Ben (36) and Natalie (34) have been together for four years. They live in Bristol where they currently rent a two-bedroom flat in Redland area at a cost of £1,300pm plus bills. The couple have a very active lifestyle and good social life. They like climbing, travelling, diving and socialising with friends. They had stopped travelling during the pandemic but over the past year have been away three times including a two-week trip to South America.

Recently Natalie has recently found out that she is pregnant with twins. This was a surprise for the couple and made them start thinking about getting married and their future as a family. While they are very positive and excited to start a family, the couple are worried about their personal finances and have decided to seek advice.

The clients realise that their lives will change in the near future and their entire focus will be on raising children. The current flat has a spare bedroom that is used as a study room that they need for her work. Living in a small rented flat is not an ideal place to raise a family, and they are thinking of buying their own house with a garden. They are hoping for a 3-4 bedroom detached or semi-detached house with easy access to central and north Bristol.  

Ben works as a recruitment consultant for a company based in central Bristol with a £30,000 annual salary plus commission, which could be up to £10,000pa. He likes working with others and finds his job very satisfying. He currently works from home 2 days a week and hoping to get a pay rise of £3,000pa over the next 12 months.

Natalie is a tech worker who has recently been promoted and earns £48,000pa. She works remotely most of the time but occasionally has to travel to various client sites across the UK. Her career in IT and technology took off just over a year ago after she had completed a professional course for which she paid for using a personal loan. She is due to give birth in six months and will be entitled to a maternity pay equivalent to 90% of her full time pay for six months and then up to £172.48pw for another six months if she chooses to stay on leave. She is hoping that Ben and his parents will be able to help her with childcare so she will be back to work after six months, although she may be working four rather than five days per week.  

The clients do not have much savings at the moment. Ben's parents have offered to help them with a £30,000 cash contribution toward the house purchase, yet they are unsure whether there are any inheritance tax consequences of this gift. 

Natalie does not have immediate family and her mother had died of cancer when she was in her early twenties. This was a tough time for Natalie as she missed support from her mother and had to combine working and studying at the same time, resulting in finishing university later than planned. 

The clients have two cars, Natalie drives a Volvo XC40 on a 24-month personal hire deal that costs 300pm and expires in three months. Ben drives a 7-year-old Volkswagen Golf he bought outright four years ago. The clients have one parking permit and pay £100pm to use their neighbour's drive to park their second car. They both like spending their time actively, socialising with friends, travelling and shopping. The clients like technology and often buy expensive gadgets and latest tech. Ben enjoys going on fancy holidays and Natalie likes shopping for clothes and fashion accessories. Most of the time they have enough cash to pay for their expenses, though occasionally use credit cards to pay for larger items. During the pandemic they save some money, but they quickly spent it on holidays. They realise they do not have a good grasp of their finances and realise that they usual living costs have gone up significantly over the past few months. The clients have credit cards, student and personal debt, and are members of pension schemes though do not understand how they joined as neither of them applied for it. They do not see the point of making pension contributions as pensions do not seem to be a priority right now and are planning to cancel their contributions in hope to provide boost to their finances. 

 

Financial Details
Ben Lewis age 36		Natalie Khaliq age 34
Salary (pa, full time basis)	£30,000	£48,000
Pension Contributions	Employee 5% plus Employer 4% of the annual full salary	Employee 5% plus Employer 5% of the full annual salary
Student Debt	Pre-2012 loan  Outstanding Balance: £4,500	Post-2012 loan  Outstanding Balance: £15,000
Credit Card	Current Balance £1,100  APR: 27.9% Credit limit £4,000   Currently making minimum payments of interests plus 1%	Current Balance £1,300  APR: 26.9% Credit limit £3,500   Currently making minimum payments of interests plus 1%
Personal Loan	N/A	Current Balance £2,405 Monthly Repayment: £185 Annual Interests 8.9% No Early Repayment Fee
Savings	Regular account (easy access): £1,900 at 0.01%	Basic savings account (easy access): £3,400 at 0.2%
Personal Car Hire	N/A	Monthly cost £300 Refundable deposit: £2,500 Expires in two months' time
Other Expenditure:
Rent	£1,300pm excluding bills
Council tax and other bills	560pm - including £100 for parking, and insurance for both cars; Volvo £60pm and Volkswagen £40pm.
Groceries	£550pm
Subscriptions (costs pm)	Total about £54pm including Now TV - £25, Netflix £9.99, Amazon Prime 8.99pm and Spotify Premium £9.99
Regular shopping, treats and treatments, gym membership and petrol.	£450pm
Other shopping, holidays and going out	Approximately £600pm

 

 

They have come to you for advice on the following matters: 

 They expect you to use information from the case study to provide guidance that would improve their financial situation. You need to comment on their current financial strategies highlighting any potential issues. Then identify any potential areas for savings and how do I write a budget for the couple which would allow them to reach their objective . This part of the recommendation may include suggestions of relevant products and actions including justifications of your decisions.

1. The clients would like to purchase their home within the next nine to 15 months. You need to research the local property market and suggest a reliable plan for achieving their goal of owning their first property taking into consideration the costs of buying, mortgage acceptance criteria and affordability. Furthermore, you need to outline potential challenges and risks. The clients would like you to recommend a mortgage deal assuming that the state of the mortgage market will remain unchanged.
2. 
   
3. Recommend insurance and other relevant products appropriate for the family in order to ensure the family's future financial security. Comment on their pension plans. Explain and fully justify your recommendations.