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Fri 29th Aug, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Savings, Homeowners, Financial products, Spending, Property, Unsecured loans, Financial news, Housing news, Borrowing, Car finance, Secured loans, Home Improvements at 12:47 pm by admin
Reports of a new study done by the Halifax building society puts paid to the idea that Britain is a nation of spend-now, think-tomorrow shoppers, forever borrowing to fund their lifestyle.
The annual Halifax Home Improvement Survey is part of a series of studies undertaken by the Halifax over the last 17 years. This year’s results show that only 5% of people looking to improve their home are taking out a loan to do it.
This may come as a surprise to lenders and brokers, as Home Improvements is the top reason given for taking out a loan. So are many applicants lying?
People are not obliged to use their borrowings for the purpose stated when taking out a personal loan (unless it is for specific finance, like a house or car), so it’s possible that applicants feel that they will be more likely to get the cash if they sound responsible.
The figures show that more people in the 18-34 age group were likely to take out a loan (12%) than the national average, and regional differences come into play too. Despite being the biggest savers, people in Northern Ireland were more likely to take out a loan than those living in London, who saved the least.
As many as 43% of homeowners questioned believed that their improvements would add at least £5000 to the value of their home, and a further 12% believed that the value added would be from £10,000 to £25,000. Homeowners clearly feel that they are using their savings wisely, a picture contrary to the one painted by much of today’s media.
Tony Wilcox at the Halifax commented: “This research contradicts the buy now pay later culture which is so often thought to be prevalent in the UK. The fact that the vast majority of people have saved in advance of spending is extremely encouraging. Using savings for such improvements means savers are really seeing the benefits of putting money aside.”
However, whether these figures paint an acurate picture of Britain today or just an acurate picture of those using the Halifax is another thing. There is no doubt amongst the lenders and loan brokers of Britain that the home improvement loan is as popular as ever.
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Tue 26th Aug, 2008
Posted in Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, Consumer debt, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Store cards, Secured loans, Debt management, Budgeting, Missed payments, Overdrafts at 12:16 pm by admin
People are making a number of fundamental errors in handling their finance according to Moneyfacts, the comparison website.
It advises people to tackle their bad finance habits in order to stay afloat during these tricky financial times.
One of the worst habits is that of living beyond your means. This fatal flaw is going to see huge numbers of UK adults sinking under unmanageable debt in coming months. People who regularly spend more than their income each month are obviously mounting up debts that they can never tackle. Many of these people will end up using credit cards to pay for basic living costs and then taking out personal loans to clear the credit cards. This is a ticking timebomb, according to MyVesta, the debt solutions provider, and they should know.
Another poor habit is allowing yourself too many credit sources. If you hold a handful of cards each with a limit of thousands there’s always the temptation to splurge. Add to this a number of catalogue accounts or store cards and suddenly all kinds of avenues are open for spending on days when your income is all gone. Moneyfacts strongly recommends paying off the cards or accounts with the highest amount of interest and limiting yourself to only a few once the balances are cleared.
Not being aware of your current financial situation is a big step in the wrong direction. Whilst few people know their exact bank balance, it is always wise to have a handle on your rough debt balance. If you haven’t tallied up all the money you owe in overdrafts, hire purchase, credit cards and loans then you’re burying your head in the sand. By being aware of what you owe you remain in control and can decide which bills need clearing most urgently.
Above all, be aware of missing payments. Many creditors see this as a green light to either slap you with a charge or raise the interest rate on your borrowings. Or both! Whilst borrowing may still be fashionable, there’s no point in spending money unnecessarily. Especially during the credit crunch!
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Fri 1st Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, Consumer debt, IVAs, Financial products, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Budgeting, Missed payments at 10:35 am by admin
TDX Group, the organisation behind the Group Debt Index, claim that there has been a significant rise in the number of debt management plans taken out in recent months.
The Group claim that debt management, such as Individual Voluntary Agreements (IVAs) will rise by a further £5 million by Christmas, growing steadily by year end.
Mark Onyett, chief executive of the TDX Group said: “We’re already seeing far higher numbers of consumers struggling with personal debts and the pressure is set to intensify over the coming months.”
The research showed that an increasing number of people with financial problems are finding it difficult to make repayments on loan and credit card debts.
This accords with research showing the house repossessions are steadily climbing and a rise in people approaching debt charities for advice.
Since the start of the credit crunch many people have tightened their belts, but it simply isn’t enough.
Whilst most families are wise enough not to extend their credit with further personal loans, the increases in the cost of living has pushed many families deeply into debt.
Unfortunately, this Christmas could see many families hard pushed to pay their bills, let alone have the festive season of their dreams.
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Mon 30th Jun, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Consumer debt, Spending, Unsecured loans, Financial news, Borrowing, Personal debt, Debt management, Overdrafts at 12:58 pm by admin
One of the benefits of being old has to be experience: the credit crunch that most people are experiencing with the UK’s economy has all been witnessed before. What is going on today with financial institutions last happened in the early 1990s, but even before that the older generation have witnessed times when wanting something meant saving up, not taking out yet another cheap loan.
Whilst we hope a full blown recession won’t be seen, the boom times seem to be definitely at an end for now and that means a change in financial habits. We are finally getting a wake up call that we cannot continue to borrow indefinitely and have to live without some of the things that we feel entitled to.
This adjustment should not be too difficult to take on board for older generations, but it might be a bit more of a tough adjustment for younger people. The young will have little recollection of the late eighties when the economy last went into recession and no memory of the days when loans were something only for businesses or buying a house.
The nation as a whole has grown used to the concept of regular holidays, new cars as a luxury, not a necessity, and splashing out on meals and clothes whenever the need takes. However, for many of those older than the ‘baby boomers’ (those born post-war), the memories are still fresh of the days of ’scrimp and save’.
Every generation has seen greater prosperity in this country and the days of ‘make do and mend’, ‘grow your own’ or clothes made from a penny pattern seem like myth to the youngest adults today.
The concept of going overdrawn was once upon a time considered shocking, and for many of the older generation today that viewpoint still holds. For these people, getting back into old ways of careful budgeting and knowing where every penny has gone will come easily.
For the younger generation, used to falling back on easy credit, or borrowing money to indulge a whim, budgeting is going to come as a sharp shock. The fact is that right now lenders are either unwilling or unable to lend money as lavishly as they used to, so if you don’t look after the money you have, you can’t bank on an easy loan to bail you out.
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Thu 5th Jun, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, House buying, First time buyers, Spending, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Rental property, Debt management at 12:02 pm by admin
More and more existing home owners are find it harder to sell their homes as fears of recession keep people from moving. But in an ironic twist, first time buyers are unable to take advantage of the new low house prices because of a lack of affordable home loans on the market.
The growing concern over the state of the economy is making many people more unwilling to overstretch themselves by buying a new home now. New figures published by the Halifax have shown that house prices fell by their sharpest rate in more than fifteen years in May.
Many buyers were hoping for a fall in borrowing costs when the Bank of England dropped the base rate to 5%. However, lenders have been unable to pass on the cut as the Libor rate remains high and liquidity low. Loans of all types have been affected.
The Bank of England is due to announce its latest interest rate today and is widely tipped to leave the rate at 5%. Consumers may feel this is a blow, but with the Government worried about inflation, the Bank is unlikely to cut the rate again yet.
Halifax’s chief economist, Martin Ellis, said: “The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability,”
Halifax warn that house prices could continue to drop next year. This is potentially good news for those waiting to afford their first home, but may still not be enough to counteract the credit crunch.
Britons have seen their wages rise 4% in the past year, a stark contrast to the 9% rise in fuel prices seen and the 7% increase in food costs.
Sadly for many, property rental prices have also been increasing as more buy-to-let investors pull out of the market, leaving a diminishing pool of properties available for rent.
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Fri 2nd May, 2008
Posted in Consumer Credit, UK Finance, mortgages, Homeowners, House buying, Spending, Property, Financial news, Housing news, Borrowing, Equity release, Secured loans, Rental property at 4:49 pm by admin
Whilst it is still cheaper to buy a property and pay a mortgage over 25 years than it is to rent a property, the saving made by homeowners has gone down by 75% in the past year according to new research.
Figures show that over a traditional 25-year period of a mortgage, buying a property costs an average of £437,925. This figure is only slightly ahead of the average for renting a property for 25 years which cost an average of £443,736.
While in past years buyers could have expected to save somewhere in the region of £24,000 over 25 years, the impact of rising interest rates and rising house prices means now that the difference between buying and renting has fallen to just £5,811.
In some areas of the UK it is actually now cheaper to rent a property than it is to buy one.
Northern Ireland is a particularly bad area for buying when compared to renting. Property prices have gone up by 40% in the past year meaning that the average house buyer will now pay £572,814 for their property over 25 years while renters will only pay £392,097 for renting the property over the same period. This means by renting a property you will save a massive £180,717 over 25 years.
While the figures do include maintenance costs they do not include set-up costs for home loans. The figures also suggest that it would be cheaper to rent a property in Wales, the north-west of England, Greater London and Yorkshire.
Obviously these figures look at the matter solely from the view of payouts, and not from the security gained from home ownership. Additionally, equity grows as home loan repayments are made and as house prices rise, allowing homeowners to borrow secured loans against their property for both property improvement and equity release purposes.
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Wed 16th Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Balance transfer, Financial news, Borrowing, Personal debt, Secured loans, Debt management at 1:36 pm by admin
It has been revealed that credit card companies have introduced an astonishing 31 different fee rises recently, a move that could end up costing consumers millions of pounds collectively.
The changes were revealed by Moneyfacts which showed that there had been large rises in fees charged for withdrawing money from cash machines as well as rises in cash interest rates. It has also been revealed that Banks and Building Societies have also increased the commission charged for foreign use as well as increasing balance transfer fees.
Alliance & Leicester implemented the largest cash fee rise, upping its rate from 2.25% to 3%. This means that withdrawing £250 with your credit card will now cost £7.50. Other banks have also upped their charges with the AA, Bank of Scotland, Halifax and Intelligent Finance all putting up their rates from 2.5% to 3%. Nationwide, Smile, and Yorkshire Building Society also increased fees from 2% to 2.5%.
Smile has increased its cash rate by the greatest amount, pushing up the interest rate for cash withdrawals on its Gold Visa from 14.9% to 23.9%. The problem with withdrawing cash using your credit card is that it is very expensive, first of all you incur a fee and then there is no interest free period. So it is best to avoid taking money out using your credit card at all costs. Comparisons with overdrafts and personal loans, show that borrowing money in this way has always been extremely expensive.
Balance transfer fees have also gone up with Alliance and Leicester increasing its balance transfer fee from 2.25% to 3%.
These new fee and rate rises plus the credit crunch are behind a massive customer move away from credit cards towards debt consolidation loans. Many borrowers are finding it necessary to tighten their financial belts, and this includes clearing old card balances and cutting up cards.
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Tue 8th Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, Consumer debt, Card fraud, Spending, Identity theft, Credit record, Unsecured loans, Financial news, Borrowing, Fraud at 1:22 pm by admin
It has been revealed that Facebook users are putting themselves at serious risk of becoming an unwitting victim of ID theft. Even posting just a few private details on your Facebook page can give fraudsters enough information to cause serious damage.
Using the information that they have come across on people’s Facebook pages, fraudsters are able to open bank accounts and take out credit cards and personal loans in their victim’s name.
The warning was sounded by a BBC1 consumer show Watchdog. The show conducted an experiment in which they set up a fictional identity on Facebook. The Watchdog team then invited 100 random people to become friends with their newly created fictional character ‘Amba’.
35 of those invited to become Amba’s friend immediately accepted the request despite knowing nothing about her. By accepting, the victims allowed the fictional Watchdog character to view any private details that they had posted on their page.
Details which could easily be accessed included date of birth as well as hometown. The Watchdog team then used these details in order to obtain more private details about their victims from other publicly available websites.
With this information Watchdog then opened up an online bank account in their victims’ names as well as successfully applying for credit cards.
One of the victims, Scott Gould, stated that he was “very surprised” by what Watchdog managed to do despite having only the slightest bits of information about him.
Users of Facebook as well as all other social networking sights are advised to be very careful when posting their details. Fraudsters often leave a trail of bad debts behind them, in Your name. Not only is the onus on you to prove that you are not responsible, it is hard work correcting your damaged credit rating.
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Wed 2nd Apr, 2008
Posted in Bad Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Credit record, Balance transfer, Unsecured loans, Borrowing, Personal debt, Debt management, Zero percent cards, Missed payments at 12:54 pm by admin
If you are considering switching from your current credit card provider to a new one because you are having trouble paying back your balance then it would be helpful if you were aware of a few pointers first.
Many credit card companies offer very low interest rates on balance transfers; sometime this can be as low as zero percent. But there is a time limit on this balance transfer. So for example if you need six months to pay off your debt and the zero percent interest on balance transfers apply for the first six months then this is an option worth considering. This could possible save you from having to pay back possibly hundreds in interest fees.
Make sure you read the fine print on the deal before signing and take care to make all repayments on time. Missing a payment or paying late can result in the lender replacing your great rate with a much higher APR, leaving your paying more than if you had taken out a debt consolidation loan to clear the original debt.
Another danger is if you do fail to pay back the balance within the given time period the zero percent will revert back to the a much higher rate on the card and sometimes this includes the lender back-charging interest on the first six months of the loan as well. This could result in repayments outweighing the benefit of the zero interest on the first six months.
Lenders do have a responsibility to warn you if the introductory offer of zero percent is about to run out. However as a general rule its better not to trust to this reminder jogging your memory, as it can often be buried in small print. Just make sure you yourself are always aware of the time limit on your offer or one morning you could wake up to a big surprise.
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Tue 1st Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, mortgages, Consumer debt, Homeowners, Spending, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments, Tenant loans at 1:09 pm by admin
It has been revealed that more than one million people across the UK are using their high-interest credit cards to pay for their mortgages or their rent.
The figure which is roughly six percent of all households shows just how desperate some people are getting to keep a roof over their heads.
The figures which have been release by the charity Shelter show that more and more young people are struggling to remain on the property ladder and have been forced to take desperate measures, including the risk of long-term financial ruin.
The problem with using a credit card to pay for your mortgage is the amount of interest that credit cards charge their customers. Many credit card companies charge rates of between 15% and 18%. Rates like these are as much as three times greater than the rates applicable on the average mortgage. Paying your home loan with your credit card is a very risky and expensive way to avoid repossession or eviction.
The figures show in some areas of the country as many as one in ten people are using their credit card to pay for their mortgage. The people most likely to resort to this measure are in the 18 to 24 year age group. More and more people are finding paying for their mortgage or rent increasingly difficult as the credit crunch hits and unaffordable housing begins to take its toll on the consumer.
Experts are blaming lenders for the problem since the have allowed borrowers to borrow excessive amounts of money, not just on mortgages, but on personal loans, car finance and credit cards.
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