KIS Bridging Loans
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Throughout your life you will face many different situations and obstacles, good and bad, which will each require you to be financially prepared.

This guide will take you through all the major stages in life where different finances need to be put in place and it will give you some advice and tips on these stages. Bear in mind that some of these stages may not necessarily apply to you, or may not happen in the same order we’ve put them in, we have simply based it on the most common cycle.  



First Bank Account

Children who receive pocket money, money as birthday or Christmas gifts, or maybe have their first job working in a café or doing a paper round will need somewhere to start putting their money. It will be the first steps for a child to gain some financial independence and to start managing their money.

Current Account

A traditional current account will be the most simple account to open. You can pay in and withdraw money as and when you like and a small amount of interest will be added to the money in the account, usually monthly.

Most banks will allow children from the age of about 11 to open current accounts, with the supervision of a parent. Some banks will also require a parent to be put on the account as a trustee. If the account comes with a debit card, allowing the child to withdraw cash and make payments in stores and online, it can be decided by the parent whether they want the child to have access to it or not.


Student Loan

When you become a student, either in College or University, your expenses will suddenly soar – especially if you will be living away from home. You will have the course to pay for, accommodation, bills, food and any other daily spending.

Student Loan

To study a University course in England, the price currently stands at £9,250 per year – obviously an unreasonable amount to be expected of any student to have readily available in their bank account. This is where a student loan comes in, which will probably be the first time in your life you will borrow a large amount of money.

The loan to cover the tuition fees will be paid directly to the University so it can’t be spent elsewhere. On top of this, you can also receive a maintenance loan to cover living costs whilst you are studying. The amount will depend on whether you are living in or out of home, the location (students studying in London will receive more due to more expensive living costs), and your family’s household income. The maximum amount you can receive on a maintenance loan is just under £8,500 for students living outside of London.

You’ll have to start paying back any loans, as well as any interest charged, from the first April after you finish your course, but only if you are earning more than £25,000 per year. You must repay 9% on everything you earn above £25,000 and if you never earn above this amount, then you will never repay the loans.

Student and Graduate Accounts

When you receive your maintenance loan instalments (which is usually at the start of each term) and maybe you are working part time, you will need a bank account for this money to go into. For this, a student bank account is an ideal solution.

Student Account

The main difference between current accounts and student accounts are the overdraft facilities. Some student accounts allow overdraft facilities of up to £3,000 and these are interest free, meaning you won’t pay interest on any amount within the overdraft limit whilst you are a student.

This money will be repayable when you are no longer a student and charges may apply if you spend over the limit. If you believe you will go over the overdraft limit, you should tell the bank and make other arrangements as this may affect your credit rating; therefore your ability to obtain credit in the future.

Graduate Account

Once you have graduated from College or University, your bank will generally turn your student account into a graduate account, sometimes this is done automatically. The main reason for this is to slowly reduce the overdraft amount each year that is interest-free so you will eventually start to pay back the money you owe (assuming you have gone into the overdraft limit at all).

You don’t have to remain loyal to the bank that your student account is held with, it is a good tip to shop around to find one with the longest period of time with 0% interest. This means the money you are repaying will be going towards the debt, not just paying off the interest.

Starting to Make Savings

Whilst you are a student, or you have finished your course and you are starting your first job, it makes sense to open a savings account so you can start to save any surplus income.

Instant Access Savings Accounts

An instant access savings account can be opened with as little as £1 and you, as the account holder, can have instant access to your savings whenever you need them. As there are very few limitations on the account, the interest rates paid tend to be quite low. These accounts may be suitable for you if you want to save some short-term emergency funds.

Restricted Access Savings Accounts

If you are planning on making longer term savings then a restricted access account may be more suitable. As the account is restricted, the interest paid is generally a lot higher.

Access may be restricted by:

  • Limiting the number of withdrawals that you can make each calendar year.
  • Requiring a minimum notice period before funds can be withdrawn (a notice account).
  • Specifying an agreed period during which you may not access your funds at all (a fixed-term account).

Notice Account: It is possible to breach the terms of the notice period in urgent situations. However, a charge is normally applied in the form of a much-reduced rate of interest.

Fixed-term Account: Your money will be locked away for a period of 1 to 5 years, which is often in return for a fixed rate of interested. Generally, the more money in the account and the longer the term, the higher the rate of interest that will be paid.


Buying a House

Buying a house is likely to be the biggest purchase in your life, therefore your biggest financial commitment.

Getting a Mortgage

Unless you are lucky to be in a very strong financial position, you will need a mortgage to buy your home. A mortgage is a loan designed specifically for this purpose.

First, you will be required to pay a deposit, which has to be at least 5% of the property price (but the more you can put down, the better, as you will benefit from a cheaper/better deal). A mortgage lender will lend you the rest of the purchase price.

This will need to be paid back in monthly instalments, as well as the additional interest that will be charged, and you will be able to do this over a term of 25-30 years. This can be a shorter period if you can afford to make larger monthly repayments.

You will be charged interest for the full term of the loan, but it is likely that the lender will offer you deals for the first 2-5 years of the term, for example; fixed, capped or discounted rates.

Other Costs

There are a few other costs when it comes to purchasing a property so it is important to make sure you have savings that can cover these costs and you have included them into your budget.

Stamp Duty: If you are purchasing a property over £125,000, or £300,000 if you are a first-time buyer, you will have to pay Stamp Duty Land Tax. This is a tax charged on any purchase of property or land and will be required as a one-off payment, in full, before you can move in.

The amount you will pay will depend on the type of property, the value of the property and which part of the UK the property is in.

Solicitor’s Fees: During the process, you will need a property solicitor to carry out all of the legal work for the house purchase. Their fees can vary massively but you would typically expect to pay anywhere between £500 and £1500. This fee will also need to be paid upfront.

Valuation Fee: Before the mortgage lender accepts your application, they will instruct a valuation of the property you are purchasing. This is to ensure that the property is sufficient security for the loan, so if you didn’t keep up with repayments the lender would get their money back through the sale of the property. This fee varies depending on the value of the property, but is normally a few hundred pounds. This is another upfront fee.

Other Administration Costs: There will be a selection of other administration costs payable to the mortgage lender. These will also need to be paid upfront but are generally quite small.

See 'The Ultimate guide to buying a property'

Paying For a Wedding

With a typical wedding today costing couples up to £15,000 - £20,000, it may seem a little out of reach for some if they don’t have savings, surplus income, or family that can help out.

Personal Secured Loan

If you don’t have the means to pay for a wedding out of your own pocket, then a low-interest personal loan will be one of the easiest and most convenient ways to fund your big day.

You can usually borrow for a term of 1 to 25 years, depending on the amount you can afford to pay back each month. Personal secured loans will need to be secured against an asset, which would typically be your home as your biggest asset, so the lender would be able to sell it, as a last resort, if you fail to make your repayments. This will, however, make the interest rates cheaper than they would be on an unsecured loan, so as long as you make the repayments, a secured loan is the better option.

0% Credit Card

A lot of credit card companies offer a 0% introductory period on purchases, balance transfers, or maybe both. If you are good at managing money, but you need to make several big purchases at once, you could use a credit card to fund some of your wedding completely free of charge.

You do have to be careful though, as once the introductory period has ended, you will be hit with the interest rate which could be quite a bit higher than the average credit card rate because you have benefited from a 0% period. This method could prove very beneficial, but discipline is definitely required.

Life Assurance

When you have come to the point in your life when you have a home and a family, you will want to ensure that they will be financially protected if the worst was to happen.

Life Assurance

The term ‘assurance’ means the protection against the effects of something that will definitely happen at some point, such as death. Below are the descriptions of the two most common types of life assurance:

Whole-of-Life Assurance

As the name suggests, whole of life assurance covers the assured for the whole of their lifetime. The sum of the life cover is paid out in the event of their death, whenever that occurs (provided that the policy is still enforce at this time).

The main benefit of this policy is peace of mind as it can be used for both personal and business situations. Examples include;

  • To protect your family against the loss of financial support.
  • To cover expenses of your funeral.
  • To cover the payment of inheritance tax.

Premiums may either be paid for the whole of your life, or you can decide on only paying them for a fixed-term (e.g. 30 years) or until you have reached a certain age.

Term Assurance

Term assurance is the most basic version of life assurance, therefore normally the cheapest. The term can be anything between a few months to, say, 40 years (however, whole-of-life assurance would be more suitable if that was the term you were after). The sum assured will only be paid out if the death of the assured occurs within that term. If you survive the term, however, the cover ceases and there will be no return on the premiums paid.

Term assurance can also be used for both personal and business purposes.

Writing a Will

Writing a will is one of the most important things to do once you have a family and a home.

Your Will

A will serves two main purposes when you die; it will specify what you want to happen to your property, money and belongings (everything that makes up your ‘estate’) and who will be your executor. The executor’s role is to carry out the estate distribution and any other wishes stated in your will.

If you die without leaving a will (intestate), your estate will be distributed in accordance with the law and may not be how you would have wanted.

Below demonstrates how your estate will be distributed if you die intestate:

  • If the deceased leaves a spouse but not children: The spouse inherits the entire estate.
  • If there is a spouse and children: The spouse inherits the deceased person’s chattels (personal belongings), plus the first £250,000, plus half of any sum that is above £250,000. The rest will be divided equally between the children.
  • If there are children but no spouse: The estate is shared equally among the children.
  • If there is neither a spouse or children: The estate will go to the parents of the deceased, or shared between the brothers and sisters if both parents are dead.
  • If no blood relative can be found: The estate will be passed to the Crown.

You can either write your will yourself, have it written by a professional will writing service, or have it written by a solicitor.

Pension Planning

Another thing to start considering (if you haven’t already) is planning for your pension. A pension is a way of saving money for later in your life, normally when you retire from work and are no longer receiving a regular income.

Workplace Pension

A workplace pension is arranged by your employer, sometimes they are known as ‘occupational’ or ‘company’ pensions. A percentage of your salary is automatically deducted and added to your pension each payday. In most cases, your employer will make additional contributions on top.  

All employers must provide a workplace pension scheme and you will be automatically enrolled unless you specify that you want to opt out. You will be automatically enrolled if all the below applies;

  • You are classed as a ‘worker’.
  • You earn at least £10,000 per year.
  • You are aged between 22 and the State Pension age.
  • You normally work in the UK.

New State Pension

The new State Pension is for those reaching State Pension age after April 2016. If you reached that age before April 2016, you will still get the State Penson which followed the old rules.

A State Pension is a regular payment you can get from the government. The current full State Pension amount is £164.35 per week but the amount you will personally receive will depend on your National Insurance contributions. You will usually be required to have 10 qualifying years on your National Insurance record but these don’t have to be 10 years in a row. This means that for at least 10 years in your life, one or more of the following must have applied:

  • You were working and paying National Insurance contributions (automatically deducted from your pay cheque).
  • You were unemployed but getting National Insurance credits (for example, if you were ill, a parent or carer).
  • You were paying voluntary National Insurance contributions.

Personal Pension

 A personal pension is one that you arrange yourself, which can also be known as a ‘defined contribution’ or a ‘money purchase’ pension.

They money you choose to pay into a personal pension will be put into investments, like shares, by the pension provider. The money that you’ll receive back when you reach state pension age will usually depend on the following factors;

  • How much money you have paid in.
  • How the investments have performed.
  • How you choose to retrieve the funds.

You can pay into the pension either through regular payments, or individual lump sums. You will receive an annual statement telling you how much your pension pot is worth.


Receiving an Inheritance

Spend or Save (or Pay Off Your Debts)?

If you receive an inheritance, it can be difficult to decide on the best option as to what to do with it. Depending on the size of the inheritance and your current financial position, you can think about saving it for the future, spending it, investing it, or using it to pay off some or all of your debts.

Save or Pay off Debts: The interest that you have to pay on any outstanding debts is usually higher than any interest you can gain by having money in a savings account, but of course that depends on your personal circumstances.

But, assuming that this is the case, you are likely to be better off if you pay off any debts you have before choosing to put the money into savings as being debt-free will make your financial position much stronger for the future.

Mortgage or Personal Debts: If you receive a large inheritance, it can definitely be tempting to pay off your mortgage before any other loans. However, mortgages are designed for long-term borrowing, making interest rates generally a lot cheaper than other personal loans. So, you may be better off paying back your smaller, but more expensive, loans first.

Investing: It may seem like a risky option to invest your inheritance, but if you are already in a strong financial position and don’t need the money urgently, investing could give you steady return. If this is something you want to consider, you should seek the help of a financial advisor.


Reviewing Pension Plans

A few years before your planned retirement would be a good time to review your pension. It is important to make sure that everything is as planned and you have accumulated enough in your pension pot to take you through your retirement.

If this isn’t the case, then you will need to start thinking about some alternative options.

If you need to build up more of a pension pot then you may think about delaying your retirement for a few years. This will allow you to make more contributions and you won’t be relying on the money for as long as you would have been. This is something you should discuss with your pension provider and you may be charged a fee for changing your retirement date.

Equity Release/Lifetime Mortgage

When you reach the later stages of your life, equity release may be beneficial if you want a last injection of cash, or you would like give some money as a gift to your family.

When you have repaid all, or most, of your mortgage and you are 55 or above, you will likely become eligible for equity release, also known as a lifetime mortgage.

A lifetime mortgage allows you to take out a loan based on your age, your overall health and the value of your property. It works by releasing the money you have held up in your property, without actually selling it. The loan will be secured against the property and will be charged on a fixed-rate of interest.

With most plans you are not required to make any monthly repayments throughout the full life of the loan, instead, the interest is added to the capital on a monthly or annual basis and paid back together at the end of the term. Final repayment of a lifetime mortgage normally comes from the proceeds when the property is sold either after you pass away or move into a permanent residence of care. Any remaining money, after the loan and interest have been paid back in full, will be put back into the estate and distributed according to your will.

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