Brits unprepared for big life changes

Over the last two years, 15 million Brits suffered financially because they were unprepared for big life events, according to new research from Abbey Mortgages. Looking back over the past two years, almost two thirds of Brits (62 per cent) have undergone a significant life change, which has impacted them financially, and at least one in every three of these has been unexpected.

Job changes account for the most common life change, with almost a third of Brits (30 per cent) having moved jobs in the past two years. While 7.7 million people (17 per cent) are better off as a result of their new job, 5.9 million people (13 per cent) have taken a pay cut.

Twenty one per cent of Brits experienced bereavement in the past two years, 16 per cent moved home and 11 per cent have had an illness that meant they or their partner was unable to work. A further seven per cent had a child, five per cent received a windfall of some description, five per cent got married and five per cent divorced in the last two years.

However, Abbey’s research shows that as a nation we’re not great at preparing for the future as only 41 per cent of those questioned expected a financially significant event to happen to them over the same period.

Nici Audhlam-Gardiner, Head of Mortgages at Abbey said: “We all know that it pays to be prepared but what’s interesting is just how many people experienced a big life change in the relatively short period of two years. Our research shows that 15 million Brits suffered financially because they failed to plan for these changes.

“However even when you do prepare, sometimes big things hit us from out of the blue, so it’s important to make sure your finances are in shape and able to withstand whatever events life throws at you.

“Making sure you have sufficient protection to cover job loss or illness when you have a big commitment such as a mortgage is one way of being prepared. Another option is to give yourself a degree of flexibility. For instance a new job that requires relocation could be a real pain if you are tied into a mortgage deal. Having a flexible mortgage could save you paying over the odds if your circumstances change.”

With Abbey’s Flexible Plus Mortgage, customers can make overpayments, underpayments, take payment holidays to suit their circumstances. You can also offset your savings to reduce interest payments and income tax. The deal is at 0.49% above base rate for the life of the mortgage and there are no early repayment penalties if you have to leave or change your deal.