Amidst the uncertain economic environment and as the new tax year closes in, it is time to sort out your finances.

Here are some of our favourite stories this week to help you get your head around money.

First-time buyer schemes

Levi Winchester, writes for the Mirror on simplifying the process of buying your first home.

Firstly, it’s best to check your affordability for monthly repayments and whether you can reasonably save for a deposit now. Here are some first-time buyer schemes that will help you:

• Lifetime ISA: A lifetimes ISA allows you to get 25% cash boost from the Government if you’re saving for your first house or retirement. However, you will pay a penalty and lose your bonus if you spend your LISA on anything other than your first home or retirement.

• Shared ownership: Shared ownership is when you buy a certain part of the property value and pay rent on the rest. This is usually between 25-75% but can be as low as 10%. You can also slowly increase the amount of the property you own every year, in what’s called ‘staircasing.’

• Mortgage guarantee scheme: After mortgage deals started pulling out in 2021, the Government offered this scheme, until December 2023. It allows first-time buyers with 5% deposit to use the Government as their guarantor.

• First Homes scheme: This scheme allows first-time buyers to get between a 30% to 50% discount on the value of a new-build property.

Increasing state pension age will condemn millions to ‘misery and poverty’

The current stage pension age, 66 years, is due to rise to 67 in 2028, and 68 by 2039- but the Government is considering moving this to the mid-2030s. Lauren Almeida, writes for The Telegraph, informing readers of the impact on the UK population.

Increasing the age would help alleviate Government spending, but put 1.5 million at risk who have no cash savings at all.

Age UK suggests that the pension credit should be made available at a younger age, or a more generous universal credit system should be in place to help people.

Any decision by the Government to make today’s fifty-somethings wait longer for their pension could be setting up hundreds of thousands of men and women for a miserable and impoverished years in their run-up to retirement.

Council tax increases 2023 – how much more will you pay?

Households across the UK are set to face a rise in their annual council tax bills. Nicola Garcia Merida writes for MoneyWeek, and tells us what the new council tax brackets will look like.

The Autumn Budget allowed councils to increase rates by up to 5%, previously only allowed by 2%. According to London mayor Sadiq Khan, some London councils could hike rates to as much as 10% from 1 April, 2023.

The amount households pay to GLA is going to rise up to £434; excluding the amount due to their borough’s council. This has been deemed necessary to help support the rising transport, police and fire brigade services.

With soaring living costs and high borrowing rates, this council tax rise is another hole burning in people’s pockets – check out the story to see your new Council Tax bracket for 2023.

Photo by Tierra Mallorca on Unsplash

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Mouthy Money co-editor Edmund Greaves looks back at the process of buying a house in 2022 and why it was the estate agents that proved to be the weakest link in the process.

My (now) wife and I were fortunate enough to be in a position to buy a house in 2022.

To get there required a lot of hard saving and an employer that was happy for me to move far enough away from central London to a place where property is more affordable.

We were also helped along in the process by the 95% LTV guarantee scheme, and the generous bonuses afforded through saving into two Lifetime ISAs (LISAs). As first-time buyers we also benefited from first-time buyer relief on stamp duty, lowering the overall cost of the purchase.

Buying a house has been difficult – even impossible – for many for a long time, but it has become all the more difficult following the rapid increase in mortgage rates over the past year. We did however get ahead of these issues thankfully. I do not envy those who want to buy now.

The process of buying a house was a chaotic experience, one that I think we were unprepared for at the outset. It requires a series of moving parts that only really function together if you as the buyer are as proactive as possible.

The market itself is eye-wateringly fractured, from mortgage brokers to lenders, conveyancers, surveyors and estate agents all operating in their own bubbles and at different speeds. Sometimes it feels like they are all whistling to a different tune, too.

But we made it onto the ladder and are very happy in our own home for the first time, despite the best efforts of galactically incompetent estate agents.

Brokers and lenders

Our broker was overall a positive experience – we got a good deal aside from anything else, locking in a five-year rate which in hindsight feels like a decent decision.

If I had one criticism of this part of the process it would be that the broker then pursued – nay hounded – my wife and I to try and sell us life insurance and protection policies. While I understand the importance of such products I felt absolutely that we were being pushed toward excessively high coverage policies that we simply weren’t ready to contemplate.

This was made into a much more negative experience than it needed to be, chiefly because we were called constantly to try and move us along the process. After a successful mortgage experience it did leave a bitter taste.

As for the lender, we had little real contact with them other than confirmatory letters, but everything proceeded in order, to little issue.

Surveyors and conveyancers

Perhaps the best part of the entire process for us was the surveyor we hired to check out the condition of the property we were buying. We used the Royal Institute of Chartered Surveyors (RICs) tool to find a local surveyor, and spoke to three of those listed.

In the end we picked a local guy who spoke well of the properties in the area and seemed knowledgeable. Living in North Devon you can quite often end up finding these sorts of services coming from all over. I remember speaking to a cheaper surveyor from Exeter who seemed to have no idea about the area which struck me as unhelpful.

Anyway, we picked the local guy and he was great, compiling a comprehensive report, answering our questions and generally being available to help, for which I shall commend and namecheck him – many thanks Alex from AHN Chartered Surveyors, who did a stand up job for us.

We also had a positive experience with our conveyancers, My Home Move. Throughout the process they were helpful and constructive, without eye-watering fees and a helpful online system that helped us visualise where we were in the process at all times.

The firm also put all documents digital-first which we found helpful, especially as it sped up the process and meant we weren’t wholly reliant on physical postage and documents. It felt efficient and effective.

This brings me, unfortunately, to the absolute worst aspect of buying a house, in our experience.

Professional dissemblers Estate agents

At no point in any interaction with an estate agent in the process of buying a house did I feel they were being honest, helpful or constructive in the way they dealt with us, the buyers.

I understand that they draw their fees from sellers – but who do you think is ultimately funding that? We had, in the event, some fairly major hiccups in the process that made this exponentially worse.

Long story short – while we were in the early stages of buying the house, the flat we were renting experienced a horrendous flood (a story for another blog…). We had several thousand pounds worth of possessions destroyed and were forced to live in a local hotel by a petrol station, a singularly awful experience I wouldn’t wish upon anyone.

Now, at this juncture our motivation to complete the process, which beforehand was proceeding at a leisurely pace, dialled up several notches. I did everything in my power to dot the i’s and cross the t’s to bring the process to a completion and at every step in that nightmare the estate agents stood in our way.

They dissembled, delayed, dropped and deserted us when we needed someone who could coalesce the process and get us over the line.

With the house at the bottom end of a three-property chain, it culminated in an issue with the property at the top of the chain which needed an indemnity policy of some description creating by the participant conveyancers.

The details are a little unclear but essentially the entire chain hinged on this one issue and we sat, waiting, for six weeks for it to be fixed – despite everyone in the chain being ready to exchange and all parties being aware of our hotel-living plight.

Top tips for dealing with an estate agent as a first-time buyer

1. Don’t expect the agent to look after you, as you’re not paying them – the seller is. Their best interests aren’t necessarily yours. They just want to make sure you buy the property.

2. The estate agent is often the fulcrum of the process which involves a mind-boggling number of participants, because they are the ones talking to everybody. If you get a lazy one, make sure YOU are the proactive one who breathes down their neck to get things resolved.

3. Don’t let estate agents rush you into decisions. We were pressured many times, particularly when it came to being told a property was “about to go under offer” etc. Take your time.

4. Use ultimatums if it comes to it. It’s the only way we got our deal across the line in the end. It is a nuclear option unfortunately, but sometimes that’s the only way to make a message clear. 

The estate agents, who I will not name for the pleasure of not giving them a right to reply to this column, did nothing to expedite the issue and sat with their thumbs in their own fundaments for nearly two months.

It culminated in me, threatening first via phone call, and then when that didn’t drive the point home, via signed letter, that if the snag wasn’t fixed to a deadline of 48 hours then we would be withdrawing from the house purchase and collapsing the chain.

And would you believe, the estate agent miraculously coalesced all the constituent parties and fixed the problem…within 24 hours of this ultimatum. Almost…almost as if it was never really a major problem to begin with!

I have never been so exasperated by such sheer incompetence, a lack of empathy and flagrant disdain.

And to put the cherry on the icing of this cake, when we finally completed and I went to pick up the keys to our new home, the person who handed them to me wrung their hands and, gurning, told me how lucky I was because the seller had left behind an expensive light fixture that wasn’t on the list and a woodshed full of wood.

In fairness, the wood has been a nice little freebie considering energy bills this winter but that’s not the point.

No, I have never felt so unappreciated as when the buyer of a house subject to the sneering attitude of every estate agent I came across.

Perhaps we got a bad apple business, but where we live it is rather a large one in the area. I can only guess if this experience is replicated around the rest of the UK.

If you’ve had a bad experience with estate agents, let me know in the comments or email editors@mouthymoney.co.uk. The best reader correspondence gets a prize!

Photo by Landon Martin on Unsplash

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Mouthy Money Your Questions Answered panelist Elena Todorova answers a reader’s question around deciding when the right time is to buy a home.

Question: I’m planning on buying my first house this year, but with interest rates soaring, is it better to wait and if so, until when?

Answer: First, and foremost, a house is a home but then, it is also an investment.

In normal times, when interest rates are low and house prices are rising, it makes sense to become a homeowner and to occasionally check on websites like Zoopla to see how the value of your home has grown.

However, you are currently looking to buy in a very different market from the one we have got used to over the past 14 years.

Although interest rates are on the rise, there are also expectations that house prices will fall and therein lies an opportunity to time your purchase and buy at the lower end of the market.

Depending on how soon you wish to buy, you might want to keep your finger on the pulse of your local market: follow the properties coming up for sale, see if there any reductions, speak to agents and get to know them well.

I always recommend using price per square foot or square metre to compare prices. Of course, you need to factor in other aspects such as the state of the house, whether it’s outdated versus newly refurbished, the location, size of garden, or whether it’s freehold versus leasehold. You need to be patient and do your research properly, but it should pay off.

The type of property is also important. A house is likely to retain its value better than a flat, even if they are in the same location.

If you are purchasing a flat, the saturation of the development will also influence how much prices will be affected in a downturn, how much they could fall and how quickly. You can still get a great place at competitive price, but perhaps you will have to wait a bit longer for prices to then recover.

Mortgage rates are on the rise, and some shot above 6% following the shock mini-Budget in September. The market has since steadied, with five-year fixes back below 5% and some expectations that they may reduce below 4% in coming months.

Current expectations from the Office for Budget Responsibility (OBR) are that Bank of England’s base rate may still increase to 5% next year, when it is expected to peak before falling back. It is unlikely interest rates will return to the rock-bottom levels of recent years, with expectations that they will steady around 3-4%.

Your dilemma is whether to buy a property at a high(er) interest rate or continue to rent (assuming you don’t live with relatives). If you continue to rent, you may also have to allow for higher rents in coming months as they are on the rise, which may eat into your deposit.

Timing the market and trying to predict when property prices are at their lowest is notoriously difficult and there are many tales of people who have missed while they took a “wait and see” approach.

Ultimately, if you have found a property you want to buy, are able to negotiate a good price and can afford to buy it, then now is as good a time as any to get on the ladder.

Owning a property provides a steady home, while you can secure your monthly payments with a fixed-rate mortgage for a number of years as your expenses and income stabilise.

Rates have increased but with a potential correction in the housing market, you may be able to grab yourself a bargain and benefit from future house growth too.

Elena is a fully qualified IFA

Elena is a fully qualified IFA (Independent Financial Adviser) specialising in residential and investment mortgages for UK residents, foreign nationals and ex-pats. With over 20 years experience in London and UK mortgage market, she has the expertise to deal with diverse and often complex cases.

Photo by Naomi Hébert on Unsplash

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You may have heard of the psychologist Maslow’s Hierarchy of Needs, which relates to human needs and motivations.

In 2016, Canadian illustrator Sarah Lazarovic cleverly adapted this concept to show a hierarchy of our buying behaviours. I find it an excellent tool to help me control my spending and to be more conscious of my consumption generally.

In this post I will look at the six layers of the Buyerarchy of Needs and explain how it might help you to save money and develop a frugal mindset. 

Each time you think about making a purchase, stop and think. Work your way through the layers of the pyramid to look at all other options before you resort to buying something.

Layer 6: Use what you have

Layer six is the base of the pyramid, the largest section. This is all about using what you already have. 

How many of us have cupboards so rammed full of stuff, we don’t know what is there? To make best use of what you already have, spend some time organising the items you already own, so that you can use them, rather than going shopping. 

For example, have a regular wardrobe declutter. When you claim you have nothing to wear whilst simultaneously looking at cupboards bursting with items of clothing, this can be a useful exercise. 

My recent house move made me appreciate the half cans of paint and other DIY items we already have, so we will make sure we use them in our new home before buying more.

Layer 5: Borrow

The next layer of our Buyerarchy of Needs pyramid suggests borrowing where you can. 

So, you need a drill to put up some shelving? Unless you do a lot of DIY this would be a prime example of where borrowing from friends or family rather than purchasing a new drill makes perfect sense. 

Level 4: Swap

If the item you require is something you will use frequently, could you swap something you no longer need?

Clothing is an easy win here. Vinted offers a swap option, or you could host a swishing party. Horticultural societies sometimes organise seed and tool swapping events. 

There are several sites to enable you to swap anything from electricals to tools and even clothing. This post gives a list of the six best websites to swap your stuff.

Level 3: Thrift

Thrifiting is my favourite! When you don’t have an item you need and have exhausted your options to borrow or swap, thrifting is the most cost effective and eco-friendly way to go. It is still a form of buying, obviously, but at a reduced price.

Charity shops are the obvious places to go to find second hand bargains, but I find car boot sales and garage sale trails are cheaper. Facebook Marketplace offers another option for bargain hunting in your local area.

Jumble sales seem to be increasing in number, and you can pick up clothing and bric-a-brac for pennies. Scout groups are a good place to check for these.

Make sure you join Freecycle and Freegle to access stuff people are literally giving away. I would also add to this checking out skips and free signs outside people’s houses. A bonus to the cost saving is that you prevent perfectly usable items from going to the tip.

I love buying second hand, and even did a whole year where I purchased no new items at all. Now it is just second nature to buy pre-loved items wherever possible.

Level 2: Make

Not all of us have the skills to make the things we need from scratch, but we can develop some of them. You can start with making your own lunch to take to work rather than buying it.

Or you can repurpose something you already own or have thrifted with a few adjustments. For example, a woman I came across created a brand new free-standing kitchen by picking up old dressers and cabinets and painting them all to match. Her kitchen looked fabulous and cost hundreds rather than thousands of pounds.

Many people on my Facebook group, My Second Hand & Frugal Life, create gifts and cards as a hobby. They have to spend a certain amount on materials, but frequently get creative with what they can thrift or pick up cheaply to save money.

Level 1: Buy

Finally, we come to the top level of the Buyerarchy of Needs pyramid, where you make considered purchases as a last resort. 

Having worked your way through the pyramid, you will have developed a frugal mindset to allow you to buy carefully.

Make sure you shop around and compare prices. Look at saving up and paying a little more for quality items that will last for many years. As the saying goes, buy cheap and buy twice!

Go grocery shopping with a list and try generic supermarket items, rather than expensively marketed brands.

There are so many ways that many of us waste money and resources. However, by following the concept of the Buyerarchy of Needs you will create a frugal mindset and stop wasting your cash.

Image by Sarah Lazarovic

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