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.
Best energy deals only for new customers
If you’re a regular reader of my blog, you’ll know I’m not a big fan of the way the energy market works (to put it mildly!). I don’t think that most people get a good deal under our competitive market. It’s not just me who thinks that – the competition regulator found that almost three quarters of energy customers are on the standard tariff, which is the most expensive deal apart from prepayment meters.
Last week an investigation by a BBC programme showed that some energy companies were saving their best deals for new customers. If you search for a new tariff on a price comparison site, you’re normally asked who your existing supplier is, and – with several of the biggest six energy suppliers – you’re not offered the best deal if you’re already with them.
According to the BBC, the difference between the best deal and the ones offered to existing customers could be as much as £260 a year. These deals used to be banned by the energy regulator, but, after a report into energy competition by the competition regulator (I know, but keep up!), the ban is no longer in force.
Not all energy companies operate this sneaky dual pricing and you can check whether you’re being offered the best deal by your existing supplier when yours runs out by choosing a different energy provider as your existing company when you next shop around.
Leaves on the line causing delays?
It’s that time again…you know the one, when trees lose their leaves and the pesky things end up on railway tracks. It’s not just a delay caused by leaves on the line that can mean you get compensation. Under new rules, if the train is overcrowded or the loos don’t work, you could get compensation from your train company.
That’s because since October 1st, rail travel (as well as ferry and coach travel) are covered by the Consumer Rights Act, which came into force for shops and other services a year ago. Under this law you may also be able to claim for consequential loss, such as the cost of a flight if you missed it as a direct result of train delays.
Almost 80% of people who are entitled to compensation don’t claim it, so here are my tips to make sure you’re not out of pocket if your train is delayed:
- You can normally get compensation if your train is delayed by more than 30 minutes under ‘delay repay’, but this will depend on the passenger charter your train company operates under. Some have different rules, especially for season ticket holders.
- If you’re entitled to compensation, you can get a cash refund (some rail companies used to insist on giving you vouchers off future travel).
- If the delay is the train company’s fault, you can get your compensation paid in the same way you paid for your ticket.
- If you’re not happy with the way the train company has dealt with your compensation claim, you can complain to the organisation Transport Focus.
The self-employed mortgage challenge
If you work for yourself, there are lots of benefits – freedom and flexibility are usually cited as the main ones. But there are some real financial disadvantages, such as unpredictable income. And it can be much harder to save for your retirement (no employer contributions) and get a mortgage.
A study by a building society found that one in eight self-employed borrowers have been rejected for a mortgage. And in many cases it wasn’t because they weren’t earning enough, as almost half earned as much or more as when they were employed. Getting a mortgage if you’re self employed can be harder than if you’re working for someone else, but it needn’t be mission impossible. Here are my tips:
- Make sure your accounts are fairly recent when you apply for a mortgage. Your accounts will be based on your previous trading year, so they’re already a rear-view mirror record of your earnings. If your accounts are more than a few months old, the mortgage lender may ask for more evidence of your earnings (some ask for a tax calculation form called SA302 as standard).
- Try and make sure your earnings are steady or rising. That may be easier said than done, but mortgage lenders may be wary of lending if your income is falling, unless there’s a good explanation.
- Check your credit report. This isn’t a plug for Noddle – the fact is that mortgage lenders will take into account what’s on your credit report and your credit score and self-employed people generally score lower than someone who’s employed.
- If you can borrow less than 75% of the property’s value, you may find it easier to get a mortgage. Lenders must have a lot more capital (money and assets) if they lend more than 75% of the property’s value, which is one reason why these applications come in for more scrutiny.
- Talk to an independent mortgage broker and be upfront with them. They will know whether there’s anything in your circumstances that will reduce your chances of getting a mortgage and which mortgage lenders are more flexible when it comes to self-employed customers. They will also advise you whether this is the right time to apply for a mortgage or whether you’d be better off improving your finances and applying in, say, six months.
Help to buy mortgage scheme ends
A scheme designed to help first time buyers get a mortgage with a small deposit will end on December 31st. The help to buy mortgage guarantee scheme was introduced in 2014 and reduced the risk to lenders of lending mortgages worth more than 90% of a property’s value.
Government figures show that in 2016 the scheme accounted for 25% of mortgages above 90% loan-to-value (compared to 70% in 2014). The ending of this scheme doesn’t affect the help to buy ISA or the help to buy equity loan, where you can take out a loan of up to 20% (or 40% in London) that’s interest free for the first five years, when you buy a new build property.
EU law to become UK law
The UK will formally start the process to leave the EU by the end of March next year. From then, we’ll have up to two years to negotiate with Brussels (although this can be extended if both sides agree). In the meantime, the Prime Minister also announced that all EU law would become British law – at least in the short term.
This isn’t a U-turn on Brexit, but will allow parliament to decide which EU laws it wants to keep and which it wants to adopt, without having to worry about getting this done within two years. EU law covers a wide range of areas, from workers’ holidays to consumer rights.
One in five wants to rent out spare room
Short of cash? Own your home and need extra income? How about renting out a spare room? According to a recent survey, more than one in five of us is interested in renting out a spare room. And you can do this without paying a penny in tax (hurrah!).
The government’s rent-a-room scheme lets you rent out a spare room and earn up to £7,500 a year in income without having to pay tax on it.
And there’s a new £1,000 ‘sharing economy’ tax allowance, which means you don’t have to pay tax on the first £1,000 you earn by advertising your home or your services on a sharing economy platform (such as Air BnB or Just Park). You can’t claim both allowances on the same room(s), but you could use the rent-a-room allowance for income from renting out a spare room and claim the £1,000 digital allowance if you rented out your drive, for example.
There’s more information on the rent-a-room scheme and letting rooms in your home, on the Gov.uk website.