Inter Financial Weblog

 

Archive for December, 2007

Overdraft problems rumble on

Tuesday, December 18th, 2007

If you have been charged for going over your overdraft limit then you may be interested to hear that the Office of Fair Trading and banks are in the middle of a test case to decide once and for all if bank charges are fair and legal or not.

Until the test case has gone through the courts, district courts and county court judges have been told that they should halt any cases involving the charges for the time being and wait until the courts make a final judgement on the matter. That will probably be some time next year.

Despite this some courts are still going ahead with claims. So if you are thinking of taking your bank to court over the charges you may still have a chance of having the case heard despite the call for a temporary halt.

There are a number of judges allowing the cases to be heard. For example one judge has allowed a case to go forward after a claimant argued that the bank had procrastinated for months on returning the charges to him. In other cases the judge is allowing cases to go forward unless the bank asks for a stay. If the bank does not call for a stay and fails to turn up for the case the judge is automatically awarding the money to the claimants.

So there is a chance that you could still be able to win a case before the test case has gone fully through the courts. This will come as great news to those whose level of debt has soared due to the charges.  Some people have been forced to take out secured loans in order to clear the mounting charges, with many of those high interest loans offered by the banks themselves.

Repossession Figures Suggest Renovation not Relocation

Thursday, December 6th, 2007

Many people are looking at the increase in repossessions in 2007, and considering renovation over relocation. They are choosing to apply for secured loans to renovate and upgrade their home, instead of moving.  This may have the desired effect of reducing the national inflation rate.

The government has been working to reduce the inflation rate, hiking interest rates five times in the last year, and promising at least one more interest rate hike within the next six months. This has many homeowners scrambling to make payments on mortgages. Many people have seen their monthly payments increase one or two hundred pounds, even though they have paid down their mortgages.

The Council of Mortgage Lenders reports that repossessions increased by 30 per cent in the first half of 2006, highlighting to first time buyers the potential pitfalls of taking on too large a home loan. Unofficial figures show that they also increased dramatically in the first quarter of 2007.

The cost of moving, upgrading a new home, and a mortgage, is making it impossible for many homeowners’ to move, despite the inflated price of their current home. Many are opting for a second mortgage, or a secured loan, and renovating, hoping that the equity in their property will hold long enough that it will become affordable to move up into a nicer home, or a better neighbourhood.

Split your mortgage between fixed and tracker

Thursday, December 6th, 2007

Five interest rate rises in a row have really hit us hard and many of us are now left struggling to find the right mortgage.

There are a number of options available to us however so finding the right mortgage is very important. The fixed rate mortgage could avoid the risk further rate rises in the future but lenders are also aware of this and increasingly fixed rate home loans come with shorter and shorter renegotiations periods as well as increasing renegotiation charges. So whilst getting out a fixed rate mortgage is always an option worth considering it may not necessarily be your best one.

There is no avoiding the fact that as interest rates continue to go up our repayments will increase with them. So what are we supposed to do to protect ourselves from getting out of our depth and falling into financial difficulties?

Some lenders have introduced a new option that while slightly unorthodox could be worth some serious consideration. Lenders are allowing borrowers to split their mortgage into two and have half on a fixed term basis and the other half of the loan on a tracker basis. This takes out some of the risk for the borrower but will mean taking extra time in searching to find a lender who is willing to make the deal with you.

The arrangement fee could be higher than with a non-split mortgage and the time in finding the mortgage could take twice as long, however you are splitting the risks involved and if you don’t like to take chances with your money than this could be the option for you.