We can all sympathise with first-time buyers.
For 20 to 30 somethings, getting onto the property ladder has never been more challenging.
The challenges for buyers trying to get credit have significantly increased since the 2007-08 financial crisis and subsequent Mortgage Market Review (2014).
This brought about the obligation for lenders to ensure that buyers could afford to service and repay the loan they were taking out, tightened the rules around interest-only mortgages, banned self-certification mortgages and required tighter qualifications for mortgage advisers.
This has led to much more stringent checks of buyers’ personal finances and is designed to reduce the risk of defaults and increase consumer protection.
But affordability, and how to make sure that once you are on the property ladder you stay on it, affects everybody.
Buyers at any age must consider affordability in different scenarios, such as interest rate rises or changes in their own circumstances.
But one conversation that does not seem to really happen regularly is: what happens if things go wrong?
So what can advisers do to help?
Advisers can help their clients lay down some great foundations – for example by providing tips on budgeting, how to pay down debts, how best to save and invest money – and signpost the tools and products that are available to help them.
|Average household expenditure (£) 2018|
|Mortgage related endowments||1,665|
|Non-mortgage related endowments||663|
Some of that is probably more relevant for first-time buyers, but not necessarily.
You might be surprised if you asked your clients about how they track their money, savings and debts.
But what happens if those best laid plans go awry?
Talking about protection products with clients can feel like a difficult conversation.
Some protection products have not got the best reputation. So where to start?
Protecting the most valuable asset you have – your family
One of the most powerful things one of my colleagues once said to me was: “Until the mortgage is paid off and you’ve secured your income for retirement, you’re basically just renting your life.”
If you are in full-time employment, or even if you run your own business and things are going well, it is easy to think that things will not ever change.
But we all know that is unlikely to be true. And if the worst happens, what provisions and plans do you have in place to protect your most valuable asset – your family?
So, in the context of housing, that means protecting the income and lifestyle of those who are buying the property – be that if they die, become sick for a period, become disabled due to an accident or are unable to work if they suffer a critical illness.
Having spent years saving and making the move into property ownership, one of the major factors in staying there is to protect that home and lifestyle should the worst happen.