Steps to take if you are struggling with your mortgage repayments
June 26, 2010
Whilst the recession may officially be over and the base interest rate may be at its lowest level in the history of the Bank of England, which spans over three centuries, many homeowners are still struggling to keep up with their mortgage repayments, which means that they are at increased risk of losing their homes.
Many people have seen their hours and income reduced, or in some cases have lost their jobs, over the course of the recession, and there are still job losses to come according to industry experts even though the recession has officially wanted. Many people are worried about keeping up with mortgage repayments, and it is important to ensure that if you are struggling with mortgage repayments you do not ignore the problem and hope that it will sort itself out, as the chances are that the problem will simply spiral out of control.
In some cases problems with making mortgage repayments can be sorted out with something as simple as going through your finances and making cutbacks. If you find that you are struggling to make ends meet financially always ensure that your mortgage is the first thing that you pay, and you can worry about the rest afterwards. The last thing you want is to lose your home, so always prioritise on your mortgage and other loans that are secured on your home.
It is a good idea to go through your finances carefully to see where you can make cutbacks, as you may be surprised at how much you can shave off your outgoings simply by shaving a fiver or tenner off here and there, and all of the money that you save can then go towards easing your mortgage repayment problems.
However, there are also people that find that they really cannot keep up with repayments on their mortgage even if they make cutbacks and this is when you need to ensure that you get advice as quickly as possible. It is advisable to contact your mortgage lender as soon as possible when you realise that you can no longer meet repayments, as the earlier you do this the more likely it is that they will be able to help you.
There are a number of options that your lender may be able to look at to help you to avoid repossession action, so immediate action is vital before you fall into arrears. If you are not confident about approaching your lender or feel that your lender is not treating your case fairly it is worth contacting the Citizen’s Advice Bureau or a debt charity for advice.
Openwork encourages borrowers to switch to repayment mortgages
June 26, 2010
Mortgage introducer Openwork has launched a new campaign aimed at trying to get homeowners that are currently on interest only mortgages to switch to capital and interest mortgages, also known as repayment mortgages. This comes after a number of lenders decided to crackdown on interest only mortgage loans, which are far higher risk than repayment mortgages.
With interest only mortgages the repayments made by the borrower cover only the interest on the loan over the mortgage term, which means that at the end of the term the borrower has to find the money to pay off the actual loan balance. For this reason the borrower is meant to make provisions, such as a sideline investment, to ensure that the actual loan amount can be raised by the end of the mortgage term.
Officials from Openwork are concerned that many borrowers with interest only deals do not have any adequate investment in place to ensure that this could be done, and is working with its key lenders, which include many big name lenders, to find a way to make it easy and affordable for borrowers to switch to a repayment mortgage.
Lenders that are involved in the scheme with Openwork include Nationwide, Halifax, C&G, Scottish Widows, Lloyds TSB Scotland and Woolwich.
An official from Openwork said: “At least 20 per cent of UK borrowers have an interest-only mortgage and FSA figures show the vast majority of them do not have a suitable repayment vehicle in place to pay the total outstanding debt. That is a huge concern to borrowers and lenders alike. We believe this campaign is a win-win for all concerned. It helps de-risk banks’ loan portfolios while confirming clients are on track - or helping them to get on track - to repay their loan in full.”
Finding a suitable personal loan
June 21, 2010
Whilst the financial markets in the UK have been very strained over the past couple of years due to the financial crisis and the recession there are various reports that claim the sector is easing up a little now, which means that the availability of loans for consumers may increase over the coming months. People may be looking for personal loans for a wide range of reasons, from consolidating other debts that they may have accrued to making a large purchase or simply paying for a well deserved holiday.
Whatever your reasons for looking for a personal loan it is important to remember that the costs can vary, and this will be based on your own personal and financial situation as well as on the lender that you go through. The interest rates charges on personal loans can vary widely, and whilst the best rates are generally only available to those with very good credit it is still important to shop around to ensure that you get the best deal possible on your loan.
In order to enjoy peace of mind when you take out a personal loan it is a good idea to ensure that the lender you go through is regulated by the Financial Services Authority, as this ensure that you have some sort of consumer protection in place rather than risking going through an unregulated lender. It is also very important to compare different personal loans and look at the different aspects of the loans to make sure that you get the one that is right for you.
A personal loan can be a fairly long term financial commitment and it is therefore important to get it right first time. One of the major things that you need to look at when you compare personal loans is the APR that the lender charges on the loans. Remember, when you see the lender advertise a ‘typical APR’ this is the amount that the majority of its customers get and not necessarily the rate that you will get, as this will depend on your circumstances.
Another thing to compare is the repayment periods available on different personal loans, as this could have an impact on the amount that you repay each month. If you want to keep your repayments as low as possible then look for a loan that offers longer repayment periods, as this will allow you to stretch your borrowing over a longer period of time thus benefit from lower monthly repayments.
Interest rates will increase according to King
June 17, 2010
The governor of the Bank of England, Mervyn King, has recently warned that the base interest rate will increase as and when the Monetary Policy Committee deems it necessary. If the base rate increases many could see their loan and mortgage interest rates and repayments increase, which could prove financially devastating for some people.
The base interest rate was dropped to its lowest level in the history of the Bank of England at just 0.5 percent in March of last year as the government took steps to try and revive the flagging economy. It has been at this low level ever since, and the low base rate has been welcomed by a number of industry groups and consumers.
However, Mr King has now made it clear that whilst the base rate is currently at its lowest level ever this is not something that can be sustained and that the base rate will be increased as and when the Monetary Policy Committee believes that this is necessary and justified.
King also hit out at those that have accused the central bank of being complacent for failing to take any action when it comes to the base rate, stating that doubt should not be cast over the central bank’s determination to tackle soaring inflation and that the most likely course of action to tackle this would be interest rates before other factors were considered.
King said: ‘There will come a time when our task will be to manage the exit from such an abnormal degree of monetary stimulus. The Monetary Policy Committee will not hesitate to withdraw the current degree of stimulus when we judge that is necessary.’
Consumers can take opportunity to consolidate debts
June 3, 2010
Over the past couple of years many consumers may have found themselves getting deeper into debt, with high interest loans, credit cards, store cards, and more. However, the restrictions on lending that stemmed from the global financial crisis has made it difficult or impossible for many borrowers to do anything about their high interest debts such as switching to a better deal.
Over recent months, however, the financial sector has been easing up, with lenders relaxing their rules to some degree. This has made it more feasible for those with high interest debts to think about consolidating their debts into one lower interest loan.
By consolidating debts consumers are able to reduce the overall amount of interest that they pay, and can also dramatically reduce their monthly repayments. With lenders easing up on borrowers to some degree this could be the chance that many have been waiting for to consolidate their debts and benefit in a number of ways.
For most people reducing their monthly outgoing at the moment is important, and consolidation is something that can help borrowers to do this by wrapping all of their various debts into one low interest loan. It also means that borrowers do not have the hassle of dealing with a range of different creditors, and only have one loan and one creditor to deal with.
One finance professional stated: “It has been difficult for people that have waned to consolidate their debts for the last couple of years, as lenders have been far more restrictive with their lending. However, with things easing up somewhat now could be the time for those that want to reduce their outgoings and streamline their finances to get all of their debts wrapped into one.”