Archive for May, 2010

Why save when you have debts?

Thursday, May 27th, 2010

These days many people are dealing with the burden of unsecured debt, with many having to make repayments on loans, credit cards, store cards, catalogues, and other types of unsecured finance. The past couple of years have been financially turbulent for most people, and many have ended up increasing their debt levels and having far more to cope with in terms of their financial commitments.

Whilst the base interest rate is at the rock bottom level of just 0.5 percent at present this is not always reflected in borrowing rates, and for many the interest rates being charged on loans, credit cards, and stores cards is extortionate given that the base rate it at such a low level. At the same time the interest paid on savings is minimal, which means that those putting their money into savings accounts are getting little to no return.

With this in mind it is worth considering whether there is any point in putting money into any form of savings account if you already have debt to pay off. The returns earned on savings will be far outweighed by the interest charged on debts in most cases, and this means that those that have debts would be better off putting any spare money towards repayments of their debts rather than putting it into a savings account where they will receive very little in the way of returns.

Recent reports have shown that many savvy consumers have realised that they could be losing out financially by putting spare money into savings rather than  using it to repay debts, and this has seen the number of people that are paying down their debts rather than saving money surge. For many getting rid of high interest debt has become a priority in the current climate, with many wanting to rid themselves of the burden of debt as quickly as possible.

Credit cards in particular have high rates of interest, with the gap between the base interest rate and the interest rate charged on cards becoming increasingly greater. Consumers who have a balance on a high interest credit card would therefore benefit from transferring the balance onto a 0% balance transfer card or using their savings to repay the debt. This way it is possible to avoid the huge interest costs that some providers charged on credit cards.

Tags: finance, saving, Interest, debt, Personal finance

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Reduction in the number of home loans in Scotland

Thursday, May 27th, 2010

Official figures have shown that the number of home loans granted to people in Scotland experienced a drop in the first three months of this year. The figures, which were released by the Council of Mortgage Lenders, showed that in the first quarter of the year the number of loans that were granted to homebuyers in Scotland fell by one third.

Between January and March of this year the number of home loans that were granted to homebuyers in Scotland came to 9700. Whilst this figure did reflect a drop compared to the final three months of last year the number of loans granted was actually 28 percent higher than in the first quarter of last year.

According to the CML the end of the stamp duty holiday at the end of last year played a big part in the reduced figure due to the increase in activity prior to the end of the stamp duty holiday causing a lull at the start of this year. Many of those that would have otherwise waited until the start of the year to buy a home ended up rushing it through at the end of last year in order to save the money that they would otherwise have to pay on stamp duty.

The total value of the mortgages that were granted to buyers in Scotland in the first quarter of the year came to more than £1 billion. The previous quarter, when the number of home loans issued was higher, the value of the loans came to £1.6 billion.

A spokesperson for the Council of Mortgage Lenders said: “The pace of recovery in Scotland at first sight appears slower than in the rest of the UK, but in fact throughout the current housing cycle, market activity in Scotland has followed that of the whole of the UK very closely, but with a lag of around one quarter.”

Tags: finance, Scotland, mortgage, Mortgage loan, council of mortgage lenders

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Borrowers should prepare themselves before applying for loans

Wednesday, May 26th, 2010

Borrowers in the UK are being urged to prepare themselves before they make an application for a personal loan, with the current financial climate making it increasingly important for consumers to carry out checks before they make an application for a loan.

According to the report anyone that is considering applying for a personal loan should make sure that before they submit an application of even start comparing loans they order a copy of their credit report and do a proper check on their credit. This can help to boost the chances of getting an affordable loan by ensuring that the data on the report is correct, and can reduce the risk of consumers damaging their credit rating by applying for loans when their credit is not up to scratch.

Officials have said that lenders are far more stringent these days when it comes to credit checks, and even small blemishes can affect consumers’ changes of getting affordable personal loans and other forms of finance. This is why consumers should check their reports to see if there are any problems and check whether they can be rectified before they spend time looking at different loans and completing applications.

Consumers are able to order their credit reports online, which means minimal hassle. Checking their credit reports can help many people to enjoy increased peace of mind when making a loan application.

Credit reference agency Equifax said: “The credit crunch and lenders’ subsequent aversion to bad debt mean that our financial histories are being placed increasingly under the microscope. Credit ratings can be affected by anything from the basics – such as your history of repaying debt – to the finer details such as whether you own a fixed-line telephone.”

Tags: credit history, finance, Unsecured loan, Personal finance, credit score

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Borrowers could be at greater risk due to PPI ban

Saturday, May 22nd, 2010

Last week the Competition Commission announced that it was banning the sale of Payment Protection Insurance or PPI at point of sale in order to try and increase competition and reduce the cost of this type of cover, which has been causing controversy for some years. This was a provisional decision from the Competition Commission, and was welcomed by many.

However, one industry official has expressed concern that this ban on PPI at point of sale could actually adversely affect some customers, as it could mean that they are left unprotected and uncovered should anything go wrong. Finance journalist Lorna Bourke said that Britons could be left at greater risk as a result of this ban because they would have no cover in place.

The Competition Commission has already tried to ban PPI in the past, but some of the major banks appealed against this and their appeal was upheld. The ban on point of sale PPI could affect customers who do not bother or think about taking protection out elsewhere but will also affect the lenders themselves who could lose out because of the ban.

PPI is designed to cover repayments for the policyholder for a set period of time in the event that they cannot make repayments due to sickness, injury, or redundancy. However, these policies hit the headlines after investigations showed that the policies had often been mis-sold to those that did not want them, did not need them, and in some cases were not even eligible to claim on them.

Ms Bourke stated: “There is a real danger that banning all PPI policies sold alongside a mortgage or personal loan could result in borrowers having no protection at all. This could mean homebuyers losing their homes if they are unable to meet repayments.”

Tags: mortgage, payment protection insurance, PPI, competition commission, finance

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Will your lenders help if you are in financial trouble?

Saturday, May 22nd, 2010

There are many people that are in debt these days, and a huge number of them are struggling to keep on top of repayments to the point where they are having to cut back not only on luxuries but on day to day items such as food and household necessities.

The recession and the global credit crisis has resulted in an increase in the number of people that are facing difficulties with repaying their debts, and many borrowers do not know where to turn to get the financial assistance that they need.

There are actually a number of options available to those that have unmanageable debt levels, such as contacting a debt charity for advice or simply streamlining spending and outgoings. Another option is to contact the lenders to see whether the terms of the loans can be negotiated, and this is something that lenders have become increasingly used to over the past couple of years.

If you have debt that you are struggling to repay it is important to take action before you get to the point where you literally do not have the money to make the repayment and subsequently start falling into arrears. If you are already struggling and feel that things could get worse it is advisable to take action as quickly as possible.

In the current financial climate most lenders will be sympathetic with those that have always managed to maintain repayments in the past but have now started to struggle due to their financial circumstances. This is why it is well worth contacting the lenders and explaining your situation to see whether there is anything that they can do to help.

If you have a good credit rating lenders may be able to offer a consolidation loan, where all of your different debts will be rolled into one and you would pay over a set period of time based on the amount that you could comfortably afford to repay each month.

If this is not an option lenders may be able to review the terms of your loan and make changes, such as increasing the length of the loan period so that you repay over a longer period of time but you are paying less money each month. You can contact your lender in writing or by phone to discuss your financial problems, but it is always worth making an appointment to go in and explain your financial situation as this will get things moving far more quickly.

Tags: lenders, finance, loan, debt

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Lenders offer mortgages to those with slightly damaged credit

Thursday, May 20th, 2010

Since the onset of the global credit crunch the term ’sub-prime’ has become something of a swearword in the financial industry, with lenders who were once doling out loans to those with bad track records shying away from anyone with even slightly tarnished credit.

The sub-prime mortgage sector has practically died a death over the past two years, and this has left even those with slightly damaged credit struggling to get mortgage finance. However, according to a recent report this could be changing with a couple of lenders now considering ‘almost prime’ and ‘complex prime’ consumers for mortgage loans.

Several years have passed since the financial meltdown began, which was parked across the pond and was partly blamed on subprime lending to those that could not make repayments. However, reports claim that General Electric Co.’s GE Money unit and Investec Plc’s Kensington division are now considering lending to those with slightly damaged credit who cannot get loans through mainstream lenders.

Compared to 2007 mortgage lending had fallen by 60 percent last year, and many lenders had stopped considering those with damaged credit for mortgage loans or any other type of finances. This has led to those with credit problems experiencing difficulties when it comes to getting a mortgage. However, the lenders that are easing up on the rules have said that it will not go back to the way it was in 2007, as they will ensure that customers have better credit histories and can meet repayments.

GE Money said: “‘Subprime’ sends messages out that people are lending money to individuals who can’t repay it. Our customers have clear track records though some may have had minor credit blips.”

Mortgage brokers believe that in the current climate there is a big gap in the market for those that have slightly damaged credit histories, as often these people are not a big risk but can still struggle to get mainstream finance.

Tags: Subprime lending, credit, finance, Mortgage loan, mortgage

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Debts could mean many having to work into retirement

Thursday, May 20th, 2010

According to recently released figures high debt levels could result in an increasing number of people having to work into their retirement in order to fund their lifestyle and deal with the financial commitments that they are still burdened with. Officials believe that this will lead to a sharp increase in the number of people that are only partly retired, as many may have to continue working part time.

Researchers have said that 20 percent of people aged fifty five and over said that due to their circumstances and financial positions they would have to continue working until they were seventy years of age, and in some cases even longer. This is the future that could be facing older people that still have mortgage and other debts but no proper pension provision or savings.

Officials have said that the retirement dreams of many people have been dashed as a result of the high levels of debt that they have coupled with their lack of savings and pensions. Their financial situations mean that many people will have to continue working part time when they should be looking forward to retiring and spending time with their loved ones.

Many of those polled said that once they reached their sixties they would move from full time work to part time work, but would not be able to retire completely because their financial situation would not allow for complete retirement. One pension consultant, Linda Whitney, said that savings for retirement had become a big problem. She described this as ‘one of the largest socio-economic problems’ facing the Government.

Whitney stated: ‘People need to wake up to the fact that they will have to save more, work longer or live on a lower pension in retirement.’

Tags: finance, Pension, retirement, debt

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95 percent LTV mortgage from Skipton

Friday, May 14th, 2010

First time buyers have had a difficult time when it comes to raising the money to get onto the property ladder over the past couple of years, and this is because since the onset of the global credit crisis lenders have been demanding much higher deposits than the traditional 5 percent that was once the standard. For many first time buyers the demand of 10 or 15 percent deposit has been too much, leaving them stranded when it comes to realising their dream of homeownership.

However, many first time buyers will be pleased to hear that one High Street building society is launched some new mortgage deals next week, which will include a mortgage of 95 percent Loan to Value, meaning that the buyer will only have to find a deposit of 5 percent if they qualify for the deal.

The mortgage product is being launched by the Skipton Building Society, and will be made available to both existing and new customers who apply directly to the building society. There are subsidiaries that borrowers can apply through but the minimum deposit available through these channels will be 10 percent.

The interest rates that Skipton is going to charge on its 95 percent LTV mortgage will vary based on whether the applicant is an existing customer or a new customer. For existing customers the interest rates for an 85 or 95 percent mortgage will be 4.99 percent to 6.99 percent with a fix of two years. For new customers for the same mortgages the rates are 5.19 percent to 7.19 percent, also fixed for two years.

Skipton said: “When we announced our strong 2009 annual results earlier this year, we said that we hoped to gradually increase both the volume and scope of our lending throughout 2010, and this new range is part of that process.”

Tags: mortgage, Mortgage loan, Skipton, finance

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Those in debt should consider IVA over bankruptcy

Thursday, May 13th, 2010

These days there are many people that are in debt over their heads, and for many of these people repaying the debt is pretty much impossible. In some cases consumers that are unable to meet their financial obligations do not really know the options that are available to them, and some launch straight into the bankruptcy procedure without looking at any alternatives.

However, one industry expert has recently claimed that those with a relatively high level of unsecured debt who cannot make repayments could do far better by considering an IVA, or Individual Voluntary Arrangement, as this could provide a number of benefits over other possible solutions such as bankruptcy or Debt Relief Orders.

The advice came from Pat Boyden, personal insolvency expert at PricewaterhouseCoopers, who said that one of the main reasons why an IVA could prove so beneficial compared to the other options was because this was a plan that provided far more structure for those in debt, enabling them to both improve their own finances over a period of time and return at least some of the money that they owe to creditors.

IVAs are known as a softer alternative to bankruptcy, and should not be entered into lightly or without thought. However, for those that really are struggling with a large amount of unsecured debt with a number of creditors these plans can provide structure and financial relief.

Boyden stated: “A massive 35,682 people entered into personal insolvency in the first three months of 2010, showing that the record number of personal insolvencies reached last year is showing no signs of slowing as the UK economy comes out of recession. The UK consumer continues to struggle with personal debt and will do for some time yet.”

Tags: debt relief, bankruptcy, debt, finance, individual voluntary arrangement, Personal finance

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Personal debt levels set to remain high

Wednesday, May 12th, 2010

Over the past few years many people that did not have any significant debt have found themselves lumbered with debts such as credit cards, store cards, and loans, having struggled to manage on their income during the last couple of years, which have been financially turbulent.

At the same time many people who were already in debt have found themselves even deeper in debt, having struggled to keep on top of their debt repayments and to keep on top of other financial commitments. This has left many households in a very difficult financial situation, and despite the fact that the recession is now officially over things are not set to improve any time soon.

In a recent report a financial industry expert, Chris Tapp from Credit Action, has stated that personal debt levels in the UK are set to remain high for the foreseeable future, as many people are still struggling with their finances and therefore do not have the resources to tackle their debts and make repayments on the money that they owe.

Although the credit crunch has resulted in a tightening of lending criteria amongst banks and other lenders, which means consumers are less likely to get finance and accrue debt, many are struggling to pay existing debts because of factors such as reduced working hours and job losses.

Mr Tapp also added that the increase that has been seen in unemployment levels could make debt problems worse, as consumers turn to sources of alternative funding such as credit cards and overdrafts in order to make ends meet.

Tapp stated: “I think we will still continue to see personal insolvencies very high for some time until employment begins to filter back into the system and more people can get back into jobs.”

Tags: repayment, finance, debt, credit

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Make sure you don’t get a raw deal on your bank loan

Tuesday, May 11th, 2010

In the current financial climate most people are keen to keep their debts down, but for many people the need to borrow money is inevitable due to their circumstances. Those that do need to take out loans and other forms of finance need to ensure that they are not paying over the odds on their borrowing, which could prove difficult because the banks want to try and charge over the odds.

Following the most recent Monetary Policy Committee meeting it was decided that the base interest rate would remain at its all time low level of just 0.5 percent. The base rate has been at this record low since March of last year, and for many people this automatically leads them to believe that because the base interest rate is low the cost of borrowing must be low.

However, this is not the case, and according to reports UK banks have actually been slyly increasing the rate of interest on loans and borrowing, resulting in those that have to take out credit having to pay more. The misconception that a low base rate means low borrowing rates is a dangerous one for borrowers to have, as they may then drop their guard when it comes to checking and comparing the cost of borrowing.

Officials believe that all that has happened as a result of the base rate falling to such a low rate is that the margin between the base rate and the rate that banks are charging has widened to astonishing levels, and whilst consumers are suffering because of this the banks are actually reaping in the money, enabling them to shore up their finances following the chaos caused by the financial meltdown. It is thought that the banks could be making millions of pounds through these sly increases.

With this in mind consumers that are looking to take out a loan or other form of credit from a bank should make sure that they check the details of the loan agreement carefully to ensure that there are no hidden charges and fees that have been slyly added by the lender. It is also important to ensure that you compare the interest rates on similar loans from a number of lenders so that you can find the most competitive loan, as the interest rates charged can vary from one loan product and provider to another.

Tags: finance, loan product, Bank, interest rates

Posted in Featured Articles, Loan News | No Comments »

Consumers more cautious about borrowing money

Monday, May 10th, 2010

A recent report has indicated that consumers in the UK have become increasingly cautious about borrowing money and getting into debt that they cannot afford to repay. However, despite this trend insolvency levels have continued to soar as a result of people finding themselves in unexpected situations.

The report claims that whilst fewer people are putting themselves at risk of taking on loans and debts that they cannot afford there are also many people that took on debt that they believed that they could afford only to find that something unexpected happened that affected their ability to make repayments.

The data was released by the debt charity Money Advice Trust. An official from the charity said that in many cases consumers had taken out loans and credit when they thought that they could afford to make repayments on them but then something like a death, job loss, or divorce had seriously impacted on their ability to repay the debt.

The charity also said that there had been a sharp rise in the number of people that were contacting advisors as a result of changing situations leaving them in a position where they were struggling to make repayments on their debts. The number of personal insolvencies is said to have increased by 0.9 percent in March compared to the previous month.

The Money Advice Trust said that it believed that consumers’ attitudes to taking out debt had changed, as they were more cautious about getting themselves into debt and having to struggle, particularly given the financial turbulence seen over the past couple of years.

The charity said: “We think the general attitude to debt has changed. People are now more cautious about borrowing and spending and think through the consequences of getting themselves in debt.”

Tags: Debt settlement, finance, debt, Money Advice Trust

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Getting advice on finances without Internet access

Friday, May 7th, 2010

These days the nation has become so reliant on access to the Internet that many of us have no idea how to do certain things without being able to use the Internet. Those of us that have access to the Internet do not need to worry about alternatives, but it is easy to forget that not everyone has broadband access, and for those that do not life can be more difficult. (more…)

Tags: financial advisor, Citizen's Advice Bureau, Helplines, Financial advice, consumer campaign, internet access, broadband access

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