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Author: amoore70
Stress ICR (Interest rate affordability stress test)
The interest rate affordability stress test is a crucial part of the mortgage application process in the UK. It is designed to ensure that borrowers can afford their mortgage repayments not only at the current interest rates but also if rates were to rise significantly in the future. This test is applied by mortgage lenders… Read more
Interest coverage ratio (ICR) explained
The interest coverage ratio (ICR) is a financial metric used to assess a company’s ability to pay interest on its outstanding debt. It is calculated by dividing a company’s earnings before interest and taxes (EBIT) by its interest expenses for the same period. The formula is: Interest Coverage Ratio=EBITInterest Expense\text{Interest Coverage Ratio} = \frac{\text{EBIT}}{\text{Interest Expense}}Interest Coverage Ratio=Interest ExpenseEBIT Importance of the… Read more
Overview of Inheritance Tax (IHT) and 2024 rates
Inheritance Tax (IHT) is a tax on the estate (the property, money, and possessions) of someone who has died. The standard Inheritance Tax rate is 40%, which is only charged on the part of the estate that’s above the threshold. Thresholds and Allowances Tax Rates Exemptions and Reliefs Seven-Year Rule (Potentially Exempt Transfers) Gifts made… Read more
Is there a place for day one re-mortgages?
What is a Day One Re-Mortgage? A “day one re-mortgage” refers to the process of re-mortgaging a property immediately after its purchase, sometimes literally from the first day of ownership. This type of re-mortgage allows the new property owner to refinance their property quickly, typically to access better interest rates or to release equity that… Read more
What are the advantages of buying off-plan property?
The Advantages of Buying Off-Plan Property Buying off-plan property, which involves purchasing a property before it has been constructed, offers several potential benefits. Here are some key advantages to consider: 1. Lower Purchase Price One of the primary attractions of buying off-plan is the potential for lower purchase prices compared to completed properties. Developers often… Read more
The disadvantages of buying off-plan properties
Buying off-plan property, which involves purchasing a property before it has been built, can offer attractive benefits such as lower prices and the opportunity to customize certain aspects. However, it also comes with several significant risks and disadvantages. Here are the key drawbacks to consider: 1. Completion Delays One of the most common issues with… Read more
What is meant by unencumbered property?
In the context of the UK mortgage market, the term “unencumbered property” holds significant importance for both homeowners and lenders. It denotes a property that is owned outright, with no existing mortgages, liens, or other financial claims against it. Here, we delve into what unencumbered property means, its benefits, and its implications in the UK… Read more
What Are the Most Overlooked Financial Aspects of Divorce?
Divorce is a challenging and emotional process, often accompanied by significant financial implications. While many people focus on the immediate concerns of asset division and maintenance payments, several critical financial aspects can easily be overlooked. Understanding and addressing these overlooked areas can help ensure a more stable financial future post-divorce. 1. Tax Implications One of… Read more