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.
Bank of Mum and Dad downsizes
Parents are feeling the pinch and will ‘only’ be helping their children buy their first home to the tune of £18,000, down from £21,600 last year. The figures come from insurer Legal & General, who say that although parents are giving or lending less, more people are being helped onto the property ladder. Over one in four people (27 per cent) who bought a home in 2017 had some kind of financial help from their parents, an increase on the 25 per cent who were helped a year earlier.
Some parents are able to give money to their children, but it’s something not all can afford to do. Mortgage lenders don’t generally like it if you’ve had a loan from someone else, but there are mortgage products designed to let a parent or family member help with the costly business of buying a property. They include:
- Linked savings mortgage: only a few mortgage lenders offer these, but the idea is that your parent opens a savings account that’s linked to your mortgage. It has to be with the same bank or building society that you’re taking out your mortgage with and the money must be in a special linked account. Your parent isn’t able to take any money out of that account for the first few years – typically three. As long as you pay the mortgage on time, your parent can then take out their savings. Borrowers normally need to come up with a five per cent deposit, with the parents’ savings making up 20 per cent. If you fall behind with your mortgage payments, the savings can be used to pay it.
- Family guarantee mortgage: your mortgage lender takes a charge on a share of your parents’ home. It’s not the same as your parent remortgaging, because in this case the bank you’re borrowing from only has a claim on – typically – 20 or 25 per cent of your parents’ home. The idea is that once your property rises in value by enough, the lender drops the charge on your parents’ home.
Who do you think paid out £2 million a day last year? No, not some
Who do you think paid out £2 million a day last year? No, not some new lottery – but pet insurance companies! Kerching! Only around a third of dogs and fewer than one in five cats are insured, but pet insurers paid out one million claims in 2017 – a new record.
Vet bills are rising, in part because of medical advances and that means treatment can be very costly. The kind of illnesses or accidents that would have meant a pet had to be put down in the past can now be treated – if you can afford it. While the average pet insurance claim is now around £750, one insurer paid out £30,000 for a dog that suffered from seizures.
There are both cheap and pricey pet insurance policies available and they do vary quite widely. These are my tips on what to think about if you’re shopping around for pet insurance:
- How much cover: most insurers offer different versions of their policies – an economy, standard and premium version, with different amounts of cover. The budget versions may only offer £1,000 or £2,000 of cover, which may not go very far if your pet is injured or seriously ill and needs treatment.
- Lifetime cover policies: some pet insurance policies will pay out for long term conditions for as long as the pet needs treatment (up to the policy limits). These are called cover for life or lifetime cover. It’s useful to have if your pet develops something like such as diabetes, kidney problems, seizures or arthritis that could need ongoing treatment or medicine.
- Excess levels: this is the part of any claim that you will have to pay. The excess levels are typically between £50 and £100, although you can choose to have a higher excess. Some insurers impose an excess a percentage of the claim. And most will insist on a higher excess once your pet is older (and therefore more likely to get ill).
- Upper age limit: some insurers won’t insure a dog or a cat for the first time if it’s over the age of 10. But, depending on the breed of dog or cat and the insurer, it could be as young as six.
- How quickly the insurer pays out: some insurers are quicker than others when it comes to paying out. The insurer won’t generally give you this information, but you can get an idea of what their customers are saying on review sites like Trustpilot.
Don’t forget your EHIC!
If you’re planning a summer holiday in Europe this year, don’t forget to apply for an EHIC (European Health Insurance Card). It gives you access to medical treatment in countries that are in the European Economic Area (the EU plus Norway, Iceland and Lichtenstein) on the same basis as someone who lives there. It may not be free as you may have to pay a percentage of the cost of some treatment and for prescriptions.
An EHIC is free to apply for as long as you use an NHS site and it lasts for five years. If you have travel insurance and you also have an EHIC, your insurer may waive the excess if you need to make a medical claim.
SAVVY TIP: Your EHIC is still valid after Brexit and will continue working until December 2020 – and may do beyond then. The government says it’s keen for people in the UK to be able to use their EHICs after we’ve left the European Union.
How much does a loaf of bread cost? It’s always a favourite question for politicians in the run-up to an election (and they often get it wrong!). I guess the answer depends on whether you’re into organic soda bread or budget sliced white, but – according to a group of eight to 15 year olds surveyed by a national high street bank – a loaf of bread costs £15. Eek!
The children also thought that a pint of milk was £17, compared to the actual cost of 44p. The only cost they underestimated was school uniform – £180 compared to the actual cost of £213 on average.
The children were also asked about future earnings, and boys thought they’d earn £2 million a year whereas girls thought they’d earn £1.1 million. Have they been reading all the gender pay gap coverage..?!