15 SUMMER MORTGAGE NEWSLETTER Cashflow charts can also aggregate all the client incomes and expenses to judge the affordability of new mortgages John and Sarah are looking to get a new mortgage and want to understand how their finances would be impacted by rising or falling interest rates A cashflow money in/out chart helps our couple visualise their yearly income against their aggregated expense during the mortgage term. Sarah and John can quickly understand their surplus income and judge the affordability of the mortgage, combined with their current spending habits The chart can be quickly adjusted to show the impact on this surplus from interest rate movements and or job loss/promotions. Equity release charts are also a powerful example of how versatile cashflow tools can be. Advisers can plot the value of a clients house (green) whilst showing the increasing level of interest (red) accruing against the house An adviser can then adjust the various inputs, such as the expected house price return, to show clients how the future increase in their property value can in part pay off their original debt and interest payments With a growing focus on justifying fees and a desire to be less transactional, cashflow forecasting could be an integral part of the mortgage & protection industry. FE CashCalc is the UK’s market leading cashflow tool and the company are preparing to start expanding their operations into this new frontier. With a new client portal and mortgage fact find, FE CashCalc will attempt to streamline an advisers data collection and help them produce valuable output for their clients. If FE CashCalc are successful, they will simply be the first wave, followed closely by the plethora of other tools that compete in this space. To explore further, take a look at this short video that illustrates how to use FE CashCalc with your mortgage and protection clients.
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