Interest rate cut special: what savers & mortgage holders need do now. Including… why locking in savings can be a winner.

25:38So not only is it cheaper, the euro price is lower than the pound price. Now, if I go on to that, let me give you an example because this is quite telling. We'll take a woman's floral organza dress. Zara UK, 46 quid. Zara Spain, 36 euros, which is£31, roughly. Zara France, 46 euros. So it's more in France than in Spain, although it's still cheaper than the UK. Zara Greece, same price as Zara Spain, so it's good. Zara Italy, same price as Zara France, so better than England, but not worse. So if you're going to Greece, Spain or Portugal, and you're going to Zara on almost... I mean, I've never seen anything where the rule doesn't work.

26:19The euro price tends to be lower than the pound price. So certainly if you're going and you were planning to shop at Zara before you go, I would wait and do it once you get there, because it's going to be a lot cheaper. And just finally, there's one from Ali, and this is right up my alley. It says, this is going to sound daft. Not to me it doesn't, Ali. But cling film and tin foil from Istanbul. They sell them in the supermarket in large sizes and it's so much cheaper and better than here as the packaging has better cutting tools on it too. God, it makes me want to go to Istanbul just for that.

26:50Well, and that's a wrap on this section. Very good. Brilliant.

26:59Mortgages, then. Where are we? What do we need to reflect on with that? I mean, you've kind of covered this already. Well, we know that variable rate mortgages are going to drop. Although if it's a variable, we don't know it'll drop by exactly a quarter of a percent. It will if it's a tracker. Fixed rates, well, you're fixed. But once your fix ends, that price, the rate that you'll move to afterwards should drop. But no one should be on the standard variable rate. That's about 7.5 % at the moment. Most people should be getting another deal. The question I think most people ask me about this is if I'm getting another deal, should I fix now or is it going to get even cheaper and should I wait to fix?

27:35Now, we have joining us to help because mortgages are complicated and it's a regulated area is Jane King, who is an independent mortgage advisor with Ashridge Private Finance. Hello, Jane. Welcome on board. Good morning, Martin. Good morning, Adrian. Hiya. Hiya. So what have we got? Rebecca, I'm due to remortgage next year. Worrying in timers might be about to lose my job. Sorry to hear that, Rebecca. and the rate we currently have is 1.87%, so expecting a big rise. Are there any predictions about whether there might be a downward trend of mortgage rates into next year? So it's a very interesting question.

28:08First of all, I'm sorry to hear about your job. You've done very well to retain such a cheap, low-rate mortgage. You probably had a long-term, maybe a five-year fix, and you locked in that rate. You've done very well out of it. But certainly, when that fix ends, you're going to see bill shock, and your rate is going to jump quite substantially. So what you need to do is be prepared and I'd start looking six months ahead of time to be prepared to get a new mortgage. Now, what's interesting here is I can talk to you about UK base rate predictions. Many analysts are saying 3 % by the end of the year, some below 3 % by the end of the year.

28:41So a series of cuts. We're currently at 4.25 % in April, you know, expecting five more cuts potentially this year. The question is, how do those base rate cuts factor into what fixed rate mortgages you will be able to get? Because as I said earlier, fixed rate mortgages are already looking ahead to the future in the pricing they're set at now. So markets' long-term expectations aren't just crystal ball gazing. They have a practical, real impact on the price that you can get a fix at right now. So the perfect person to ask is Jane. Jane, what do you think is going to happen to mortgage rates? Interest rates are dropping.

29:20Are we going to see fixed rates drop? And by how much so during the year? What's your thinking on this? Well, it's anybody's guess, isn't it? I mean, I sit in on meetings with bankers, economists, and nobody really knows what's going to happen. Although we've had fairly stable base rates over the past few months and even the past year, fixed rates have been undulating up a bit, down a bit, up a bit, down a bit. So it's very difficult. I mean, as we all know, a big predictor of fixed rates or interest rates in general is inflation. However, fixed rate lenders sometimes drop and increase their rates for various other reasons.

29:57So if you're a lender with a big lump of money that you can't lend, we've had the stats this week that there's been a loss of volume in transactions with sales after the stamp duty break. So they may have a lot of money lying around that they need to lend. And the only way they can lend it is to drop the rates. So we're not just looking at monetary reasons. We're also looking at other things like service standards and, you know, whether the money is available. So it's very, very difficult to predict. But again, I'm sorry that you might lose your job. And what I would just mention at the same time, if you really think you're going to struggle, I would urge you to contact your lender as soon as possible to talk to them.

30:37There's lots they can do. And so please don't worry about it too much. Yeah, I've been talking to lots of other brokers, too, about what's going on with mortgages. And all of them seem to say this is a decent time to get a mortgage. That doesn't help. It doesn't help the questioner because approvals are down on the back of stamp duty. The stamp duty going up, people try to get in before the deadline. So there's less demands and there's a negative economic outlook. So lenders are trying to offer better deals and more generous loan sizes. And we've also seen some more flexibility being given by the regulator to end up mortgage companies on their affordability charts.

31:13If I look at where we are with mortgage rates right now, the cheapest that we're seeing at the moment, we're seeing it down at 3.6 % for the very cheapest two-year fix, 3.8 % for the cheapest five-year fix. That, of course, for people with great credit scores and great loan-to-values. That just gives you an idea. But let's just think about that. You can fix for five years at 3.8%. The base rate is now 4.25%. So you can fix below the current UK base rate. I think that is worth looking at where we are competitively at the moment. The honest practical answer, Rebecca, is there's not much you can do right now anyway, because you want to hold on to that fix for as long as you possibly can.

31:51And it does look like, you know, because UK interest rates are predicted to come down, if those predictions are true, mortgage rates won't be as bad as they have been by the time that your fix comes to an end. That's the potentially good news. Mortgage rates could be, you know, roughly where they are now, the cheapest rates in the 3 % or maybe even in the 2 % if you were lucky and UK-based, for you anyway, and UK-based rates would come down a lot. If you'd been doing this, you know, way back in the mini budget in July 2023, you'd have seen fixed rates up at around the 6 % level. So they are a lot lower than they were.

32:25So the bill shot you're going to get isn't as big as it would have been. but I think it is probably unlikely that you're going to see rates in the 1 % which you've got now so hold on to that when you can and if you have any spare money you can look at reducing your mortgage overpaying when you can you know putting money aside so that you won't need to borrow as much when it comes to that remorse you can point I'd suggest you did that too. Gemma in Lytham says she's a dance teacher so the only numbers she knows are five six seven eight very good. Well that's sort of the percentage you're getting on the standard variable rate.

32:55I've got a fixed mortgage rate that ends this month, how many years do you recommend I fix the mortgage rate for? Well, it's kind of what we were just talking about. Current finishes... It is slightly different. It is different, yeah. But what I'm getting at, it still demands some kind of knowledge of macroeconomics, a kind of level of expertise. Unless you happen to work in the city, 98 % haven't got... I disagree. Okay. I disagree because what you're doing is you're saying, I need to base the decision on an unknowable factor. The unknowable factor is what's going to happen to mortgage rates over the next five years.

33:31And I'd say when it comes to fixing, one of the big things you need to look at is you need to look at yourself. So you need to look at how much do you value price certainty? How much do you value knowing exactly what you're going to pay? And the more risk averse you are, then the more you should, if you can fix at a rate that you can afford, then the more you should be, first of all, hedging towards fixing and secondly, hedging towards fixing for longer. Because if you can lock in on a rate they can afford, then you close your eyes to the fact that you might have done better in hindsight and you lock in on a rate that you can afford.

34:04So you have to look at both the externals and the internals. Just her number, I mean, her numbers for our purposes might not be totally relevant, but a current deal finishes at the end of June, 29 years to go, loan to value, 150k still to pay on a house worth around 370k. So the loan to value, which is the absolutely crucial figure, how much of your home's current value, so if your house price has gone up, it can be beneficial, you're borrowing. The lower the loan to value, the better. As she's under the 60 % loan to value, which is where you get the cheapest mortgages, below 60%, she's doing well on that.

34:36Let's head over to Jane, though. What do you think on this, Jane? Where would you go? Two or five year fix, having heard that information. And we understand that you can't get, you know, this is not a full fact find, just general points for people. Well, I mean, I agree with you, Martin. I think the borrower has to look at their own personal circumstances and objectives. so for instance you know if they're living in a house that they love they've got children at school you know for the foreseeable future then I think you have to look at where we are now and not what what you may think is happening in the future so if you're settled no plans to move then obviously it would make sense to fix for a long time and as Martin said close your eyes to what you may or may not do because we all don't have the benefit of hindsight when this comes if you're thinking well actually might be I may, you know, change jobs in a couple of years, I may relocate to the other end of the country, I may do this, then a longer term fix is not for you, it's a shorter term fix would suit you better.

35:33So I think you've got to ignore what may or may not happen to fixed rates, because nobody really knows. And look at where you are now, and what you are now and what the rates are now. And if we can get, as Martin said, your loan to value is under 50%. So you'll be getting the good rate. So I would assume that you could get something under 4 % right now. And to me, that would been not a bad deal. But how many years do you recommend you fix the mortgage rate for? You'd go for five, would you? Five gives you some... Going for 10 means you're really locked into the property you've got. That's what I'm talking about.

36:02Because when I had to make that decision, when I first bought a house, I first got a mortgage, I was presenting Working Lunch, business programme. I remember one of the top four ex-guys in the city came on. I said, I've been offered this percent for five years, this for seven years, this for 10 years. and which of those? And he went, I'll go for that one. So I went for that one. But that's kind of what I'm getting. I had access to his advice. Yeah, but he didn't know either. No, he didn't, but he had a better idea. No, all he did is help persuade you to make a decision. You made a decision, you got on with it and you're happy you'd made a decision.

36:36That decision was the other. What people don't know, and you won't know, is that, you know, the most important thing, it was actually the Oasis song was written about interest rates dropping. Don't look back in anger. was just simply their message to tell mortgage holders that you make the right decision, then you don't look back in anger at what's happened on the back. Jane, we should let you answer. We were asking you a question. Would you take how many years? Well, the other thing you might want to do, because your mortgage is quite low in the big scheme of things, is maybe convert to a tracker for a little while.

37:06See what happens to rates over the next six months to a year. A lot of trackers come without early repayment charges. So you could do a wait and see and then hop off the tracker into a fixed rate further down the line. what are the cheapest trackers right now what rate roughly that they're sort of bank base rate plus 0.4 so you'd pay more to track then now wouldn't you you'd be paying you would you would but you've got the flexibility and if it's a small mortgage it may only equate to a few pounds a month so it might be worth a gamble might not that the lady might just want the peace of mind of a fixed rate i get that so it's all really down to what their attitude to risk is over where rates are going to be in two years or five years.

37:45Adrian, I just want to do something with you, which I think is really instructive on what you were asking about a moment ago. So we're just going to play a game. This is important. Now, imagine I have a coin in my hand. I don't. I didn't bring one in. I've got a coin in my hand here, and I'm going to offer you a bet on the tossing of this coin. It's a totally fair bet. It's straight. Here's the deal. If you win, I'll give you 100 quid. This is not a real bet. I'm not really offering him. There's no contract. If I win, you only have to give me a pound. Okay? Would you take that bet? Yeah. Right.

38:17So let's toss the coin call. Heads. It was tails. Was it a bad bet? No. No. You had a good bet made on the information that you'd had. You had a bad outcome. And people often confuse bad outcomes with bad decision. So this is where we're going with fixing. If you take a decision to fix based on you want long-term price uncertainty at a rate that you can go, and then interest rates were to drop so that it would have been cheaper in the long run, people then go, well, made a terrible decision. No. You made a good decision. You had a bad outcome. And unless we have clarity of decision-making between decision and outcome, anything can go against us.

39:02We don't know the future. Should I marry him or her? You might make a good decision. You might have a bad outcome. All of this, all of dealing with uncertainty is taking the best decision you can on the information you have at the moment. And as long as you do that right, you mustn't beat yourself up because if you do, you tend to make the wrong decisions more frequently in future because you become biased and risk-averse when you shouldn't be. So those people asking, should I fix now? How much can you ride the market? How much room do you have? And the more risk-averse you are, the more fixing is right for you, even if it doesn't work out right in the longer run.

39:33Just before we get on to Mastermind, Just one question from Fiona I think is interesting. Is it better to overpay on a mortgage while it's fixed at a lower interest rate to reduce the amount I owe on it or save the money in an account? So a very simple rule of thumb. If your mortgage rate is lower than the amount that you can earn on savings, which you'd be lucky if it is, but if it is for some people, then what you would be better to do is to put the money aside in a savings account. Now, you might put it in easy access. You might put it in a fix. as long as that money matures, if it's in a fix, before you need to remortgage.

40:06And you would build up your savings so that at the point of remortgage, you could use that to reduce your mortgage. But in the meantime, you would actually earn more savings interest, as long as you've got to look at the after-tax rate on savings, earn more savings interest savings than paying off your mortgage. If your mortgage rate is higher than the amount you can earn after-tax on savings, you would generally be better to pay off the mortgage. Jane, do you agree on that? I absolutely agree. It's a perfect rule of thumb. The only thing I would add to that is if it's in a savings account, you can always draw it out if you have some sort of financial emergency.

40:37And people do get these sort of things. Whereas once you've made your overpayment, you obviously cannot get that money back. So it's got to be money that's not in your rainy day emergency fund. Exactly. You should always have a three to six month emergency fund at the same point.

40:57Welcome to Money Mastermind, the current score in this three option multiple choices. Adrian has got nine right and 15 wrong, but you're on a good run at the moment. So let's see what you can do here. OK. Now, Adrian, purely by chance, when trying to think about a question that would be suitable for you, I started thinking about things that give information out of their backsides. And lo and behold, I realised after the recent bout of good weather, I thought of sunscreen. Turn a bottle of sunscreen cream around and there's usually a three-letter code on the back, which can be useful. So what I want to know is what does it stand for and why is it useful?

41:37You have three options. Is it A, the P-L-A, the Product Licence Authentication. This indicates the specific ingredients So if two products have the same PLA You know it's the same thing And you can see if you can buy the same thing For cheaper elsewhere under a different brand Is it B The PAO The period after opening The length of time after opening a sun cream Its protection will last for So that therefore you can work out How long it's still valid for And not have to buy a new one If you know it's still going to work Or is it C, the PUN, the photodermic ultraviolet norm? The PUN is a regulated measure of how long one application should provide protection for, so you can compare which will last longer, so which is better value.

42:31Is it A, the PLA, B, the PAO, or C, the PUN? So the second, those three, you're saying only one of them is real? Only one of them is real. Okay. I can now reveal what the advice I had from Adrian in Shipster. He said, dear Adrian, in honour of Adrian's across the country, when Martin's mastermind comes round, never go for the middle option. It's never the middle option. That's from Adrian in Shipster. Well, let's see. I think it's – I wouldn't have gone for the middle option anyway because I want to honour Adrian's advice. Be it right or wrong, I'm honouring the rights of a fellow Adrian. I think it's A.

43:16You think it's the product licence authentication? OK. Well, first of all, C, the P-U-N, is different when you look at it on paper. It's called the PUN. The PUN. It's completely made up. There is no photodermic ultraviolet norm measure whatsoever. A, well, actually, on many medications and substances, they do have a P-L code, the product licence code. And if the product license code is identical, then it is exactly the same thing. You can often find it with hay fever tablets. So you can buy the same thing for cheaper elsewhere. Because if they have the same PL code, it's the same tablets regardless of the branding.

43:53But A wasn't the PL code. It was the PLA code. The product license authentication, which I made up. So the correct answer, sorry to this agent and the other answer, give me a nutter, is the product, the period after opening, the PLAO. which is the length of time after opening its protection with last fall. When you get sun cream, look at the P-A-O. Note, if you can put on a marker on your sun cream, the date you opened it, so you then know how long it is still valid and still safe for. So that's different to a used before. It's a period after opening that you can use it for. And what this does is many people, when they go away the next year, they go, oh, I can't use it, it's out of date.

44:32Well, actually, some sun creams have a 24-month P-A-O. So you could use it for two years, and if you put the date on it when you open it, you then know how long it's going to last for, and you don't need to buy another one. Did you know what that text said from Adrian and switched the order? I promise you, I had no idea. I'm trying to assess your guilt. I don't have any contact. No, but you've got a producer in your ear. Producer Simon would not do that. That was completely legit. Adrian, you've now got nine right and 16 wrong. And to both you Adrians, Yabu sucks.

45:04Right, everyone, we're in that bit after the show where it's podcast only. normally producer Simon asks me questions, but I've got someone to ask questions today. So Jane King is an independent mortgage advisor with Ashridge Private Finance. And Jane, I've got lots of mortgage questions before I come on to the savings questions, which I'll get producer Simon to ask me. Anyway, too much of the underbelly of the show. Let's just get on with the questions. So the first one is from Karen, who says, hi, Martin or hi, Jane. My son is due to complete on his first house purchase next week. He hasn't exchanged contracts yet.

45:39Should his broker be looking for a different mortgage in view of the announcement today from the Bank of England? Thank you, Karen. Well, I mean, my gut feeling would be to say no. It's too close to completion. You could end up with a chain collapsing. You could end up with not being able to get a better deal somewhere else because of restrictive criteria. There could be all sorts of reasons. And that close to completion. And bearing in mind that you probably wouldn't say very much, really, on a quarter point reduction, I would say no. Yeah. And my view is pretty simple. I mean, we've had a quarter percent reduction.

46:13So, look, first of all, if your son's getting a variable rate mortgage, the rate's going to come down anyway. If he's getting a fixed rate mortgage, well, probably most of that quarter percent has been factored in to the mortgage rate that he's getting, because this was not unexpected. All of us in the industry, we were all certain there was an interest rate coming. The question was, was it going to be a quarter of a percent or a half a percent? Not was it going to be nothing or a quarter of a percent? So this and that gets factored in to what's going on in the mortgage rate. So fixed rates may come down a little, but it's going to be it's not going to be the full quarter of a percent.

46:48I wouldn't have thought, is it, Jane? No. At the moment, they're going up and down by 0.1, 0.01. They're very, very small increments of reduction. So it's not going to reflect in any huge savings anyway. But my concern would be more the timescales than any sort of few pounds he could save here and there. Yeah. So the general consensus, Karen, is get on with it and congratulations to him in his first home. I hope he's happy. I presume he's living there for a long time and he's done all his budgeting so that he can afford the mortgage and just get on with it, smile and now deal with whatever he's got to do to make it be the place that he wants to live in.

47:23Next question is from Robin Deben. Looking to buy a house this year and take out a small mortgage. I have two ISAs, my wife's and mine, that have a combined 160 ,000 in them, earning 4%. Great. Well done. Is it worth keeping one of them and borrowing more money at a lower interest rate? Worried what the government will do to ISAs, which will take longer to build an ISA? So that's an interesting question. I think this is probably more me than you, Jane. So I'll start it and then you come in, if that's all right. Absolutely. Yeah, absolutely. OK, so you're quite right. There is a realistic chance that in the autumn budget this year, the Chancellor, Rachel Rees, will drop the amount that you can put into cash ISAs.

48:05Currently, you can put£20 ,000 into ISAs in a year. And if you're just using it for a cash ISA, you can put the whole amount into a cash ISA. The prediction is it could be as low as£4 ,000. Nobody knows. The decision hasn't been made, but is absolutely 1 % certain it has been looked at. and the policy is being discussed. If it were to happen, we don't know whether it would happen immediately in autumn. They could delay it. So it starts, so they announce it in autumn, but it starts on the 1st of January. We've seen precedent for that before on ISA decisions, or it could start at the start of the following tax year.

48:37So the 6th of April, 2026. But I think there is a realistic chance of that happening. Now, please do not read that as me saying it is going to happen. I'm saying it is a realistic chance and you should look at it. So your question here is, should I keep some money in an ISA? Because if they reduce the cash ISA threshold, if I take the money out of the ISA to reduce my mortgage so that I need a smaller mortgage, it's going to take me a long time to get that amount in if they drop the threshold down from£20 ,000 to£4 ,000. I think it's a very legitimate question. The first thing I would say is we have to work out how much you are going to gain on the mortgage.

49:18So you're saying you're taking out a small mortgage, which I presume means that you have a good loan-to-value ratio, your loan-to-value ratio is lower than 60%, in which case, if it wasn't, then using extra savings to reduce the mortgage becomes really valuable, not just because you have a lower mortgage, but because potentially it can reduce the interest rate on your mortgage because you have a lower loan-to-value ratio. I suspect from the phrasing of your question, that isn't an issue for you. Also, the question is what rate of mortgage you can get. We are talking about cheapest mortgages on the market being below 4%.

49:50So if you've got a 4 % cash ISA, I don't know if that's fixed or variable, we'll assume it's fixed, and you've got the rate locked at 4%, if the mortgage borrowing is at less than 4%, then actually you're practically better to keep the money in the cash ISA too, because the mortgage is costing you less than you're earning for the equivalent money in savings. So for me, it probably does sound quite a sensible idea to keep some of the money in your cash ISA because of the risk of cash ISA thresholds being dropped in your particular situation and the fact you're not going to gain that much by reducing the mortgage.

50:28Feel free to disagree, Jane. No, I absolutely agree. I think actually what I would do is if I was to do that, then yes, I would try and bring my loan to value down as low as possible. And from what you say, a small mortgage, I would assume, as Martin did, that it would be under 50%. And then if you find that rates go up in the future, you can or the risk to ISAs doesn't materialise, then you could also maybe take out small amounts every year and make your most fixed rates will allow you to overpay by 10%. So if you wanted to get it down, then maybe in the future, you could take the odd 10 % out here and there to get it down quicker if that's what you wanted to.

51:08So you would have the balance of, you know, the bulk of your money in the ISAs getting the 4%. and maybe some people like to overpay their mortgage and like to get it down. And that will give you the best of both worlds. Yeah, and that gives you the flexibility. Once you've overpaid the mortgage, it's much more difficult to get the money back. So it works that way. The one other note, if you are overpaying your mortgage, which can be an incredibly lucrative thing for many people to do, is make sure that it is reducing the capital that you owe. What many mortgage lenders do is when you overpay your mortgage, they just reduce your repayments in the future and they keep the term the same length.

51:41If you're overpaying your mortgage to really have the savings, you want them to effectively reduce the length that you'll be paying in future. So you keep your future mortgage repayments at the same level, but it's actually the amount that you owe them that's reducing when you overpay. Now, we're about to move on somewhere in the podcast that I wasn't expecting to do, which is to talk about mortgage acceptance and how you get accepted. And it's really interesting that many people focus on their credit score, but that's not the most important thing. there are a couple of bigger things that could kibosh your application before we even get to credit scoring.

52:14Back to the pod. Our next question is from Mel. She says, Hi, I've lost my job. Sorry to hear that, Mel. Our fixed rate product ends next year on her mortgage, but I expect I'll be on a lower salary. If we stay with the same lender and apply for a consecutive fixed rate product, can we avoid the affordability process? I expect we would fail. is our home at risk. So actually, I would always suggest to people that when you're looking at a new mortgage, you look at the product transfers. Product transfers is where you're getting a new mortgage deal without changing your lender first, because that's the benchmark that others have to beat, because it's easier to stick with your existing company than is to switch elsewhere.

52:52So you should always be looking at a product transfer first, just so you know what they need to beat in order for it to be worthwhile to go elsewhere. Jane, talk us through the affordability question here. Okay, so as Martin says, if you go to your existing lender, they will release their what we call follow-on rates. So which rates they're prepared to offer you at the end of your term between three and six months before your current fixed rate expires. During COVID, it was six months, but now many lenders have reduced this down to three. So you need to keep an eye on your lender and find out when they will release their follow-on rates to you.

53:27If you decide to remain with them, then 99.9 % of the time, as long as you make no material change to the mortgage, so you don't change the term, you don't change the type of repayment, you don't change the loan amount, then you can normally switch to a new rate without any documentation. So that would not be a problem, the fact that you've lost your job. However, if you are struggling, then as I said earlier, it is imperative that you speak to your lender as soon as possible. We have the mortgage charter in place, they can help you to try and get you through what might just be a short temporary blip in life as we all get them.

54:08But please don't take your head in the sand and pretend it's going to go away because it probably won't. But absolutely, check with your own lender first. From what you say, you wouldn't be able to switch to an alternative lender anyway. And most of the high street banks' lenders' follow-on rates are pretty competitive. It's interesting you that you mentioned the mortgage charter because you'll probably know it was me who pushed Jeremy Hunt to put the mortgage charter in place and I sat in a quite a vicious meeting with the bosses of the big banks and I was the only person on the country there was all the bosses of the big banks the chancellor the head of the regulator and me and I was the only person on the consumer side I had asked if I could take mortgage brokers and another and charities in with me I got a no did the mortgage charter work it was meant to give people rights if they were struggling on the mortgage did it did was it and what did you think of it be honest well there was certain under the fca regulation we had what was called forbearance where lenders said that they would you know take a view on people that were struggling but i don't think it was compulsory i think what you did was made it compulsory um and for a lot of people it gave them a breathing space to get their lives back in order fortunately they've decided to continue it which is great news because people are still suffering from the after effects of Covid, you know, people in hospitality, you know, where jobs aren't very secure still.

55:28So I think it's been an absolute... And all the excluded people who never got the help that, you know, catastrophise their finances too. Absolutely. So I think it's great that it's still in place. I think it was a bit bad of the lenders not to have done it as a right rather than a privilege. So I think they should have done it anyway. So I think it's great that you managed to shoehorn them into doing it. for people that do suffer life changing events even if they're only temporary then I think it's been a great thing but what I would say is that if you are taking out mortgage or even if you're renting don't necessarily rely on it because there is insurance out there that could protect you from things like sickness and stuff like that so that if you do have to take advantage of the mortgage charter then you've got that backup cover in place should it go on and on because lenders aren't obliged to do it forever.

56:16It's a short-term assistance rather than a long-term fix. And I think it's just worth, I might just talk for a second about acceptance for a mortgage. I mean, the three key things are, first of all, your affordability score, which is the first thing that you'll fall down on. People often talk about credit scores, mortgages especially, affordability scores are more important. Lenders carry out strict checks to see if you can afford mortgage repayments on top of other expenses. And they stress test how you would cope if interest rates went up. They're usually stressing it above their standard variable rate, 7.5%, even if you're applying for a lower mortgage.

56:52So that's part of their... This is new lenders when you're applying for a deal from a new lender, either a first-time mortgage or a remortgage. So that affordability check is crucial. Now, the difference between affordability checks on mortgages compared to credit cards and loans is when you apply for a credit card on loan, the affordability check tends to be a statistical one. It says, how much disposable income would somebody in, typically in your position where you live, have? So they wouldn't look at your bank statements. They just do it on the statistical modelling. So you can't really affect it.

57:23But in mortgages, they do often involve going through your bank statements in the run-up to your mortgage application. So you can help yourself by going frugal and reducing your outgoings in the three to six months before your mortgage application if acceptance looks likely to be a problem. It's also worth going£100 beyond an LTV zone. So, you know, LTV thresholds tend to get cheaper every 5%. Go£100 beyond that because that can need underwriting too. The good news on affordability is the regulator has reminded lenders recently they have some flexibility and Santander, Halifax, HSBC and NatWest have loosened affordability testing since March, so reducing the stress testing.

58:03So you may be able to borrow more,£10 ,000 to£40 ,000 more if that's suitable. Jane, anything from you on affordability? So what we do have now, I'm sure you're aware, is we now have lenders who are lending for very, very long periods of time, so 10, 15, 20, 25 years and so forth. And one of the reasons for their popularity is that they do not have a standard variable rate. Therefore, they do not stress test on that standard variable rate because it doesn't exist. And so we now have lenders who are willing to lend up to six or seven times income. I'm not saying you should, but I'm saying that those lenders, that is one of their USPs for lending over longer periods of time.

58:42And they're also including some fairly flexible features as well. So they may be worth looking at if you're prepared to tie in for a considerable amount of time. And Jane hasn't said this, so it's worthwhile me saying this. If you're struggling with affordability, you're struggling with your mortgage or your credit score, or as I'm about to come on to in a moment whether your property is right. That's when mortgage brokers are really, really good. I mean, they're very good at helping people understand the process when they don't know and finding them a mortgage. But the important thing to understand is brokers have information about acceptance criteria that is not available to the general public.

59:17So a broker can match you to the mortgage that is going to accept you at the cheapest rate. So if you're unsure, don't trust the lender, you're better to go through a broker, and that should hopefully make the process a little bit more simple. But she can't and shouldn't say that, so I will say it. After that, the next most important thing that can stop you getting a house, which isn't often talked about, and this is mainly for people buying a new property, well, it's only for people buying a new property, is the property itself, right? People often forget that. So living above a shop, Jane, what else, what other properties don't lenders like that it's worth being aware of?

59:53where to start martin um they don't like studios unless they're 35 meters square or more or they're in a prime location they don't like ex-local authority flats um in blocks where the majority of the flats are still in with uh social tenants they don't like local authority blocks where the entrance is from an outside balcony rather from from an inside staircase they don't particularly like concrete. They don't particularly like timber clad. There's above a shop near a petrol station. Some of them don't like thatch roofs. Yeah, pretty much. There's quite a wide range of properties. And then there are some lenders who specialise in this sort of thing and they've made it their niche to lend on unusual properties.

1:00:39But you'd probably need a bigger deposit. So instead of 5 % or 10%, they may want 15 % to 20 % deposit on the more unusual properties. Right. So we've done the first two things. Number one, affordability. You can't afford it, they won't lend you. Number two, your property's got to be right or that can make borrowing quite difficult too. The final one is your credit score. Now, credit score matters. If you've got a really poor credit history, it can torpedo a mortgage application. But if your credit score is okay and you've flown through the affordability score and you've got the right house, then, Jane, you'll probably still be able to get a decent mortgage, won't you?

1:01:12Credit score isn't the first thing. It's probably the last thing of those three. Well, can I just advise anybody looking to buy a property in the short term to please, please, please avoid Klarna and any sort of short term payment plan. Buy now, pay later. They sound great. Lenders absolutely hate them. We also need if you're running your office's gambling betting account on your personal bank account, please stop because lenders don't like that either. And they don't like cash withdrawals on credit cards either. No, they hate those as well. And believe you me, these days, lenders are forensic in their examination of bank account bank statements, mainly due to money laundering regulations.

1:01:55They go through bank statements with a fine tooth comb. I know there's a lot of people out there that put weird names under their transactions. Some of them you couldn't possibly say on a radio program, but some of them, but lenders do not like those either. so I think you need a minimum of three months clean tidy bank statements and no at least three months of no payday loans or buy now pay later deals and also just as a don't switch a bank account in the three month run up to applying for a mortgage don't do unnecessary credit applications they won't kibosh it but they can make things a little bit more difficult so all of that is really important oh can I just mention that can you make sure that your name is spelt correctly on your credit file your address if you live at 1a the high street and your credit file says the garden flat it's going to come back as a decline on a credit check because they cannot find the data so make sure that your address matches what's on the royal mail website with actually go to the three credit reference agencies experian equifax and transunion before you even start all this and check line by line through your credit file for errors yeah that's one of the biggest reasons why especially people that don't go through advisors and go direct is they they're let they go to the bank the bank says no they don't know why and sometimes it can be just a simple thing as an address mismatch on a credit file can i just also say that if you are sitting at your computer on a saturday night deciding that you're going to go direct um please do not get three four five hard searches done on your credit file in an evening and people do all in a short space of time because if none of those so in other words that means you're applying you're applying for different marriages at the same time.

1:03:36Spraying out applications. Yep. Because by the time you find the one you want, the chances are the lender will be very concerned about potential mortgage fraud and the chances are that you'll get declined. And I've spent many an hour on the phone talking to lenders, trying to convince them that it was just somebody had too many glasses of wine on a Saturday and thought they'd get a mortgage. Jane, thank you so much. That's been really interesting. And I especially enjoyed our discussion about acceptance, which wasn't something I was planning to talk about the beginning, but I think will be really useful for people.

1:04:05Thank you so much for joining us. It's a pleasure. Thanks for having me on.

1:04:12Now, let's move on to a final few of your savings questions. Podcast producer Simon, PPS is here. Simon, what have people been sending in on savings? Yeah, we've got quite a few texts on this during the show. Alan in Slough wants to know, when I transfer a cash ISA from last year, am I allowed to transfer the whole amount, including interest accrued as well as adding the new 20k allowance for the new tax year if I have that much available? Yes is the answer but let me explain in a little bit more detail. The rules for limiting the amount in cash ISAs is about the amount of new money you can put in.

1:04:49So you're allowed to put in up to£20 ,000 per tax year. There are no rules on how much interest you can earn. Any interest you earn stays in a cash ISA. There are no rules on how much you can transfer. If you're transferring a cash ISA, there's no limit on that. There's no annual limit. It just doesn't matter. So yes, if you have money in a cash ISA, some of which you put in in previous years or this year, and some of which is interest, it can all be transferred over across to a new cash ISA, provided that amount is under that individual product provider's maximum amount. So as I talked about in fixed rate cash ISAs, some of them only allow you to put a maximum of£20 ,000 in.

1:05:27So you could transfer money in, but if you had£40 ,000 from past years, they wouldn't let you do it because they're only letting you put up to£20 ,000 in. But that's about a provider rule, not a cash ISA rule. Another text we've got is someone asking about their 19-year-old daughter. She has a Kahoot fixed rate from last year with about£3 ,000 in, but this fixed rate has dropped to 1%. She saves approximately£50 a month through standing order at the moment, though wants to increase this with her new wages during a gap year. What would be the best fit for her, given if she's saving to go to uni September 26?

1:06:00So I presume in that case, she's going to need it to be easy access. The money in Santander, it was a great fixed rate. Once fixed rates ends, they tend to move it into a pants account, paying a pants rate. You always need to diarise when the fix ends and you generally need to be either taking any maturity option that they give you. So sometimes when your fix ends, they will say to you, hey, you can have another fixed rate and here are the ones we're offering you. And they may be even better rates than their new customer rate. So it's always worth looking at that. Or you just want to get it out of there and move it into the top paying account that you can find elsewhere.

1:06:29I mentioned some of them earlier. You've got cash isis, which she could use as she's at the right age, even though there won't be a tax benefit. Easy access cash isis currently 5.07 % from Trading212, which includes a year-long 0.72 % newbies bonus. Plum is 5.06%, but more of that is a newbie bonus for a year, 1.52%. Moneybox, 5.05%. Top bigger name would be Marcus Bank, which is owned by Goldman Sachs at 4.3%. Some of that's a bonus too. The bonus doesn't really matter that much. It just means you're probably going to have to move it in a year as the rate will drop, but it's worth doing and you can always move a cash ISA.

1:07:02So I would probably be looking at any of those. I mean, the truth is just try and get yourself something over 4%. And there are loads of accounts over 4%. The higher up you go, the better. Where if you put it in a cash ISA, it protects from tax and the cash ISA easy access rates are better at the moment. Yeah, but don't keep it in an account paying 1%. That's just pants. You need to just move it. And moving a normal savings account is easy peasy lemon squeezy. You literally just open the new savings account, withdraw it from your existing savings account and put it in the new savings account. There's no transferring.

1:07:32There's no anything that you need to do there. Next question. Of course, you could also consider a lifetime ISA if she would be saving it towards a first time home. If you listen back to the bit I talked about that earlier. Did you mean to say Santander? Because she said Kahoot, didn't she? Yeah. Sorry. Kahoot is a sub-brand of Santander. I'm talking about the same things and actually offered very similar savings account through Kahoot and Santander. So, yeah, in that sort of sense, they're interchangeable in the question. And my mind was just going to the bigger bank. But thank you for pointing it out.

1:07:59I got sent this one from Jerry. My son is looking to buy this year and has a help to buy ISA. However, he is likely to purchase a home over 250 ,000. He will not. Therefore, he will not get the government bonus. Can he transfer funds to a lifetime ISA? Does the money have to be in the ISA for a year to get the bonus? So, the help to buy ISA is the predecessor to the lifetime ISA and you're right. Outside of London, you have to be buying a property that costs less than£250 ,000 and I don't see that increasing in any time in the future. Inside London, it's up to£450 ,000. The lifetime ISA, the limit is a property£450 ,000 anywhere across the country.

1:08:37So, if you're buying a property of£350 ,000, then, yes, you would be better in a lifetime ISA, but you have to have the lifetime ISA open a year to get the bonus as a first-time buyer. Your question says, does he have to have the money in for a year? No. The lifetime ISA has to have been opened. So if he already has a lifetime ISA opened, even with just a quid, hence why I suggest the quid thing for everybody, then he can put the money in. And as long as it's been open a year by the time he uses it open, not about when he puts the money in, about the time the ISA was opened, then he will be able to get the bonus.

1:09:14But if he hasn't got a lifetime ISA opened at the moment, then putting money into a lifetime ISA, if he's planning to buy in four months' time, is pretty pointless because he'd have to pay a withdrawal penalty to get the money out. The advantage of the help to buy ISA over the lifetime ISA is while he won't get the bonus, he won't pay a penalty to withdraw his money. So here's what I would probably do. If you've got a lifetime ISA and it's been open so that it'll be over a year, then yes, move the money from the help to buy ISA into the lifetime ISA and you can transfer it or you could just withdraw it and put it in because it sounds like you've got less than the yearly lifetime ISA amount.

1:09:52If he hasn't got a lifetime ISA, I probably wouldn't do that. I'd keep it in the help to buy ISA for now. But I would put a pound in a new lifetime ISA just in case he didn't buy the property. And that lifetime ISA was then going to be open in a year when he does buy the property. And I'd at least get that clock ticking. Because again, you're only risking 6.25 pence and it's worth it just in case something happened that meant he didn't buy the house now. and the final text that we got sent in they didn't include the name but i've set up a couple of junior isis for my two daughters with five thousand in each at a 3.5 interest is there a better junior isis to put the money in yeah the top paying junior cash isa is coventry building society at 4.25 again that's probably likely to come down by a quarter of a percent now and you can transfer in other junior isis and child trust funds into there you can do it by postal branch.

1:10:41If you want one online, then it's actually the UK-owned financial services provider, NS &I, National Savings, as it used to be called, which is paying 4%, and that allows you to transfer stuff in too. And that, I think, is the end of our savings and loans section.

1:10:59And let's just finish with the final couple of tellers. Things that you can buy abroad for far cheaper than you can buy at home, but you've got to be able to transport them here too. We'll just do a couple of tech ones to finish. I've got one from Jennifer who says, I'm Canadian. That was the worst Canadian accent. That was just not a Canadian accent at all. I went Australian. I'm so sorry. I'm not going to do an accent. I am Canadian and visit home annually-ish. I usually buy my mobile. I don't know why I'm doing this. I'm keeping up though because I'm just, you know, I'm just styling it out.

1:11:27I usually buy my mobile phones and laptops there. I'd buy more things, but TVs are too large to bring back. Ha ha. Unsure if that fact will remain with the tariffs. depends on how brands are imported, I suppose. So yeah, mobile phones and laptop tech in Canada. I think you've got one about the US as well, haven't you? Yeah, we've got one about Apple products. I'm sorry, Jennifer, for the silly accent. I don't know what happened. But it's good to future-proof yourself. If the BBC go back down a kind of RP route for presenters, then you'll still be okay. Quite right. We got sent this anonymous one.

1:11:58Apple products are consistently and significantly cheaper in the US and Canada every time I go. current price for an iPad Pro 13 inch in Canadian dollars is£1 ,799, which they say is£931 with Monzo's near perfect rate. Sounds about right. In the UK, that would cost£1 ,299, so£368 saving, which is 28%. Yeah, I mean, that is a big difference and can almost be worth the price of going if you're going to buy, couldn't it, on that sense, which I think, well, I'll do one more. Let's do Ria. random just been to Lanzarote and really decent hairbrushes in the supermarket were around 2 euros usually at least 10 quid here so we didn't want to brush that one under the carpet or brush that one with your hair and that seems a good way to end thanks for listening everyone

1:12:46that's it for this week if you've enjoyed it please tell your friends you've been listening to the Martin Lewis podcast and suggest they do the same we tend to put out a new episode every Thursday subscribe to keep up to date then your pockets will be pleased with you and if you've not enjoyed it

1:13:18Martin Lewis is the founder of MoneySavingExpert.com But of course, other consumer and price comparison websites are available You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen. I got bills, I gotta pay.

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