The greatest money-saving tips since lovemoney.com began!
These five tips could easily save you £50,000...
lovemoney.com has been sending you money guidance since 11 December 2008. To celebrate its 15-month anniversary, here I'm going to summarise articles we've written that'll save you the most money. These are the greatest money-saving tips since lovemoney began!
1. And this one's just for starters...
I'm going to begin by telling you something you shouldn't buy to save yourself thousands. I'm talking about insurance that protects your mortgage, loan or credit card repayments. My colleague Cliff D'Arcy has for many years campaigned against the extraordinary cost of this product, revealing that such insurance can cost £3,000 on a loan of just £7,500!
You can, however, consider buying the same insurance separately through a stand-alone insurer, which you can find through the internet. These typically charge 1/10th of the price that your lender charges, and the terms and conditions tend to be better. Alternatively, consider my favourite insurance: income protection insurance. We wrote about this in Five ways to protect your income.
If you've been paying for payment protection insurance, there's a good chance you have a case to claim your premiums back. Read Rip-off insurance: Get your share of £200m compensation to find out more.
2. No salespeople required
Selling a £150,000 home could easily cost you £3,500 in estate-agent fees, even if you negotiate on price. That's a lot of money for very little work. Consider what they actually do:
- They value the property. This is a free service they do in return for a chance to sell their services to you.
- They might spend 120 minutes on emails and phone calls (assuming 10 minutes a week for 12 weeks).
- They might spend 400 minutes showing people around your home (assuming about 20 visits lasting an average 20 minutes each, and this includes the 10 minutes or so it takes them to drive to and from your property).
- Add 60 minutes for preparing all the advertising (including on Rightmove and such things as taking photos).
- Add on 30 minutes for the paperwork (which is generous as it's all standard letters and forms).
Add this up and, in total, they're earning about £344 per hour. They're not doctors. They're not lawyers near the top of their field. Even after deducting their minuscule expenses (for photos, brochures and advertising, for example), that's one heck of a wage.
Related how-to guide
Sell your home
If you want to obtain the best possible price when selling your home, then these ideas should help.
See the guideAn estate agent does just three key things, all of which lovemoney.com, in the past 15 months, has given you guidance on doing yourself:
- Establish the property price. Read point three in Sell your home in seven steps (although you may want to skip over point two).
- Advertise your property. Read how in Buy your next home on Google and Buy your home online and get a bargain, and Sell your home online (the latter of which includes some halfway houses between getting an agent and no agent, but at much lower cost.)
- Arrange viewings at the weekends (in groups if you want to save time), and write a list of things to tell prospective buyers (e.g. about friendly neighbours, transport links, a modern boiler, and other benefits that aren't obvious about the property). A list is cheaper and less forgetful than an estate agent. There's more on arranging viewings in Sell your home online.
- Watch our video: The estate agent debate
Is it essential to use an estate agent when you sell your home? We speak to Sarah Beeny and estate agent, Philip Bullman to get both sides of the argument.
3. Cutting the cost of saving for retirement
Although this section is much shorter than the last, it's likely to save you six times as much money! Whether you're investing in a pension, or a shares ISA, or something else, you're probably investing in managed funds, which means that a human (or a team of them) is looking after your money.
We talk about the advantages of ditching managed funds and letting a computer run your investments in Two simple ways to invest better in shares. If you invest just £100 a month for 40 years you could easily save yourself £18,000 in fees and you can expect that the computer, simply by mimicking the stock market, will outperform almost all managed funds!
Read about some incredibly cheap funds run by computers in Three cheap index trackers.
4. Don't look to your mortgage lender for help
There are a couple of things that mortgage lenders offer that sound friendly, but really end up costing you thousands.
Some of them will encourage you to take a payment holiday. While this sounds nice, it means that you will end up paying more interest on your mortgage every month until you have paid the whole thing off! Read how a three-month payment holiday might cost you, on a £150,000 mortgage, almost £2,000 extra interest in The true cost of a mortgage payment holiday.
The same goes if you agree to let the lender add any arrangement or other fees to your mortgage, rather than paying for it yourself up front. The extra interest you'll pay on a £1,000 arrangement fee will almost double the cost of the fee by the end of the mortgage, as we explain in Why you should pay your mortgage fees up front.
5. This could be the big one
I've mentioned already that Cliff D'Arcy is the champion who tries to help people understand the extraordinary cost of buying protection insurance on your loans through your lender. In the same way, Jane Baker is as much a champion against the hideous cost of buying an annuity (a monthly pension income after you retire) from the same company you've been saving your pension with during your working years.
She calculates that by taking your pot of retirement money elsewhere and getting someone else to pay you your annuity income, you could save yourself almost £24,000 in 20 years. Read about it in Don't forget to shop around.
More: Five ways to make thousands from your home | Quit smoking and save £143,233
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I don't think the ex estate agent will get any sympathy from anyone that has used one. I have had 4 houses in my time and sold two on behalf of deceased parents/in law. I reckon out of that lot one agent was really worth paying and did their best to sell the house. As for poor morals of clients, well the estate agent photo is the start of the eveil game. This is alway taken lying on their belly with a wide angled lens to make teh house look enormous. It also excludes all the pylons, wires, petrol stations next door etc. So another wasted journey when you get there and so don't bother to go in. The seller will think what a rude customer, I would say what a crook the estate agent/seller is! I have bought house in spite of estate agents but did drop out of one due to the non co-operation of agents to keep me informed of progress. I sold one house by the simple means of an ad in the paper and I reckon that was the fastest completion we had, seven weeks from start to finish.However, I do not rate solicitors either, they can hod up any sale so effortlessly and as a profession and slow at dealing with business. Probably as they deal a lot with dead people's etates and they can't chase them up.
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Estate Agency is one of the most misunderstood professions. Maybe because you don't need qualifications to do it, or maybe because everyone loves a scapegoat. Yes, there are some unscrupulous ones out there, but there are bad eggs in any profession - don't tar them all with the same brush. Yes, I used to be one years ago, so I know how hard these guys have to work - especially in a tough market like the one we are in at the moment. As for the writer saying 120 mins worth of telephone calls - they have clearly never been part of a lengthy complicated chain involving leasehold properties, difficult buyers and/or sellers digging their heels in over something ridiculous just out of principle (cut off nose...), spending on average 3 months working on getting through to exchange of contracts (occasionally as long as 6 months), all for no sale, no fee. Estate agents don't "gazump" - they are legally bound to inform the vendor of any offers received. It's the sellers decision who to sell their property to! I left the industry because there were so many people who could influence whether or not a sale went through (industry average then was that 33% of all sales fell through, meaning no fee was paid and a whole lot of time and effort wasted on the part of the agent). People influencing a sale include: buyer(s), seller(s), at least 2 sets of solicitors, at least 1 estate agency, usually at least 1 mortgage advisor, usually at least 1 surveyor, not to mention, friends and family - everyone putting their twopenneth worth in to the pot. I used to think it wa a miracle any sale went through sometimes with all the influence out there! I also left because the general public are so fickle and will look after themselves, often using the estate agent as a smokescreen for their own poor morals. Also, estate agents get bad press for sending through details of unsuitable properties to buyers. Let me tell you that a majority of people look for properties more expensive than they can afford - the mortgage advisor is often only seen AFTER they have wasted various agents and sellers time viewing houses and negotiating an offer. Buyers do not go about the process in the correct manner, ignoring advice of the professionals because they think they are just being sold to. And a majority end of buying something completely different to what they first set out looking for (there is a good reason why "wild card" properties are included in certain property TV shows!). Good luck to you if you are fortunate enough to sell your property without the use of an estate agent. Let's hope it's a straightforward sale and you are not one of the unlucky 33% that fall through. Although I dont doubt that that % would be higher if purely looking at private sales, since emotions get involved, whereas an agent will be sympathetic, but practical and professional. There aren't many professions that offer to do work for you with no guarantee of being paid for their efforts. I could go on all night, but fear with some blinkered people I'd be wasting my breath! Go do work experience in one and then you will see what really goes on behind the scenes.
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Couldn't agree more! I've always considered estate agents one of the most useless, 'middle-men' jobs going! There's nothing you can't do yourself and it's even easier to get an audience these days with the internet. The legal and financial side still needs professional guidance but estate agents, forget 'em!
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14 March 2010