Archive for June, 2010

Consolidation loan could prove beneficial for many in debt

Tuesday, June 29th, 2010

Being heavily in debt is something that many people are having to cope with, and over the past couple of years, with the recession and the financial crisis taking their toll, many have found themselves getting deeper and deeper into debt. A lot of people that have accrued debt over the years have a range of different debts that they are paying off, such as credit cards, store cards, loans, and overdrafts.

Often these debts can carry very high rates of interest, and this means that consumers can end up paying a fortune for their borrowing over the term of the loans and cards. In addition to this, having a range of different debts to deal with can prove to be difficult and inconvenient because it means having to make repayments to a number of different creditors each month.

Many officials believe that some people that have a range of different debts could benefit from consolidating these debts into one convenient, lower interest loan, and this is something that they can do with a consolidation loan. A number of lenders offer consolidation loans, and depending on the credit rating of the applicant the rate of interest charges can be very reasonable compared to the rates charges on most credit and store cards.

Borrowers can benefit from consolidation in a number of ways. Consolidating a range of higher interest debts into one lower interest loan can really cut the amount of interest that the borrower pays overall, and it can also reduce monthly outgoings as the repayment on the consolidation loan may be lower than the combined repayments on the individual debts. In addition to this borrowers will not have to worry about making different repayments to different creditors, and will only have to deal with one lender.

Tags: finance, debt, debt consolidation, loan

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Consumers cautioned about debt as credit card availability increases

Saturday, June 26th, 2010

Consumers in the UK have been warned by a debt management and advice group about getting into debt as a result of the number of credit cards in the UK increasing. Figures have shown that there has been a sharp increase in the number of 0 percent purchase credit cards available, and there are concerns that this could lead to more people getting into debt.

Officials believe that the more relaxed lending criteria by lenders could also contribute to more people getting credit cards and then finding themselves in unmanageable levels of debt. This time last year there were only two credit cards that were offering 0 percent interest of more than ten months on purchases, but this has now increased to eleven such cards.

Whilst eleven may not sound like a huge number it does reflect an increase of around four hundred and fifty percent compared to last year, and with rules relating to lending becoming more relaxed there are concerns that more people could find themselves getting into credit card debt.

Officials believe that competition has returned to the credit card market, and once again lenders are vying for business from consumers, although not to the same level as they were several years ago before the financial meltdown. This could lead to more people applying for these cards, and eventually could lead to greater levels of debt of people are then unable to meet repayments.

However, whilst the debt company was concerned about debt levels officials from the firm also said that these 0 percent interest purchase credit cards could be useful if used properly.

The debt company stated: “If used properly, the 0% purchase deals for extended months is still a viable option for many consumers. However, it is important to stay within your limits and pay off the difference by the final month, otherwise you could be in for an unpleasant surprise in the form of increased interest rates.”

Tags: Credit card, credit, debt, finance

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Can first time buyers get an affordable mortgage?

Saturday, June 26th, 2010

Over the past couple of years there is no doubt that things have been very difficult for first time buyers, and for many their dreams of homeownership have been dashed due to high deposit demands, stricter lending criteria, and higher interest rates charged to certain groups such as first time buyers.

However, although there have been extreme difficulties over the past couple of years when it comes to purchasing a home as a first time buyers the market is said to have eased up over the past couple of months, and this could mean that first time buyers won’t have such a tough time getting the mortgage that they need.

So, is it actually easier now for first time buyers to get a mortgage than it was say twelve months ago? Well, in actual fact the mortgage market has eased up to some degree, and there are now more mortgages available that are suited to first time buyers and even aimed at first time buyers, which is great news for those that want to get onto the property ladder.

However, things are nowhere near as easy as they were in the past. Just a few years ago first time buyers could get mortgages for 100 percent of the property and even for 125 percent of the property value, but this has now all changed. These days first time buyers would be lucky to find a mortgage for 95 percent of the property value, which just a few years ago was the norm.

The number of lenders offering 90 percent mortgages for first time buyers has increased, and this is good news for those hoping to get onto the property ladder as it means having to raise less of a deposit, although buyers may still have to stump up a substantial amount to be able to put down the necessary deposit, which can be a problem given that first time buyers have no previous property from which to take equity.

Another thing that could stand between potential first time buyers and home ownership is the fact that property prices are still quite high, and therefore many cannot get the level of mortgage that they need. A way around this is to look at scheme such as shared ownership or Homebuy Direct, which are schemes that make it easier and more affordable for first time buyers to get onto the property ladder.

Tags: first time buyer, mortgage, finance, Property ladder, Mortgage loan

Posted in Featured Articles, Mortgage News | No Comments »

Government takes steps to protect struggling homeowners

Friday, June 25th, 2010

The government has taken steps to try and protect struggling homeowners in the difficult financial climate by bringing in a range of new measures that will prove additional safeguards for those that could otherwise be at risk of losing their homes.

The UK’s financial regulator has decided to make all mortgage advisors personally responsible and accountable through the introduction of new rules and regulations that will apply to companies that deal with consumers that are behind on their mortgage repayments.

The FSA started a review of the mortgage market in the autumn of last year, and has now said that all mortgage sale firms and employees will have to be FSA approved. In addition to providing additional protection for those that are behind with their mortgage repayments the regulator is also looking to increase protection for those that decide to sell and rent back their homes.

Sale and rent back scheme shave become increasingly popular over recent years, with homeowners desperately trying to find a way of being able to stay in their home before they are repossessed due to mortgage arrears. Through these schemes they can sell the home and then rent it back from the company, but there have been many problems including the companies evicting the former homeowners shortly after taking the property from them.

Under new regulations companies that buy homes to rent back to former homeowners will have to give them tenure of at least five years. According to reports these, and other new protective measures, will come into play at the end of June.

An FSA official said: “Sale and rent back is often used by those who want to sell in a hurry to stay in their home, and so it is vital that they are better protected during what is usually a difficult period financially. We also think it is wrong that arrears charges should be taken from customers already in difficult circumstances.”  

Tags: FSA, sale and rent back, mortgage, finance

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Debt worries for private tenants

Friday, June 25th, 2010

Recent reports have suggested that debt worries may be increasing for private tenants in the UK, with reports of large increases in the number of private tenants seeking advice with regards to their debts. The data comes from the Consumer Credit Counselling Service, which claims that the level of enquiries regarding personal debt has increased.

The CCCS said that the number of debt related enquiries from those that are privately renting as well as those in social and council rented properties has been rising as a result of many of these renters being unable to keep on top of their repayments. The charity said that previously many enquiries had been from people that were homeowners and worried about losing their homes, but now this had switched to many of the enquiries being from those that were renting.

The CCCS is now concerned that there could be an increase in homelessness as a result of renters struggling with their finances. Those that fall behind on their rent as a result of their financial situations could quickly find themselves being evicted. The CCCS is urging renters to ensure that they always make payments on their rent before they worry about non-priority debts.

The charity also said that things could get worse for those that are on housing benefits, as the new coalition government has cut benefits including housing benefits, which could increase the difficulties that are facing many renters.

An official from the Consumer Credit Counselling Service said: “While we have always had more people in rented accommodation calling for help with their debts, they have usually been able to maintain their rent payments. This suggests that the personal finance situation for those in rented accommodation is deteriorating to the extent that they many end up homeless.”

Tags: Consumer Credit Counselling Service, debt, finance, credit

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Average fixed mortgage rates fall to seven year low

Monday, June 21st, 2010

The average rate of interest on a two year fixed rate mortgage has fallen to its lowest level in seven years, according to market data. Reports have shown that the average rate of interest charged on a two year fixed rate mortgage has now fallen to just 4.52 percent, which is the lowest it has been since September of 2003 when it fell to just 4.51 percent.

With lenders trying to get consumers off variable rate mortgage deals many have been dropping their fixed rate mortgages since 2009, and this has seen the average rate on these fixed mortgages continue to fall steadily. Officials said that many consumers are on standard variable rate mortgages at record low levels, and lenders want to try and get them onto fixed rate deals by dropping the rates to make the deals seem more tempting.

Industry experts have said that homeowners are now increasingly staying on standard variable rate mortgages with low rates of interest rather than switching to higher rate fixed rate deals, and this is something that lenders are determined to address. The urgency for lenders has been further increased by the fact that the base rate has now been at a record low of just 0.5 percent for well over a year now.

One finance expert said: “Many borrowers are opting to remain on record low SVRs and overpaying their mortgage rather than secure a new deal at a higher rate. Lenders are trying to incentivise borrowers onto new fixed rate deals by making significant cuts to rates. A fifth of lenders have moved to increase their SVR since bank rate was kept on hold after finding their previous level unsustainable. Competition for a limited amount of mortgage business continues to increase amongst lenders, who are once again actively competing to be top of best buy tables. Previously, only deals for borrowers with large deposits were seeing cuts, but as the market improves borrowers with smaller deposits are being offered more competitive deals. The platform has been set for the mortgage market to return to some sort of normality, while still applying the lessons learnt over the last few years.”

Tags: finance, interest rates, Fixed rate mortgage, Mortgage loan, mortgage

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Seeking advice on debt

Monday, June 21st, 2010

Over the past couple of years many households have experienced real financial difficulties stemming from the global financial crisis and the effects of the recession. Whilst the recession may be over and the economy is meant to be picking up there are still many people that are suffering financially, having got themselves into significant levels of debt over a short space of time.

During the recession and the credit crisis many people found themselves struggling to make ends meet financially, and this meant that many were forced to turn to solutions such as using their credit cards and overdrafts to meet day to day costs. This has left a huge number of households now struggling to make repayments on their debts, and with speculation over the base interest rate increasing this could be a very worrying situation for many.

It is vital for those that have debts that they are really struggling to repay to take action sooner rather than later, and the wrong thing to do – which sadly many people find themselves doing – is to bury your head in the sand and hope that the problem goes away. All too often this simply leads to the debt problems getting worse and worse, and getting to a point where the borrower ends up having legal action taken out against them.

In order to avoid this it is important to keep an eye on your finances and make cutbacks wherever possible so that you can ensure that your debt repayments are met. However, if you have gone through your finances with a fine tooth comb and cannot find any other areas where you can cut back it is important that you do not simply sit back and hope for the best. If you are struggling on a regular basis to make your debt payments it is advisable to seek advice as soon as possible.

There are two main courses of action that you can take to try and solve your debt problems. The first is to contact your creditors directly and see whether some arrangement can be made to ease the situation. Most creditors are aware of the problems that borrowers are facing, and may be able to reduce your payments by extending your repayment term. It may be a good idea to go in and see your lender in person, as you can then effectively explain your financial situation and get the problem resolved as quickly as possible.

Another option that is available is to seek advice from a debt advice agency, and there are a number of these available these days. These agencies will be able to look at your financial situation and outgoings and will be able to recommend an appropriate course of action, such as a debt management plan, and IVA, or simply suggesting ways of budgeting more effectively to ease the financial strain.

Tags: finance, debt, credit, Debt settlement

Posted in Debt News, Featured Articles | 1 Comment »

Bogus companies offering personal loans

Friday, June 18th, 2010

According to recent reports there has been an increase in the number of companies that are offering fake personal loans in the UK, and those being targeted by the bogus companies are people that would most likely be unable to get a traditional loan and are therefore more vulnerable or high risk. Officials are warning consumers to be on the lookout for suspicious loan companies and offers.

In the current economic and financial climate many consumers are more likely to fall victim to these bogus companies, as many will be after a financial lifeline, which they believe that these companies may be offering. Officials have warned consumers to look out for companies that target people through cold calling or via the internet or text messaging, as these are more likely to be the bogus ones.

The warning was issued by officials from the Citizen’s Advice Bureau, and there are concerns that people that are unable to get finance from mainstream lenders may easily fall for these scams in the hope of being able to get finance. However, many of these companies are charging upfront fees to customers to get them a loan, and then the loan never actually comes to fruition.

One official from the CAB said that many of these companies were targeting more vulnerable people, as they knew that they would be more likely to fall for the scam. She said that people needed to be careful of companies that carried out cold calling, emails, and SMS messaging, and direct mail campaigns in order to get people to take out a loan.

Consumers that are looking for a loan should always check the credentials and reputation of a company before making any commitment, and should always exercise caution if asked to pay an upfront fee.

Tags: fee, Citizen's Advice Bureau, credit, loan, finance, bogus

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Why use a loan comparison site?

Thursday, June 3rd, 2010

Finding a loan can be very difficult for borrowers these days, and with the restricted number of loans available coupled with the increased stringency of lenders some people really do struggle to find a loan that is well suited to their needs. Some may struggle to find a loan at all, often because they do not have perfect credit and are looking at companies who mainly deal with those that have not had credit problems in the past.

Over the past couple of years it has become even more difficult to find the right loan, as increased restrictions put into place by lenders have made it more difficult for those that want a loan that is both suitable and affordable. Whilst those that are looking for a loan can go through the websites of each of the individual lenders this can be a very time consuming and frustrating task. It also does not necessarily mean that you will find the finance or loan that you are looking for.

Over the past few years specialist websites have been set up known as comparison sites, and these allow users to compare everything from loans and insurance to credit cards, mortgages, and much more. You will find a range of comparison sites to suit your needs depending on the product or service that you are looking for, and these sites can make it far easier and quicker to find the right product or service at the right price.

With a loans comparison site you can really speed up the process by using the filtering facilities that most of them offer, where you can put in details such as whether you want a secured or unsecured loan or whether you have a good or bad credit rating. The results that you get back on the site will be based on the information that you entered, which means that you won’t have to waste a whole lot of time looking through loans that are not going to be suited to your needs and circumstances.

Once you have retrieved the list of loans and lenders from the comparison site you will be able to see at a glance which of them will be suited to your needs, and which are the ones that offer the most affordable repayments. You can then choose a loan that you know is going to be right for you and that you can comfortably meet the repayments on.

Tags: loans comparison site, finance, Personal finance, comparison site

Posted in Featured Articles, Loan News | No Comments »

Consumers urged to check credit before making loan application

Thursday, June 3rd, 2010

In the ongoing difficult financial climate many people have struggled to get finance, and no matter sort of finance consumers are applying for – be it loans, mortgages, or credit cards – there is a far higher chance of getting rejected for the finance these days than several years ago before the onset of the global financial crisis.

Lenders these days are being far more stringent with regards to who they will lend to, and the credit score of an applicant has become more important that every, as lenders are using credit reports to go through applicants’ past financial history with a fine tooth comb before making a decision on whether to give them the finance that the need.

With credit reports now playing such a big part with regards to the decision that lender making when deciding on loan and mortgage applications those that are considering applying for a loan are being advised to check their own credit before they make any application, as otherwise they could quickly be rejected and this could further damage their credit rating.

These days it is possible for consumers to order a copy of their credit report and score with ease and convenience online, and for just a few pounds. The information from the credit report can prove invaluable in helping consumers to determine whether to make an application for finance or wait until their credit has improved.

One former bank official said: “It has become really important to check your credit report before applying for finance these days, and by doing this borrowers can save themselves the hassle of making an application that is going to end up in the rejection pile. More importantly, however, they can avoid another black footprint on their credit file.”

Tags: credit score, credit history, credit, finance

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Credit Action figures show personal debt is on the rise

Thursday, June 3rd, 2010

Over recent years the level of personal debt that has been accrued by consumers in the UK has caused a great deal of concern, and for many individuals the debt problems have become increasingly worse as a result of the financial turbulence of the past couple of years. New figures that have been released have shown that personal debt levels in the UK have continued to increase.

The report has been released by the debt charity Credit Action, and the figures on the report have shown that personal debt levels have continued to increase. The twelve month growth to the end of April this year was 0.8 percent, and the total amount of personal debt came in at £1460 billion. In April of this year total lending is said to have increased by £0.4 billion.

In a breakdown of lending figures the Credit Action report showed that secured lending for the month had increased by £0.5 billion whereas consumer credit lending had fallen by £0.1 billion. The average level of debt per household in the UK is close to £9000, and this does not include their mortgage or secured debts. With mortgage debt included the level of debt per household comes in at close to £58,000.

Over the past couple of years many consumers have been in a catch 22 situation where they have been unable to get affordable finance due to restrictions put in place by lenders but at the same time have needed access to finance in order to fund their day to day lives in some cases due to problems caused by the financial crisis and job losses.

For many this resulted in them turning to their overdrafts, credit cards, and even doorstep lenders in order to get the money that they needed for essential purchases and bill payments.

Tags: finance, Personal finance, Consumer debt, debt

Posted in Debt News | No Comments »

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