money to one and not the other, or you’ve left money to charity instead of your children, it could be easier for them to challenge your will and to ask for a share.

Fixed rate mortgages rising?

Want to get the cheapest fixed rate mortgage? You may have to move quickly! A few mortgage lenders have increased their rates or fees on some of their best buy fixed rate mortgage deals. But the good news is that fixed rate mortgages are currently incredibly cheap.

For example, it’s possible to get a two-year fixed rate mortgage charging little more than 1%. These deals are only available if you have a 40% deposit or equity and they tend to come with chunky fees (£1,500 – £2,000 isn’t uncommon). But even if you don’t qualify for these super cheap deals, you should be able to get a competitive fixed rate.

SAVVY TIP: Ask your own lender what they can offer you; compare their rates with those on offer elsewhere and talk to an independent mortgage broker. They can help you get the best mortgage deal for you.

Moving? It will cost you

Meanwhile, if you’re thinking of moving house, make sure you have enough money! A new survey shows that moving house can costs thousands more than expected – and budgeted for!

Two fifths of people (39%) said they’d paid £5,000 more than they’d budgeted for and one in ten had to rely on their parents to bail them out!

Not surprisingly, almost nine out of ten people found moving stressful (who doesn’t?), with ‘packing up belongings in my old home’ being the number one cause of stress.

My advice? Don’t expect it to be stress free because it probably won’t be. Plan as much in advance as you can, and make sure you pack things you’ll need to find (such as a kettle, mugs etc) where you can find them and not hidden at the back of the removal van!

Do you argue about money?

If you’re in a relationship, what do you and your partner argue about the most? Who has the remote control? Dirty plates in the sink? If you’re in your 30s or 40s, it’s likely to be money.

My website, SavvyWoman, recently published a Women & Money report (kindly sponsored by Noddle!) which found that money is the most common cause of arguments among couples aged 35 – 54 and the second most common cause of arguments for couples of all ages. Only cleanliness/tidiness causes more rows!

We also found that almost a third of couples married or living together (31%) don’t have a joint bank account – preferring to keep their money entirely separate – while over a third (35%) have a joint current account and don’t have separate accounts as well. Three times as many married couples rely on a joint current account alone than those who live together.

Here are my tips for reducing the chances of arguing over money with your partner:

  1. Have the ‘money conversation’ before you move in. You don’t need to do this the moment you start seeing each other but it’s worth talking about how you plan to pay your bills etc as a couple before you move in together or rent or buy a property.
  2. Be honest with each other about your money. Our research found that almost six in ten people said their partner knew everything about their finances. But one in ten women and one in 12 men said their partner only knew about some of their financial situation. And one in 25 women said their partner knew little or nothing about their finances. Eek!
  3. You and your partner don’t have to have identical ideas about money, but it’s likely to be difficult if you can’t talk to each other and can’t work out a compromise if you’re poles apart on your finances.

Pension scams on the rise

It’s estimated that one in four pension savers have been targeted by scammers since the ‘pension freedoms’ were introduced in April this year.

And figures show that the amount of money lost to pension scammers tripled in May to £4.7 million from £1.5 billion in April. So, how do you spot a scam?

  1. If you’re cold called, it’s probably a scam. Legitimate financial companies don’t generally cold call.

SAVVY TIP: Scammers are often tempting people with the promise of a free review of their pension or a free government review. It’s true that you can get free pensions guidance from a government initiative called Pension Wise but you have to make the first contact – you’ll never be cold called. If you want to get in touch, you can call them on 0300 330 1001.

  1. If you’re put under pressure to make a decision – it could be a scam. Take your time and take advice from others. Decisions you make today could affect the rest of your life.
  1. A scammer may offer you the promise of much higher returns. Often these returns just aren’t achievable. If someone tells you to invest in something like overseas forests or golf clubs or car parking spaces in the Middle East, the alarm bells should be ringing! You may find you lose all the money you’ve invested and, even if you don’t, it could be harder to find out what’s happening to your money.
  1. If you’re promised the chance to access your pension before the age of 55 – be aware that this could mean you pay a large charge and have a hefty tax bill to pay on top. The rules only let you take money out of your pension once you’re 55 (unless you’re seriously ill).

SAVVY TIP: If you’re not sure whether you’re being offered something legitimate or are about to be scammed, call Pension Wise on 0300 330 1001 or the Pensions Advisory Service on 0300 123 1047. If you think you’ve already been scammed, contact Action Fraud on 0300 123 2040.