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Introduction to Credit Crunch

Lets discuss money for dentists

"In this world nothing is certain but death and taxes" Benjamin Franklin

money4dentists, the specialist independent financial advisers to dentists (IFA's), have over 50 years experience behind them to exclusively advise dentists & partners of dentists.

From this month Richard and his team will be bringing you regular ideas covering all aspects of saving money for dentists, and the series will include:

  • The credit crunch – is it a good time to buy, sell or rent
  • Emergency fund - building savings for tax bills
  • Protection - make sure you have the correct life & critical illness cover in place
  • Income protection – own occupation, or not own occupation, that is the question
  • Investments – we let the cat out of the bag on two of the best kept secrets
  • Pensions – has the NHS Pension Scheme changed for the good or the bad
  • And many more!

In this issue Richard is going to go through how the credit crunch will, if at all, effect most dentists.

House prices

Over the last few months we have seen falling house prices due to a number of factors from changes in LIBOR, which had a knock on effect as to the reduced number of mortgage deals available, which has then caused an increased number of re-possessions and so on. All this has had a huge and significant impact on the housing market, or commonly known as the "credit crunch".

For most dentists there is light at the end of the tunnel, as for those that are looking to buy their first home, or even move to a larger home (this tends to be VDP's, or younger Associates), which should be taken to be a positive thing. When moving upward in the housing market, you benefit from any reduction in prices (almost like a discount!).

Let me cover this in an example

Selling current home

£200,000 - value 2007
£180,000 – sale price 2008
£20,000 - reduction in sale price

Purchasing new home

£350,000 - value 2007
£315,000 – sale price 2008
£35,000 - reduction in purchase price

Downsizing current home

£1,000,000 - value 2007
£900,000 – sale price 2008

The above figures are based on 10% reduction in sale and purchase prices. Obviously the percentage is the same, but unless you are moving out of the housing market altogether or downsizing, you can use the current housing market to your advantage. We have already seen an increase in first time buyers, and dentists looking to increase their portfolios are also snapping up bargains.

So basically the credit crunch offers cheaper prices which should make it easier (as well as less hard on your pocket) to buy or upgrade, especially if you are looking to keep your existing property to let out. If you are looking to buy and sell then as long as prices fall in line with each other then the net effect should be neutral, but as illustrated from the example above, the financial figures are better.

Remortgaging

Over the last few months lenders have been tightening their criteria, but on a positive note, we are finding that more and more lenders are releasing new, more attractive deals making it easier for people to get the right deal for them. However, this is still not easy by any stretch of the imagination so always seek independent mortgage advice.

Fancy leaving the UK for a while With the UK property market seemingly on a downward spiral, why not consider investing in overseas property?

Not only will you be able to benefit from a holiday home, you can also let the property out via agencies like www.holidaylettings.co.uk for a passive income. Also, if you are a principal you can use the property as an incentive for employees – nothing says 'thanks for the hard work' like 2 weeks on a Mediterranean island!

So is it financial doom and gloom for 2008

Not at all, there are still plenty of options available whatever your circumstances. Falling house prices mean there are property bargains to be had, competitive 0% credit card deals are available to reduce outgoings and if The Bank of England base rate falls again, many mortgage payments will decrease. The key to cracking the credit crunch is taking the strengths associated with it, and making it work for you.

money4dentists have a great record for guiding dentists efficiently, effectively and profitably through their professional and private financial decisions, gaining great trust within the profession, as this year they have been awarded Small Mortgage IFA Firm of the Year, with Associate Sarah Smith coming 2nd place as Newly Qualified IFA of the Year, and Richard even managed to get in there with 2nd place as Protection Adviser of the Year!

As one of the most respected specialist names within dentistry, money4dentists will help guide readers with all aspects of financial matters which will help save money, avoid tax and make sure you are maximising where you spend your money. Their extensive experience can help you to realise your individual aspirations!

Please contact us at richard@money4dentists.com or 0845 345 5060 if there are any specific areas you would like us to cover.