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Archive for October, 2007

Fixed rate mortgages getting cheaper

Wednesday, October 10th, 2007

So you’re thinking about getting a mortgage but not exactly sure which one to get. There are so many types out there and with house prices constantly rising and high interest rates making home loan mortgages more expensive, getting on the property ladder seems almost impossible.

Well, one way of making it easier to understand it all is by familiarising yourself with some of the terminology. Let’s have a look at fixed rate mortgages.

A fixed rate mortgage is a loan where the interest rate remains the same, or in other words, fixed through the term of a loan or for an agreed amount of time. The question we really want the answer to is whether this is the right answer for me? Well, that depends; if you really hate risk it may be right for you but then again interest rates could fall and you would end up losing out. So what is the experts saying at the moment? Is now a good time or bad time for fixed rate mortgages?

Well, the financial news reports say that the prices of fixed rate mortgages are starting to fall following months of soaring rates. This is good news for anyone who wants the security of fixed monthly payments, but don’t be too complacent. Experts are warning that interest rates could rise again later this year.

The best advice for anyone thinking of taking out a mortgage is, “do your homework”. Make sure you shop around and find the best rate out there.

Posted in Borrowing, Consumer Credit, Debt management, Financial products, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, interest rates, mortgages, Property, Remortgaging, Secured loans, UK Finance | No Comments »

Borrowing Wisely

Thursday, October 4th, 2007

No matter what you want to buy, it seems that everything is expensive today.  A handbag can cost £5000, a sofa can cost £10,000, but when it comes to borrowing, consumers need to consider the fact that the retail price is not the total price paid for the product.

A  £50,000 wedding does not cost £50,000. Instead, it costs the original capital and the accumulated interest. While £50,000 will not buy a dream wedding any more, it does take a major chunk out of a person’s savings or home equity.

The important consideration when making a big purchase is value.  Many people buy a £5,000 sofa instead of a £10,000 sofa. The first couch is worthless long before the loan is repaid.  The second piece of furniture may not only retain its value, but it may even increase in value depending on the market and the demand.

The next thing to consider is the interest.  Many people borrow on unsecured personal loans instead of secured loans.  Releasing equity from your home can be a good idea if it saves you money.

Many people believe that finance companies cannot force the sale of a home to repay a debt if the borrower defaults. This is no longer true. In fact, a company can ask a judge to force the sale of a home for a relatively small loan.  So, paying the extra interest for an unsecured loan, or a personal loan, is no longer ‘wise borrowing’.

The cost of borrowing has made it impossible to grab the first financial product offered.

Posted in Borrowing, Consumer Credit, Consumer debt, Debt management, Equity release, Financial products, Homeowner Loans, interest rates, Personal debt, Personal loans, Property, Savings, Secured loans, Tenant loans, UK Finance, Unsecured loans | No Comments »

Credit Card Interest – Are you being ripped off?

Thursday, October 4th, 2007

According to a survey by Nationwide Building Society only 29% of credit card customers are aware of the fact that many credit card providers always pay off debts charged at the lowest interest rate before paying off the debts with the higher rate of interest, making themselves an additional £500 million each year from this credit card interest rip-off.  Most credit card companies use this method to reduce the balance owed on your account to suit them, not you – a sneaky way of maximising the interest that you end up paying.

Most people are too optimistic in the sense that many credit card customers trust in their credit card company too much and assume that the company has their best interest at heart, when if fact it only has interest in the amount of money they will be able to make off of their customers’ debt.

Figures from the survey reveal that 18% of people assume that the longest outstanding debt is paid off first, with another 12% believing that the items with the highest interest rate is paid off first.  What seems to be the most disturbing is that a large percentage admits to not having a clue as to how their debt is paid off; roughly 26% admit to not knowing how their debt is paid off.  However, this could all change as the Department of Trade and Industry has ruled that starting in October 2008 all credit card providers must draw attention to the order in which payments are made.  This is part of general trend towards governing bodies keeping an eye on financial services, such as personal loans, insurance, banking and other forms of consumer credit agreements.

Consumers finding themselves paying vast amounts each month from their credit card bills and yet paying little more than the minimum amount would be wisest to consider a debt consolidation loan. Customers usually find that they can continue paying the same each month in loan repayments and yet most of the sum repaid will be capital, not interest, leaving them to clear the debt in record time.

Posted in Borrowing, Consumer Credit, Consumer debt, Credit Card, Debt Consolidation, Debt management, Financial products, interest rates, Personal debt, Spending, UK Finance | No Comments »

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