What is Financial Assessment?

What is Financial Assessment

Assessing financial matters thoroughly has always been quite important. I personally believe in long-term planning, because it makes things easier and organized; especially when it comes to financial issues.  To plan about how much money you should contribute, I think financial assessment is very essential.  It is used to work on how much amount is needed to be contributed towards the personal budget.  Financial assessment can be executed in a personal meeting, via an online questionnaire or on a call with a financial planner. The best way is to set up a meeting with the financial officer and discuss all the minute matters in detail. The reason of assessment is to be aware of where you stand today and where do you want to be in the coming future, so that you can get accurate and appropriate recommendations from the financial planner.

What is Financial Assessment

Questions to be asked in the financial assessment:

A high-quality financial assessment will most likely ask questions about the following.

  • Capital
    It includes questions that are related to your saving, and bank accounts, shares and stocks, land or property that you own (except the home you live in), rental income from other properties that you have (after tax deduction) and social security. These all should be belong solely to you, not anyone else. The financial assessment verifies that whether a certain amount of capital should be set aside to pay for the property taxes and money over the course of the loan or not. The “set aside” decreases the amount of loan proceeds available to you (the borrower).
  • Income
    You will be asked about the money you have coming in, such as: pensions and benefits. The also includes all the benefits to which you’re entitled even if you haven’t claimed it. It includes: Attendance allowance (exceptionally severe disablement allowance and constant attendance allowance), bereavement allowance, support or employment allowance, disability allowance, income support, jobseeker’s allowance, industrial injury disablement benefit, working tax credit, universal credit, maternity allowance and universal credit.

You’ll also be asked about your approach to money, areas you want to work on and the ideal balance between lifestyle spending and saving.

  • Decline:
    Following will not be counted: Direct payments, the mobility components of personal independence payments and disability living allowance, your partner’s income or capital.
    If you pass the financial assessment, you can proceed with getting the loan. However, if the lender or the financial planner determines that you do not have sufficient cash flow, your loan application can be refused or declined or Life Expectancy Set-Aside will keep your most or the entire available loan proceeds to pay homeowners insurance and property taxes for as long as those funds last.

What borrower need to provide?

Income source
Details about any income source should be provided. Income sources include but are not limited to:

  • Salary
  • Income from investments
  • Security amount
  • Pension

The borrower may submit legal & authentic documents such as:

  • Bank Statements
  • Tax returns
  • Property ownership documents
  • Insurance

Financial assessment can focus on various areas of your money life, depending on the fact that who is giving it. Organizations that sell financial products like brokerage accounts, insurance procedures or investment recommendations may adjust their questions according the type of products they are selling. An insurance company may not be the right place for you, if you’re looking for a budget. The advisor or financial planner would be charging commissions or fees for the recommendations they give.  Whatever financial assessment is chosen by you, keep in mind what are your ultimate objectives and how the organization offering the assessment fits with those objectives.