Financial goals are specific objectives that individuals or organisations aim to achieve to improve their financial health and secure their financial future.

These goals can vary widely, from short-term targets such as saving for a holiday, to long-term aspirations such as retirement planning.

Setting financial goals is crucial because they provide a clear direction and measurable milestones to track progress.

Financial goals can be categorised into short-term, medium-term or long-term.

Short-term goals typically include building an emergency fund for unexpected expenses, paying off high-interest debt such as credit card balances, or saving for a specific purchase, such as a new gadget or a holiday. These goals are usually achievable within a few months to a couple of years and serve as the foundation for financial stability.

Medium-term goals often span a few years and might include saving for a mortgage deposit or funding further education. These objectives require more substantial planning and discipline, as they involve larger sums of money and a longer commitment.

Long-term goals, such as retirement planning, estate planning, or achieving financial independence, are typically the most ambitious and require years to decades of consistent effort and planning. These goals are essential for ensuring a comfortable and secure future, allowing individuals to live on their terms without financial stress.

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Setting financial goals

Setting effective financial goals involves being specific, realistic, and prioritised. A clearly defined goal includes the exact amount needed and a set time frame for achievement.

It’s crucial to ensure goals are attainable given one’s current financial situation and to prioritise them according to their importance.

Creating a detailed plan outlining the steps necessary to reach each goal is essential, including budgeting, saving, and investing strategies. Regularly reviewing progress and making adjustments as needed helps keep the momentum going and ensures goals remain achievable.

Financial goals matter because they help individuals stay focused and disciplined with their money. By having clear objectives, people are encouraged to develop better money management habits, reduce financial stress, and increase their chances of achieving financial security and independence.

Whether it’s saving for a new car, paying off student loans, or planning for retirement, having well-defined financial goals is a vital step toward a prosperous future.

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From the end of the cost-of-living crisis, to falling house prices, and how to be a football fan without breaking the bank – here are our favourite must know money stories this week to help you get your head around your personal finances.

Rising wages forecast to ease cost-of-living crisis

Average pay rises could be about to overtake inflation for the first time in 14 months, reports Oliver Wright for The Times.

New inflation figures and average earnings data for the last month are due to be released next week. According to the Bank of England’s forecasts, inflation is expected to slow down to around 6.8%, and wages are expected to rise slightly more than 7%.

Ashley Webb, UK economist for Capital Economics, said: “There isn’t a perfect way to define the cost-of-living crisis but a good proxy is when CPI inflation is above average earnings growth. So, based on this measure that uses growth rates, the cost-of-living crisis appears to be coming to an end.”

While economists say there are signs wages will grow faster than inflation at least until 2025, these wage rises will make it harder to bring down inflation to its 2% target set by the Bank of England.

Furthermore, homeowners might find that these wage rise benefits will be offset by rises in rents and mortgages.

House prices edge down, but market proves resilient

House prices fell by 0.3% in July, according to data released by the latest Halifax house price index yesterday. An average UK home is now worth £285,044 – 2.4% less than house prices a year ago.

While this was the fourth consecutive monthly decrease, prices have only changed a little over the last six months. The rate of annual decline also slowed down from -2.6% in June to -2.4% in July.

There are indications of first-time buyers turning to smaller, more affordable properties to offset the rising mortgage costs. The buy-to-let sector also remains under pressures. However, wider economic factors such as the strong wage growth, currently over 7%, suggest a promising path ahead for the UK housing market.

Kim Kinniard, director at Halifax Mortgages, said: “The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year.

“Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline. And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels.”

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown commented: “Big challenges remain, we’ve seen borrowing costs stabilise in recent months, but they remain much higher than many have become used to and there is no sign of them coming down significantly any time soon.

“This squeeze means we are likely to see prices fall further over the coming months though the index suggests more of a soft landing than a crash.”

Be a football fan without breaking the bank

As the new Premier League season nears, Miles Brignall writes for The Guardian ways for all football fans to watch their favourite, local team and save some money.

Season tickets are still popular but there is no denying that they come with a substantial price tag. With some season tickets up to £3,000 (and cheaper ones for League Two clubs) or many in-demand clubs charging fees to even join waiting lists – it’s worth thinking twice! Most clubs also don’t allow sharing season tickets with friends, but many have measures in place that you might be able to work around.

One-off tickets are almost impossible to get a hold of too. So, a good way to see your team for cheaper is buying tickets for League Cup matches, known as the Carabao Cup.

Another way is watching academy games. For example, Manchester United’s under-21s play their home fixtures not too far from Old Trafford – and entry is free!

You can always watch live football on TV – via subscriptions with TNT Sport, Sky Sports, Now TV, or others – or head down to a pub to watch the game. They continue to be the low-cost options if you don’t end up spending tons of food and drinks, plus, there’s an added communal experience.

Photo credits: Unsplash

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Amidst an uncertain economic environment and the rising cost-of-living, it’s increasingly important to take better control of your finances.

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

Households face biggest water bills rise in decades

Jess Clark writes for The Guardian as household water bills face the biggest rise in almost two decades from April 2023.

The typical water bill will face a hike of 7.5%, increasing to an average of £448 a year. While the increase is less than inflation, one in five customers who are struggling to pay have a ‘tipping point’ of an additional 8p a day.

Water firms will see several future investments, and companies have recently increased the level of support offered by over £200m. However, consumer groups lash back calling it a ‘postcode lottery.’

Emma Clancy, chief executive of the Consumer Council for Water, comments: “Low-income households need immediate relief and the long-term security of knowing their water bill will be affordable.

“It’s not fair that struggling households face a postcode lottery when it comes to getting help with their bill – that’s why we urgently need a new water affordability scheme that provides consistent support based on people’s needs.”

One in five eating food beyond use-by date

Cost-of-living correspondent Kevin Peachey writes for the BBC that many are struggling to keep warm and eating food past use-by-date as prices soar.

The Office for National Statistics (ONS) shows data that nearly one in five adults surveyed said that they ate smaller portions or food beyond its use-by date in the days approaching Christmas.

The Food Standards Agency says that people should: “Never eat food after the use-by date, even if it looks and smells ok, as it could make you very ill”.

Four in five (80%) of those asked were worried about the cost-of-living crisis affecting them, with some also losing sleep over it. 15% were found to be worried that their food would run out before they had money to purchase more.

Cold Winter weather coupled with the soaring costs of energy bills and food prices is continuing to have a significant impact on people’s mental and physical health and wellbeing.

Londoners selling homes on WhatsApp

Damian Shepherd reports for Bloomberg on a booming private property sales market in London, with Londoners selling their homes via WhatsApp.

Under-the-table sales hit record levels with almost 25% of London homes sold off-market in the last quarter of 2022. The trend is predominantly in expensive property sales, allowing the parties to negotiate on their own terms.

Almost a third of homes sold for £1m or more were sold off-market in this period, primarily due to the increased activity at the top of London’s real estate market. A strong dollar has drawn more international buyers to the market.

A Hamptons analyst anticipates that strong off-market sales will continue through 2023. However, high-end properties will still be available in public view on property portals.

Photo by Imani 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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Mouthy Money’s Your Questions Answered panellist Natasha Heron answers a reader’s question on whether they will have a higher rate of tax on their rental property in Wales while living somewhere else.

rental property in Wales

Question: I own a home (paying the mortgage) in Wales which is currently being rented to tenants.

In 2023 my wife and I will look to buy a home together. We currently live in a flat which is owned by my wife’s sisters.

If we were to buy a property in Wales, would I be stung with a higher rate of tax because I already own a property which is being rented?

The new property will be my main residence and, preferably, I’d like to keep hold of the property I am letting out.

Answer: This is one of the main areas which causes confusion as the SDLT surcharge on second homes includes a special exemption when a purchaser is replacing their main residence.

The test is a two-tier approach.

Firstly, do you hold more than a £40,000 interest in any worldwide residential property? If yes, then you fall into the surcharge for second homes.

Next, we look at each buyer separately to see whether they qualify for an exemption. It is important to remember that each buyer must qualify and if one does not, they will ‘taint’ the entire purchase.

Secondly, have you (or are you) making a disposal of a main residence? The main residence exemption safeguards buyers who are simply selling their main residence to replace it with another to ensure they are not unfairly landed with the surcharge.

Usually, a main residence is sold in conjunction with purchasing a new one. However, the rules do permit for a main residence to be sold within three years of the purchase. This means the surcharge applies but it is refundable provided conditions are met.

If we use the two-step approach above, ask:

1. Do you own more than a £40k interest in a residential property? Yes, you have a BTL.

2. Main residence exemption:

a. Have you sold a main residence in the past three years?

b. Are you selling a main residence?

As you are married, we can consider whether you can rely on your wife’s situation. Unmarried, joint purchasers cannot rely on one another’s situation, but spouses and civil partners can.

If your wife has sold a main residence within three years preceding the purchase and she also lived in her property as a main residence in that time frame, you can potentially rely on her sale.

Assuming the answers to the above are “no”, the surcharge will apply to your new purchase.

Your only option to avoid the surcharge is to sell the BTL before purchasing your new property. If it is sold afterwards, you cannot reclaim the surcharge as you have not occupied the BTL as your main residence.

This is a tricky tax and you must seek advice at the earliest opportunity.

Natasha Heron is a tax manager at the accountants Hillier Hopkins, and host of the Tax Able With Tash podcast.

Photo by Thirdman

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Start an ISA: opening a Lifetime ISA, with a tax-free wrapper, lets you save up to £4,000 every year with the government adding a 25% bonus of £1,000 on top of what you save.

What is the deal exactly?

A Lifetime ISA (LISA) could be a game-changer to your savings. This account offers the chance to save money in a tax-free wrapper and receive a 25% bonus from the government.

For example, if you save £4,000, in a tax year (6 April to 5 April) the government will give you £1,000.

Start an ISA whilst you can

However, you need to be between the ages of 18 – 39 to open an account, and saving for a house or retirement as the money isn’t ‘easy access.’

If you’re nearing 40, make sure you open a LISA before you hit the cut-off age. You can continue to put money into the account until the day before your 50th birthday.

You can open two kinds of LISA – cash or stocks and shares. If you’re looking to buy a house in the near future (less than five years), cash is generally best as you won’t be affected by short-term stock market fluctuations.

If you’re using the LISA to save for the long-term, then stocks and shares are better as you’re in with a better chance of growing your money above inflation over the long-term.

Stock market returns aren’t guaranteed but broadly over long time horizons do rise and will grow your money.

Why should I care?

With the end of the tax year approaching in April, there’s no better time to choose an ISA to get a 25% bonus each tax year on up to £4,000.

This is especially true if you have savings languishing in a cash account earning very little interest and losing value against inflation.

If you want to save money for your retirement or house, a 25% bonus each year could help a long way to accomplishing those goals.

What’s the catch?

There are quite a few conditions when opening a LISA.

You can only deposit a limited amount in a LISA – the maximum you can save is £4,000 per year, meaning that you’ll only get £1,000 from the government.

LISAs can only be used to buy a house or for retirement – and there are more limits set within those two options.  

Currently, the LISA’s limit stands at a purchase of up to £450,000 in London. If you go over the limit, money can’t be withdrawn from your LISA, or you could lose the bonus and face a 5% government withdrawal charge.

You’ll pay a penalty if you withdraw the cash and don’t use it for a first home or retirement. If you do cash out the money for something else rather than a property or pension, then you’re charged 25% of the amount withdrawn.

What other options do I have?

Help to Buy ISAs were the precursor to the LISA, until they stopped being available after 30 November 2019.

However, if you’ve opened a Help to Buy ISA before that date, then you’d be able to save £200 every month towards your first home, with a 25% bonus from the government. You’d then be able to claim your bonus by 1 December 2030.

The alternative to a LISA includes regular cash ISAs or stocks and shares ISAs. As mentioned above, you should be using stocks and shares and investing if your time horizon for saving is longer than around five years.

Where can I find out more?

There are a few banks that offer LISAs, including AJ Bell, Moneybox, Hargreaves Lansdown and more.

Photo by Towfiqu barbhuiya on Unsplash

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The year ahead could bring more stability for the UK housing market, as the bumper demand caused by the stamp duty holiday will no longer be a factor boosting property purchases.

2021 was the strongest year for mortgage lending since 2007, according to trade association UK Finance. This was caused by a combination of factors including the stamp duty holiday, people with more cash savings, and a rethink of where households wanted to live thanks to the pandemic.

James Tatch, principal, data and research at UK Finance, says: “The outlook for the housing and mortgage markets over the next two years is for a return to more stable, balanced picture following the upheavals of the last two years.

“While risks remain, both to new lending and ongoing affordability, the market looks to be emerging from the pandemic in a better place than previously anticipated, supported by a much-improved wider economic outlook.”

‘The focus seems to be shifting to remortgages’

The price of an average UK home hit a record high of £254,822 in December. This is the highest house price growth in 15 years, according to Nationwide.

With house prices reaching record levels in 2021, housing affordability for first-time buyers may continue to be stretched.

Rising inflation will put a squeeze on real incomes next year. With the Bank Rate increase from 0.1% to 0.25%, this could also place pressure on affordability.

Myron Jobson, personal finance campaigner at interactive investor, says: “The mortgage market is still adjusting to the loss of the stamp duty holiday, which propped up the property market during the pandemic, before it was completely phased out at the end of September.

“While net lending increased in November following a contraction the month before, the net borrowing was £2.9 billion below the 12-month average to June 2021, when the full stamp duty holiday was in full swing.

“The focus appears to be shifting to remortgages, which saw a significant jump in activity in November as borrowers with home loans set to mature opting to lock into a fixed rate deal ahead of the highly touted rise in interest rates.”

Is the rental market calming down too?

Tenants faced an 11% rise in rents compared to pre-pandemic levels in suburban areas in 2021, according to property website Rightmove.

With a 155% increase in demand per rental property available in cities and up to 224% in rural locations, tenants had to compete to rent properties last year.

Will this be the case in 2022?

Mouthy Money spoke to Ryan Taws, branch manager at Cubitt & West Estate Agents, who says the rental market will remain “inconsistent and extremely competitive.”

He says: “I think the rental market probably will be the same in 2022. A lot of it does come down to the Covid situation, whether people can rent out their properties and move abroad, and then that would bring more properties onto the market.

“It’s just supply and demand, you have less of something and there’s more people that want that, and are willing to pay more price for that as well.

“So, I think that’s probably going to be a continuing trend until there becomes a bit more clarification about the pandemic. I believe that once the Covid situation is sorted out, and people can move abroad, again, that will sort the market out and make it more balanced.“

With news of the sales market potentially stabilising in 2022, Taws adds: “Normally, the sales and rental market don’t go hand in hand.

“If lettings are busy, and there’s a lot of properties on the market, that’s because sales are not doing very well. So, sales have been very good for two years. And lettings have been very bad for two years in the sense of properties on the market.

“So hopefully, for my sake, I do hope that sales won’t be stabilized!”

Photo by Chris Flexen on Unsplash

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Mouthy Money Your Questions Answered panelist Karina Hutchins answers a reader’s question about being able to get extra cash in their mortgage above the house value to conduct renovations.

Question: My partner and I are first-time buyers nearly ready to buy a house. We can afford something around £200,000 with our deposit but we’ve seen a house that needs some work, but has a lot of potential, for £180,000. Would we be able to ask the bank for extra cash in our mortgage above the house value to conduct renovations? We don’t have the extra funds ourselves to do the work that is required.

Answer: Before the financial crisis of 2008, it was common to find mortgage loans up to 120% of the value of your home.

However, this level of debt left people in negative equity (where you have more debt than your house is worth) meaning they became mortgage prisoners, as without equity, they couldn’t afford to sell their home or change their mortgage deal. As such, mortgages above 95% of the value of your home are no longer available.

I would see if it’s possible to buy with a 5% deposit and use whatever funds you have left over to start renovations.

If you require further funds, you can wait six months after the mortgage starts to apply back to your lender for a further advance. They will revalue your home and maybe you will be able to withdraw further funds if you’ve created more equity.

This could work well as house prices have naturally increased by 10-15% over the last 12 months and you can look to improve the property as much as possible with the deposit money you held onto.

YOUNG MONEY: If you’re 18 – 29, we want to hear from you! By taking our quick survey, you’ll be in with a chance of winning a £100 shopping voucher from your choice of Amazon, John Lewis or M&S – plus four £20 vouchers up for grabs too.

Alternatively, you should look to save funds or seek affordable borrowing elsewhere which isn’t secured against your home. If you do take out new debts, please ensure you can afford the repayments in additional to your mortgage and other outgoings.

Karina Hutchins is Head of Mortgages at Open Money

Have you got a burning money question? Ask your question here

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The post Can we ask for extra mortgage cash to renovate our new house? appeared first on Mouthy Money.

Mouthy Money Your Questions Answered panelist Ben Yearsley answers a reader’s question about what to do with a lump sum after selling a house.

Question: My partner and I sold our house. Net cash from the sale is £454,000. We are building a new home that will not be ready for at least nine months. Where do you suggest we put this money for six months that will be risk-free, yet grow a little? It’s worth noting that we will be using it to pay off our new home in full once it is ready.

Answer: This will be a short and sweet one I’m afraid, as realistically there aren’t many options. As you need the money to buy a house in under a year, you can’t afford to take any risk with it, such as investing it. That limits the options massively I’m afraid.

The first thing you should both do is put £50,000 into premium bonds. There is no risk with Premium Bonds but you do get the chance of a few tax-free prizes. After that there is no other option but to find the best instant access rate that you can.

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Be mindful of the Financial Services Compensation Scheme compensation limit, which is currently £85,000 per person, per bank or £170,000 if it’s a joint account. That means if in the unlikely event your bank goes out of business, you’re guaranteed to get back £85,000 for a single account or £170,000 if it’s a joint account. Anything over that won’t be covered. So it’s important to spread the £454,000 across multiple accounts to ensure you stay under the FSCS limit.

If you do anything else you are risking capital you need in the short term for a specific item of expenditure.

Ben Yearsley​, investment director, Shore Financial Planning

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Our reader asked a follow-up question in the comments: I thought the £85,000 was enhanced for a short period following the sale of a home?

Ben Yearsley answers: The FSCS guarantees cash up to £1 million for six months so the money is only protected for that initial period. However, I’d stick on the side of caution and spread it into different account anyway as suggested with the premium bonds.

Photo by Visual Stories || Micheile on Unsplash

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