news Spring 2020
+ Property update – what steps could you take now Ade Abiose, who heads our mortgage department, writes: The Coronavirus outbreak has affected all our lives in different ways – none more so than medical professionals who have been at the centre of the UK’s response. Medics with a private practice may have also seen their income fall during this challenging time as clinics and treatments are cancelled and hospital resources are relinquished to help the NHS. Despite comfortable lifestyles, many homeowners might be facing large mortgages on primary residences or second properties. In a bid to boost the economy, the Bank of England base rate was cut twice in March, from 0.75 to 0.25 per cent on 11 March and reduced again to 0.1 per cent on 19 March. Some (but not all) mortgage lenders have passed on these cuts to borrowers by reducing their standard variable rates. To further ease financial strain, the government announced a new policy allowing 3-month mortgage payment holidays. Homeowners and landlords can apply to defer payments but the detail and criteria does depend on your lender. Some banks are restricting their payment holidays to those who can demonstrate they have been affected ‘financially’ by the virus (rather than emotionally or socially). Most lenders have now removed the subjective element to this – so all a borrower has to Medical Family Finance News Spring 2020
do is declare they are affected financially by the pandemic and they understand the consequences of a payment holiday. However, the process of applying for it still varies depending on the bank. Other lenders have payment holidays automatically built into their mortgage terms. If you would like to know the position of your specific lender, we would be happy to establish their policy for you. Lenders are not allowed to charge additional fees to set up the payment holiday. The scheme could also be useful for landlords whose tenants are unable to pay their rent. The capital owed will not change but interest will continue to accrue so it may take longer and cost more to repay the mortgage. For this reason, it may be better to continue to make your current monthly repayments as normal if you can. Alternatives: The best option for you will depend on your particular circumstances, the level of your repayments and the lender who supplies your mortgage. There are a range of alternative options which may provide a better option which include: • Extending the term of your mortgage by reducing monthly payments. • Moving your mortgage to interest-only payments for a set period. • Deferring your interest payments for a set period.
+ Property update continued Accessing reserves: Some homeowners keen to supplement their income or to provide funds for school or care home fees may choose to release equity from second homes or buy to let properties. This is a valid option, particularly in times of low interest rates, providing the pros and cons of such a move are completely understood.
Most lifetime mortgages have fixed rates of interest but some lenders offer variable rates. The older you are, the greater the percentage of your property that you can borrow against.
Rates on Equity Release mortgages have fallen to an all-time low. There are also lifetime mortgages which are long-term loans secured against your home and repaid when your die or go into care. With conventional mortgages, the amount you owe decreases over time but with most lifetime mortgages, the sum increases so debts can grow quickly. This is because there are no repayments so the interest on the loan is added to the debt continually. A few lifetime mortgages now allow interest to be serviced or capital over-payments of up to 10 per cent to be made.
If you would like further information on anything mortgage or property related, please do not hesitate to contact Ade on ade.abiose@medicalfamilyfinance.co.uk or 020 7252 5765.
+ Opinion: Dr Mark Martin Taking time to cherish what we have and who we love is a natural and delightful outcome of the worst of times. This has forced me to consider whether I have done everything I can to take care of loved ones and to protect them from further distress. This was a simple exercise but something far too easy to put off in the busiest of times. I organised a quick review of our protections, Wills and Powers of Attorney and instantly gained some peace of mind that things were in order. Despite the strains and challenges of the last month, you may have been surprised to find some positives in our strange new world. This may be less time commuting, a reassessment of things that matter, a renewed appreciation for colleagues or an online connection with an old friend. In the office we have made great efforts to talk with team members daily and to find humour whenever possible – despite the gloomy news. Being in this together – despite social distancing – is enormously helpful.
Those of you valiantly working on the frontline will not have time to prioritise such matters but please remember that this is part of our service to you at Medical Family Finance. If you would like us to check whether your documents are still fit-for-purpose, please let your adviser know. If we need to create new papers or insurance, we can point you in the right direction. We are always here for your financial queries and concerns but please do lean on us for any other practical assistance we can provide at this time.
+ Financial update The financial headlines can be daunting but it is important to remember that as with all significant global events, the markets are reacting to new information and pricing accordingly. The sharp falls you will be hearing in the media are exactly how we would expect the markets to perform.
things pick up and are the very thing that deliver strong returns on your portfolio in the long-run. Historic data shows us that investors who have stayed the course during previous volatile market activity have gone on to see their investments recover and grow.
Even in these unusual times, the basic principles of long-term investing remain unchanged; short-term falls do not necessarily impact later life goals. Markets will always rise and fall – these falls allow investors to capture the growth of the economy when
We cannot predict the outcome of the coming weeks or months but please be assured that your investments should not add to any distress. Please lean on your adviser who will be happy to answer any questions you may have.
Medical Family Finance News Spring 2020
+ Interview with Professor Hugh Montgomery if not for care, compassion and safety, then to keep us in the workplace. We can't afford to have staff down now. But I don't think lobbying will help. On this, government and DH are doing their best. Something else we should learn: when things aren't right, we don't always have to shout. Sometimes people are doing their best. Can you tell us about the fundraising appeal by the Intensive Care Society? This is the 50th year of our profession yet no-one knew of ITU. All TV drama and fly-on-the-wall documentaries focussed on the Emergency Department, helicopters and heart surgery. But now people know. But they still don't know that our nurses are the brightest and most dedicated: flying a patient for 12 hours by hand – not by wire – is a far more complex thing than flying a jet plane. But the work is brutal and poorly paid. Posts were unfilled. Hugh Montgomery is Professor of Intensive Care Medicine at UCL where he also directs the Centre for Human Health and Performance. Hugh kindly spoke to us while working on the ‘frontline’, helping patients during the Coronavirus outbreak. Have the incredible efforts of your colleagues at this time reminded you why you chose to be a doctor? Yes. Bar very few exceptions, everyone has stepped up to the plate. But more. It is just so startlingly clear that our systems have stifled creativity and drive and autonomy, suffocating the most exceptional and creative, and strangling any buds of innovation. We have become beholden to 'top down control', forms, and regulation. These have vanished. In an afternoon, we built a new CPAP machine. In a week, we developed a new ventilator. Ethic is passed in 12 hours not 18 months. I think that juniors must think that 'this is what I thought doing medicine was, until I did medicine'. Long may that last. We must fight against reverting to the previously turgid and stale. Will the government value the NHS workforce more once this outbreak has passed? No. The country is bankrupt. It was before. The drivers that saw us robbed of 40 per cent of our pensions – despite the fact that many of us having worked 168-hour weeks for years as juniors on low pay – are worse now than ever. I think they'll play the card of 'everyone has suffered' and, after a year or so, we'll be worse off than ever. Sad, but true I think. Would you urge more retired doctors to return to the workforce to help in this current time? We need all the help we can get. People are dying out there. Literally, and also figuratively. What is the current situation with protective equipment for staff? In honesty, I can't blame anyone. I suspect that a civilian supply chain has just been overwhelmed by wartime needs. But we need the PPE –
Meanwhile, we lacked an 'organ' (British Heart Foundation), ‘disease’ (Cancer Research UK) or ‘age’ (Age Concern/ Great Ormond Street) so no-one wanted to give us money (despite the fact that surviving heart surgery or cancer care often depends on us). We had no money for research. And, finally, patients experience brutal conditions on ICU: 82% have significant psychiatric problems afterwards. We'd set out to raise £50m this year. But now, all that fundraising is lost. All our seminar income is lost – yes, our staff paid for their own training from meagre salaries. Our £300,000 buffer of investment is all but gone. And our costs have all risen as we step up to the plate. ENOUGH. Thank you and thank you again for clapping. But now we need tangible help: to humanise every ICU (silence alarms, add colour and smell, create circadian lighting and more); to create our research fund (there was NO money when COVID19 hit); and to secure the society so that members don't end up paying for membership and then again for their own training. £100m would do it. Who is going to be first with a big donation? Come on, please. Lead the way. With the benefit of hindsight, what can we learn for future global health issues? Planet and people are connected. If we plunder forests and cage animals together we risk our ecosystems and thus our lives in coming decades – as well as our lives now from infectious disease. We fly around the world, spreading diseases and causing climate change. We seek to give our children the things we never had, whilst forgetting to give them the things we DID have – clear air, forests, wildlife, family life, conversation and games. We realise that we didn't need the health service as it was. ED has been EMPTY of all but Coronavirus. People might learn that a minor cold or sprain doesn't need a doctor. And now we might reengineer: to PREVENT disease, rather than spending on (often futile) treatment.
+ Interview continued How do you cope with the media interest when working on the frontline? I take little notice. I have no intention at all to be a celebrity. My job is to speak the truth to all and with clarity, if and when that helps. I'm not remotely interested otherwise. As my father used to remind me, 'we are all worm food in the end'. The Intensive Care Society represents and supports ICU staff to improve patient safety and save lives. They have launched a fundraising campaign - #WeAreCritical – to help in the fight against COVID-19.
www.justgiving.com/campaign/CriticalAgainstCovid19
Message from the team at Medical Family Finance Many of you will be involved in the medical challenges that this unprecedented situation brings and we would like to extend our thoughts and appreciation to you.
+ Budget 2020 – your update The Chancellor Rishi Sunak used his first Budget in March to reduce tax charges on pensions savings. From April 2020, the point at which the annual allowance – the amount which can be saved into a pension free-of-tax each year – is ‘tapered’ will be increased. Previously, anyone with a ‘threshold’ income of £110,000 or more (that is total income from all sources) was subject to a reduced annual allowance known as the ‘taper’. The standard allowance is £40,000 but it then tapers on a sliding scale to as low as £10,000 depending on earnings. The Chancellor has now raised this threshold by £90,000 to £200,000.
However, Mr Sunak also reduced the minimum tapered annual allowance from £10,000 to just £4,000 for those with incomes over £300,000. This could mean that the highest earners need to establish the validity of pensions savings carefully. It was also confirmed that the lifetime allowance which governs total tax-free pension savings will increase in line with inflation from £1,055,000 to £1,073,100 for the 2020-21 tax year. The ISA allowance remains at £20,000 but the Junior ISA limit will rise from £4,368 to £9,000 from April 2020. Should you have any specific concerns regarding the Budget and your finances, please do not hesitate to contact your adviser.
+ News in brief: Client services update Our full team is now working remotely and we are pleased with the positive feedback we have received from many of our clients. Our systems use secure, cloud-based technology and so you should see no interruption to our business operations. However, please do let us know if there is more we can be doing to make your dealings with us even easier.
Expanding our team In order to ensure the best experience for our clients, we have continued to expand our advice team and now welcome (from left to right) assistant financial planner Benjamin Manso de Zuniga, trainee assistant financial planners Oliver Prichard and Thomas Popplewell, and head of communications David Norris.
You can continue to contact your adviser on the usual office phone number as well as using email or the secure messaging function of our client portal. If you have a meeting scheduled with your adviser we will be happy to host this via video conference technology. Please let us know if you require any assistance to install the preferred applications. We are doing everything we can to ensure we are here when you need us most but welcome any suggestions you may have.
Medical Family Finance 020 7252 5765 Medical Family Finance News Spring 2020
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