Rewirement podcast

Angellica Bell: Hello, and welcome to Rewirement, the podcast where we help you make the right connections to create your brightest financial future, brought to you by Legal & General. I'm Angellica Bell, and in this series, I'm talking about the things that keep us awake at night. Those questions that go round and round inside your head, when it comes to the best thing to do with your finances. We are on a mission to see if we can get some answers. We found people with a whole range of financial challenges, and we've paired them up with experts who can help. The idea is that they get some great advice and we all learn something along the way.

So far this series, we've talked about getting out of debt, about making sure your pensions and savings are working as hard as they can, and about making early retirement a realistic option. Well today, we're at the other end of the journey, at the beginning. And that thing that everybody talks about, getting onto the property ladder. Well, it's a phrase we hear all the time, but where do you start when it comes to buying your first home? Is buying even the right thing to do? If it is, how do you do it, and how can you possibly get the cash together for a deposit? Is it inevitably time to visit the bank of mom and dad?

Well, we're going to speak to two first time buyers about getting their foot on the bottom rung of that famous ladder. And first of all, we are joined by Ben. How are you?

Ben: I'm very well, thank you for having me. It's great to be here.

Angellica Bell: No, I'm really looking forward to hearing your story. Tell me a bit about yourself.

Ben: Yeah, absolutely. So the situation that I'm in at the moment, I've just finished university about two months ago. I've just started my first full- time job as well down in London, just living outside of London, and really just looking to find out a little bit more information about how to get onto that property ladder.

Angellica Bell: Congratulations on completing your degree. Two months, already got a job, fantastic.

Ben: Thank you.

Angellica Bell: So you don't have a house yet, which we know, but I believe you've done a lot to try and make that happen. What have you done?

Ben: Yeah, so throughout my university studies, I always worked alongside to save up quite a healthy deposit, just to sort of get myself in a good position that when I do start working and I have more disposable income, that I can then spend on a mortgage or put myself in a good position towards buying a property.

Angellica Bell: So, what did you do to make that dream come true? What did you have to sacrifice? I'm hoping you did have some fun.

Ben: Obviously, yeah, did have a lot of fun at university, but there's a lot of time around it as well that I did have to put in extra work outside my studies. It was a lot of different jobs ranging from early mornings, night shifts, evenings. I worked in nightclubs, hotels, shops, the lot, right?

Angellica Bell: And at the back of your mind, you were thinking, I'm doing this, working these late nights while getting up early because there's a goal.

Ben: Exactly. Yeah. It's what motivated me. The 4: 00 AM wake ups or working from 10:00 till 6:00 in the morning, it made it all easier knowing that there's going to be something that's going to make this payoff.

Angellica Bell: So you're a grafter.

Ben: Yeah. I would say that's one of my strongest traits.

Angellica Bell: Okay. Well, you're very clear about what you want to do and that's buy your house, but I know you had lots of questions about how to do it. So we found you someone to talk to, his name is Liam Anstruther, and he's a director and advisor at the mortgage advice club and an expert on everything involved in house buying. We got you together. So let's hear what happened.

Liam Anstruther: First thing you need to do in any journey is you need to have that initial chat with an advisor and get something called an agreement in principle or a mortgage in principle.

Ben: But what does that actually entail?

Liam Anstruther: So a mortgage in principle is basically where a lender will look at your ingoings and outgoings, and they'll do soft credit search. And they will through their background calculations, depending on the lender, come to a decision on what loan amount you can get. Obviously you've got a peace of mind of knowing that doing a soft credit search, even though it is not a full credit search, you've got the peace of mind knowing that you can get access to a mortgage because your credit's good enough to do so.

Lending amounts, all the lenders are different on the multiples of income they use to what loan they will give you. Generally it's anywhere between 4.75% of your income. So that's a really, probably quick and easy way for somebody who's right in the beginning of starting to look at what properties you can get. I always say an easy multiplier, which is a safe multiplier is if he times your income by four, then that'll tend to be an easy way to figure out what you can get.

Ben: So obviously you mentioned there about the credit history. I'm hearing a lot of different requirements. You need to qualify for a mortgage. Another one that I hear is the three months employment history with a salary. What sort of other requirements are there that I'd have to meet?

Liam Anstruther: It's actually a myth. Employment history is it's not a thing is with certain criteria. And this is why there's a big difference between going to high street, and then speaking to an advisor who perhaps knows more about other lenders. There are lenders who will accept day one, it's called day one contract. So as long as you've got your contract in place, they'll accept you. There's a whole host of other lenders who will accept one month pay slip. And then there's a lot of your high sheet lenders who will want three months. So there's nothing stopping you. And that's why as soon as you've got the idea to want to buy your first home, get the advice first, getting that margin principle, speaking to somebody, and then going ahead with it.

And then other things you've said there about credit, there's obviously the lenders you've all heard of. There are a whole host of other lenders who perhaps you haven't heard of that are called adverse lenders who, if you have had credit blips or you've maybe had a mistake in life where your credit history is not the best, there will be higher rates charge, but it still gets you the option of having your own home rather than renting.

Ben: Well, yeah, definitely. I mean, that's the whole idea I really want to get onto the property ladder as soon as possible. So another term I've heard then is being a first time buyer. So is that something I would qualify for? What are the key advantages to me?

Liam Anstruther: Yes, yes. Spot on. So first time buyer is, as you're saying yourself, you're buying your first property. Even some lenders classify first time buyers is somebody who hasn't bought in two years, three years, you get class as a first time buyer again, so you get the benefits that come with them.

The first one probably primarily with the lenders is that they will potentially give you cash back. So if you're a first time buyer, you get the benefits of getting a little added bonus of when you move into your home, some lenders will give you preferential rates for being a first time buyer, especially at the higher loan to values, so with a lower deposit. Thinking on the broader scale of things, when you're buying a home as a first time buyer, you don't have any, what's called a chain, because you're not selling a property. You are very stress free for somebody who's selling the property.

So what I mean by that is that you're tending to be a bit more flexible on when you can move in. You're not reliant on you selling your property and somebody buying your property. So, that means the person you're buying the property off, they don't have to worry about sales of property falling through. So they can just be peace of mind of knowing that you've got your deposit there. You've got your mortgage, you've got everything ready and where to go, and it's kind of up to them. When you're buying properties and you're putting offers in, sometimes even though you might not be the highest offer, you might be a stress free option. So they might take you over a higher bid.

Other things as well as there is some schemes and things out there that first time buyers are only eligible for. So you do have the option of perhaps government help, help from whether share equity or ownership type things that can help you maybe get higher value properties that you wouldn't get as a second time buyer.

Ben: Okay. So does being a first time buyer, a lender's more welcoming of that, or is there any sort of hindrance that could have for me?

Liam Anstruther: The actual criteria, whether you're a first team buyer, a second time buyer, that doesn't really matter. It's all about your income versus your outgoings. All the lenders have this calculate in the background that decides how much they will lend you. It's about what's called your loan to value. So minimum deposit's 5%, but if you can put down 10%, or 15%, or 20%, your loan to value, which is just your loan versus the value your property, goes down, which means you're a lower risk to the bank. So the lower risk you are, whether you're a first time buyer or a second time buyer, you will get better rates for that. You will get higher income model for that, which means you can tend to borrow more money, because you're putting more money down, because you're less of a risk to that bank.

Ben: Okay. So just help me to understand, where we've spoken about the amount that I would be able to deposit versus how much the property's worth, but then equally there's how much I earn, inflows versus outflows. What's the real link between those two?

Liam Anstruther: Again, it's very dependent on the lender. We're not saying you can't have a loan, you can't have a credit card with a balance on it. The biggest mistake we tend to see is, especially when you hit your twenties and you get your first job or you’re maybe making over 25,000 per, whatever figure it is, you tend to not focus on a house. You tend to get a nice big fancy car, this 500 pounds per month or whatever it is. If you're on 25, 000 pounds and you're maybe got 500 to car, your disposable income that's left over might not be that much, and that's what the lenders look at. They just basically look at, can you afford this mortgage?

What money do you have left over at the end of the month? Based on average cost of living and the same side of that, if you've got a car finance 200 pounds a month and you're on, 30 grand a year, whatever, they don't tend it deduct from it. You still get that four and a half times income, four times income, 4. 75 thereabouts, depending on the lender.

Ben: So, in my current role, I do sales. So on a commission structure and I'm on OTE as well. So my earnings can be quite dynamic in the sense that no one month is the same as another. Does that then give me more requirements that I have to meet before getting a mortgage or is it still similar? It's just then I'd need that three months?

Liam Anstruther: Depending on what value of property you were looking at or how much you were needing, a lot of the time, if we can get away with just using basic income, just because the lenders like it when you don't include overtime, because it makes things a lot easier and a lot quicker for you, a lot less stressful for the lender. So if we can use your basic and it's affordable in your basic, then that's what we'll give to the lender.

In regards to how quick we can get you in your house and get you to offer, it's a lot easier. If your last three months you average out and we need that and that's affordable, great, they'll take that. If they need to see a little bit longer, then potentially the lenders can ask for six. But again, there's that many lenders out there, they'll always be one that'll take your last three months, average out and then annualise it.

Ben: Is that something you'd recommend to do? Put all the money that you have available down?

Liam Anstruther: I wouldn't say putting everything down. I think when you move into a home, especially as a first time buyer, there's a lot of costs that you might not have thought about. You can budget for everything in the world, but I can put money on there's a cost that props up and you go, I didn't even think about that. So I think having a lot of a safety net, furnishing a house is, you think it's cheap and easy and you'll hit Ikea or you'll hit somewhere. But trust me, the bills run up very quickly.

All of a sudden, you've got pots and pans and forks and knives and you're already over a hundred pounds. So, you want to make sure you've got that money aside that you can afford to not have to be living paycheck to paycheck to get essentials in your house. So that's why you've got to think about your solicitor costs and things as well.

Ben: Could you just elaborate on those sort of other costs that you mentioned for me?

Liam Anstruther: Yeah. Sure. So you've got your solicitor fees, again, depend on the value of the property. They can be anything between 1000 upwards, 10 being kind of rough cost all in. Obviously if you're moving furniture and things like that, you might want to hire vans, moving company to do everything as well. You've obviously got to think about your furnishings. Everything you want to put into your house, any cosmetic many touches you want to add to the house. So there's a lot of things you've got to think about just outside deposit, solicitor. It's about all those other little things that you forget about that add up very quickly. Stamp duty, depending on the value of the property, so the more expensive the property is, the more stamp duty you pay.

Ben: So what actually is stamp duty? What differentiates that from the value of the property?

Liam Anstruther: What it is, is it's just a tax that you have to pay for buying a home in earning length. It changes, it goes from 1% to 2.5 to five to, there's stages it goes up in. Similar with solicitor costs, solicitors can increase their fees depending on the value of the property. Tends to be the more expensive the property, the more expensive everything else is, is the easiest way to think it.

Ben: Okay. So coming out of the hardships of the past few years and then the unpredictable future as well, is now the right time to look towards buying or would it be better to rent until there is a more certain future?

Liam Anstruther: I don't think there's any time that's right to rent. I think that if you have a deposit and you have a house that's affordable, go for it. If you go into rent and you're paying 6, 7, 8, 900 pounds a month in rent, if you calculate that over a year, it could be 5, 6, 7, 8, 9, 10, 000 pounds a year, which you will never see. That's gone. If it's into your own property, if your property value drops, but you've put 6, 7, 8, 9, 000 pounds into your property, you've still got that money there. It's still yours. And personally, I know where I would drive, put my money into my home then into the lovely landlord's.

Angellica Bell: Liam there, making a very strong case for buying your own home. Ben, what were the main things you learned from that conversation with Liam? Because I know we haven't heard all of it, because it lasted over an hour.

Ben: It was a very long conversation, a very insightful one as well. I really had no clue going into this, how to really start the process. So that's been one of the biggest takeaways is just really sort of how to get that foot in the door, starting to apply for a mortgage, going to speak to the specialists and whatnot, and the advisors and really starting the process.

Angellica Bell: Is it scary for you, especially because it's such a huge life decision to have a mortgage and get on that property ladder?

Ben: Yeah, I think there is an element of some nerve, but there's a lot of excitement at the same time. I think it's a big monetary commitment, by far the biggest I've ever made in my lifetime so far. So I guess there's always uncertainty, but it's advice like this that's priceless to someone in my position, because it really does help to sort of offer clarity in quite a confusing scenario.

Angellica Bell: I'm really glad it's helped you, Ben, and thank you so much for talking to us, keep us informed. Let us know when you have that housewarming party. I'll bring a bottle.

Ben: Absolutely. Thank you very much. It's been great to talk to you.

Angellica Bell: It was really interesting talking to Ben. He's at the very beginning of the process, but he's driven and I wish him all the luck in the world. But we're going to speak to someone now who is a little bit further along in the journey, and say hello to Shaunni welcome to your Rewirement, Shaunni.

Shaunni: Hello, thank you.

Angellica Bell: Now tell us a bit more about you and where you are in the property buying cycle.

Shaunni: I have a partner. I have a two year old little boy and I'm also expecting my second child in September.

Angellica Bell: Congratulations.

Shaunni: Thank You. We really wanted to get the process started and buying our own house because we're currently renting a property just now. So we've been looking for a couple of months now, not had much success as of yet.

Angellica Bell: Now I need to say respect to you, because you have saved this deposit when you've got a young family and that couldn't have been easy. How did you do it?

Shaunni: It wasn't easy, and it did take us quite a while, but just me and my partner were just having to be much more sensible with our money. And it's silly little things when we sat and we went through our bank statements and things. Just have a coffee at home in the morning and take it to work in a flask, you don't need to go to Starbucks and spend five pounds every single day. And obviously it was then harder when our little boy arrived, because obviously that was quite a lot of money that we were then having to spend. We just really were determined to get our own place. So we just stuck at it.

And even, some months, it was just a tiny little bit we were putting away. It was still more than we had the month before. So we just had this joint savings account. Once both of us were paid each month, if we had a little bit of money over, that just went straight into the savings account. We didn't save it for anything else. It just went straight into there. Especially when I found out that we were having a second baby, I thought, I want to be in our own house for this baby arriving. So that was when we cut right back and started saving even more money.

Angellica Bell: Very inspiring, you are. Listen, you had a chance to talk to Liam. I think we should have a listen right now.

Liam Anstruther: Potential difficulties that first time buyers with families and things might have, so you're obviously renting, so saving can be difficult while renting. You guys have done a fantastic job of saving the 5% deposit. Other considerations as well is potential drops in income with maternity pay. So the lender will take into consideration future income when you go back to full time work, as well. But at this moment in time, affordability wise, it can have an impact on getting you the ideal home.

Also, otherwise considerations to think about is that not out with what a mortgage or a lender will give you is about your affordability and thinking about what you can afford. You guys rent is 640 pound. So what we look at is making sure that the properties you're looking at value- wise with a 5% deposit, roughly what's that monthly cost going to be.

You are going to have a drop in income in the future and the mortgage is going to be 800 pounds for a certain house, then that's not going to be feasible. We need make sure that it's still affordable for you and just making sure we buy within your limits, which based on everything went through in the area and what you're looking at, it's more than achievable.

Shaunni: So when it's two people going in together for a mortgage, what do lenders look at in that situation? So two salaries, but then there's also a child and another baby on the way.

Liam Anstruther: With two salaries, it has its pros and cons, and the great thing is you have two salaries to take into account, double potential mortgage ability you can have. And the downside is any credit commitments that go with that. If one person has poor credit and the other person has fantastic credit, unfortunately is now both have the poor credit scenario. Similarly, if one of you has bought a property as well, that eradicates the first time buyer. In regards to children, lenders again, have a very complex and smart way in the background of calculating what cost they'll take off your affordability for that. They're all different on how they work it out.

Obviously when you have children, child benefit can be an income that's included in that as well. Childcare's probably another thing that obviously needs to be considered. That is an outgoing the lenders will take.

So if they can see that in your bank statements, they will question around that. When you have one child and one on the way, the lender will take into consideration that same child, because it's coming. Basically your affordability will be limited because of that, but if the wage is still there for both of you, you'll still have a good affordability. It's not going to take you from being able to borrow 200 and their second kid's going to be real expensive, so now you can only borrow a hundred thousand. It's not quite that drastic.

With maternity pay, most lenders tend to be pretty good with this because they understand that there will be reduction in income, but it's for a certain period of time. So what most lenders will do, is they'll take your income based on what it normally is, a letter confirming when you go back, and just your latest pay slip. If you're already on maternity, your last pay slip before you went on, and a letter from your work saying what you're going back on and when, just to make sure that you're still going back on a similar income. If you're not going back on a similar income, what that future income's going to be, so they can consider a realistic approach of what your affordability will actually be.

Shaunni: So Liam, now that obviously we have the mortgage and principle and we're starting to look at houses, when you consider the current market, how much do you think that we will need to offer over the home value report?

Liam Anstruther: It can be hard to think what you should offer. And a lot of it will come down to how popular that property is. So when you're going in for a viewing with an estate agent, it's always good to ask how many viewings are there, so you know, potential how much competition you're going to have, how long has it been on the market, for which normally you can get off right move, but the estate agent will probably tell you as well.

And one of the important things is, do they know what the client wants? So if an estate agent is showing you around, obviously part of their job is to get as much money as possible for the client, but a lot of them will tend to be pretty honest, because they want to show that they can sell the house quick. Now obviously, average market price or over kind of value of property just now is anywhere, depending on the country we are, about 10, 14%.

That doesn't necessarily mean you should be going in flat offer right away, because that is an average of across the land. So some will go for 20% over, some will go for 2% over, some will go for the value. Obviously we're blessed up here. We do get home reports, so we know what the value of the property is. Down south it is still the same thing. It is still, you're competing against other people. And whether, you know the value of that or you don't, you still have to hit that point of what that person's selling wants.

Shaunni: Okay. And then if we put an offer in and it was accepted, and then we're thinking about moving into the house, is that when we need to start thinking about protection and things like that, once we've had an offer accepted, then what happens next?

Liam Anstruther: Yeah. So once you've had your offer accepted, crack open a bottle of champagne, I'm joking there. With being a first time buyer, there's normally two things in life where protection comes into play. And what I mean by protection is life cover, criticalness, and income protection. Either when you're buying a home or when you have your children are normally the two scenarios where life cover, you start to think, right? This isn't just about me, and you think about other people.

So what we'll go through is making sure you understand how they work, so make sure that it's affordable for you in matching your concerns. Buildings and content, similarly, making sure that concerns with your home, whether it be what's inside your home or the structure of your home, making sure you have that in place. Now, buildings insurance is a condition of a mortgage. You do have to have that, but also just thinking about the insides your house, what you'd want to happen with that as well.

And then similarly from there, just keeping in touch with the solicitor, making sure that everything goes through smoothly. And obviously, I think one of the other concerns about the process is when do you pay everything? So when is a solicitor paid? When's your deposit paid? Generally, that is the week you're moving in. So normally, a solicitor will not put you an entry date, generally six to eight weeks in advance of when you got your offer accepted, that's when you can expect your entry date. Now, obviously there's different circumstances that can change that, somebody want to move quick, somebody potentially buying a new build who wants to wait four months. It can change depending on the purchase, but generally six to eight weeks is what they will do.

When you've got that entry date, you pay your deposit and your solicitor fees normally that week. A couple days before you move in, what's called your exchange of contracts on conclusion submissions in Scotland as the official titles in both England and Scotland. But that's when you have to have your funds ready to go for when you need to move into your new home.

Angellica Bell: So that was some of your initial conversation with Liam. And then good news, you found somewhere that you were interested in buying. What did you find?

Shaunni: Yes, So we found a house, it's in the hometown that I grew up in. It was a lovely three beds, terraced house, nice big rooms, a lovely garden for our little boy to play in.

Angellica Bell: One thing I need to add here for anyone who doesn't know about the Scottish system is that they have a home buyer's report there, and it's a detailed report on the condition and value of a property, which the seller has to have done. So the price is set by that, rather than the seller, just coming up with it. Isn't that right? Shaunni.

Shaunni: Yes, yes. And it's very, very helpful. It was something again that I wasn't really aware of before I started this process and Liam was talking me through everything.

Angellica Bell: Now, unfortunately, your offer wasn't accepted, which I'm sorry to hear about, but it's back to uncle Liam to tell him what happened.

Shaunni: My partner and I, we actually found a property that we really like. And we had asked the estate agent when she was shown us round, is there many offers in already, or notes of interest, and she had indicated that there was, so my partner and I went away, we had a talk about it, and we spoke to a couple of family members who had said they would help us out if we needed to put anything over the home value report. So we put as much as we could get from family members.

So it was about 7, 000 pounds over asking, and we put it in on closing date and we found out a few hours later that we were the eighth offer out of nine, which wasn't obviously what we were expecting at all. I was just wondering if you could think of any reason as to why that was, or what we could have done to have maybe made our chances a bit better? What we should do going forward when we're going for properties?

Liam Anstruther: The market just now is highly unpredictable. It's hard to tell what property will get interest. I would say, first thing is don't give up, because that experience can change one week. Next week can be completely different for a very similar property. In regards to offers, and obviously, again, this is a little bit differing to Scotland and England, and the fact that Scotland's, because we know the home report value, it's a little bit more difficult because if you go over that home report, the money comes straight out of your pocket.

It's not including the mortgage deposit. Your deposit sometimes needs to be a little bit higher just now, value property has been 10 or 14% for a lot of houses. So if you were kind of 7, 000 pounds over the home report, and you were sitting at about 6%, 7% over, that's maybe why you're seven of the eighth.

But the most important thing is that you've got to be comfortable with what you spend on that house. A lot of it just now is a little bit of patience, because believe it or not, it is starting to calm down. It is starting to go back to a bit of normality. We're getting further away from COVID.

There was two years worth of buyers and people locked in houses with no gardens and people they didn't like, and things like that they wanted to get out from , that are now starting to get what they want. So each time a house goes, that's another compare that's gone. So it'll go back to kind of more like the natural flow of, we have our busy periods when the weather's nice and everyone wants to move, maybe get quietness down in the winter periods like it did naturally in the buying market.

So mainly, never give up and don't think because one thing happened in one house, that's going to happen the next one. And when I speak to my clients and I know it probably doesn't help fill you with joy just now, but they all do tend to say, they really want it at that point, but then they got this house and they're glad that they didn't get that one. But better patience, better persistence, and then eventually the right house will fall for you guys.

Angellica Bell: So Shaunni, you weren't successful this time, but Liam has faith. Do you share that? And are you going to carry on trying to find that perfect home?

Shaunni: Absolutely. And as he said, you've just got to keep on trying. Some properties will go for the highest bidder and some properties who could go for a first time buyers because they've not got that chain behind them. So I'm just going to persevere and keep trying and fingers crossed it all works out.

Angellica Bell: And I think you're going to walk into a place and just have that feeling. I think you'll find it.

Shaunni: Yes, totally. I hope so.

Angellica Bell: Well, just like Ben, I really wish you the very best of luck with this. It's not easy, especially when you've got small children. Good luck with that too.

Shaunni: Thank you so much.

Angellica Bell: Well, to give us some general pointers, I'm joined now by Matt Frain, who is a director at Legal & General Financial Advice. Matt, what do you think are the key points we can learn from Shaunni and Ben's stories?

Matt Frain: As we've heard, there are many different aspects to consider. And Liam, the mortgage advisor, gave some really good detailed answers there. House prices have increased hugely in the UK for the last decade, and I think people are well aware of that. And actually the gap between average earnings and average property value is at the highest levels of all time. In some parts of the UK, it's in double figures, it's 10, 11, 12 times the average earnings, which just makes it incredibly difficult for people to get onto that first rung of the ladder. It's becoming a bigger and bigger challenge for people.

So for me, I think there are sort of three elements to that, which I would encourage people to focus on. The first one is just to find out how much you can afford to borrow. You can get a really good estimate of this by using online calculators, so the likes of money helper have a really good free to use tool, but in order to get a more accurate view, I would always suggest that you speak to a mortgage advisor.

The next stage is to work out how much you need to save for a deposit, but also for all the associated costs. And then finally the big one is building up those savings. How do you go about that? And it's not an easy thing, and it can be quite daunting for some. Look around at your best options and where you can take advantages of tax breaks and the likes.

So a good example of that is lifetime ISAs, a lifetime ISA can be opened by anyone age between 18 and 39. You have to make your first contribution before you turn 40. You can pay in up to 4, 000 pound a year into that lifetime ISA, and the government will then add a 25% bonus to your savings up to a maximum of 1000 pound a year. So you can see how quite quickly year after year, you can build up a decent amount of savings with that additional government benefit that will help you to bridge the gap, perhaps, and to put together the deposit that you require.

Angellica Bell: Okay. Now some people do have to call up mum and dad and say, can you give me some help? What would you say about that?

Matt Frain: Yeah, absolutely. The good old bank of mum and dad, or even the bank of grandma and granddad, sometimes. So for some, it can be fairly simple, in terms of just providing a cash contribution and actually from an inheritance tax perspective, you can gift up to 3000 pounds as an annual exemption, which doesn't count against your estate on death. So, for some people that can be a really sensible solution.

Another potential option is for parents to act as a guarantor on a mortgage. I would always suggest that you get independent legal advice before doing this, because of some of the ramifications of doing so. However, it does potentially allow access to a mortgage that would otherwise be incredibly difficult, so it's something well worth considering.

Another option, which is becoming increasingly popular, is releasing equity from your home through a lifetime mortgage or a home reversion plan. Now, the average age of inheritance in the UK is now 61. By releasing housing equity early, parents and grandparents may be able to help the younger generations when they arguably need it more, and whilst they'll also still be around to see their children or grandchildren actually benefit from having received that gift.

Angellica Bell: And then protection?

Matt Frain: It was mentioned by the advisor, that a condition of a property purchase is having building insurance in place. Now, essentially that's providing insurance against the property itself, but something that is equally important is ensuring yourself against the likes of illness or death. Now there are three main protection insurances.

You have life insurance, you have critical illness cover, and you have income protection. A couple of points around that, you may find, especially if you are employed that your employer will have some form of cover in place. So I would suggest to everyone that they find out what their employer offers, and then look to personally fill in any gaps that they may have. And then the final point on this for me, is that I just cannot stress enough how important these policies are, and what a difference they can make to you and your loved ones if the worst did happen.

Angellica Bell: Thank you, Matt, and a big thank you as well to Ben and Shaunni for sharing their home buying hopes and dreams. I hope they're sending out their housewarming invitations very soon. Don't forget that wherever you are in life, you can find lots more resources and information on legal and general's website. Just go to legalandgeneral.com.

One of the things you'll see there is our handy guide to everything you need to consider when you are buying a house. And you'll find the direct link to that in the show notes for this episode. I'm Angellica Bell and join me next time when we'll be looking at managing your money when you are self- employed. We'll meet someone trying to figure that out and another brilliant expert to help them, next time on Rewirement. Follow this podcast on your favourite platform and I'll catch you then.