What route to take to sort out your debt problems
August 30, 2010
There is little doubt that these days many people are experiencing severe debt problems, and given the difficulties faced by consumers over the past few years with the global financial crisis and the recession taking their toll, it is not surprising that so many people now have huge debts that they are struggling to repay.
However, it is important to ensure that you look at all of the different options if you are in this situation before you plunge in headfirst to a solution that may not be best suited to you. There are many companies that prey on consumers in debt by trying to convince them that insolvency measures such as IVAs or bankruptcy is the best option, but this is not always the case.
Before looking at options that will have long term financial implications such as insolvency consumer should consider the other options available to them to assist them in sorting out their debts. Some of these are outlined below:
Going through finances
Some people think that their financial situations are worse than they actually are, and many are surprised to find that they are able to save a fair amount on their outgoings simply by making some simple cutbacks. Whilst it is nice to be able to spend whatever you want it is important to know when to cut back, and if you have debts to pay then this is the time to make these cutbacks. It is therefore advisable to go through your finances and see where you can cut back on your spending.
Speaking to your creditors
Often creditors are more understanding that they are given credit for providing they are informed of the situation in plenty of time. Therefore if you are struggling with repayments on a loan or debt it is important to speak to the creditor right away rather than hoping that the problem will resolve itself. This way there is plenty of time for the creditor to go through your situation and find a solution that will suit both of you.
Speak to a debt management professional
Another option is to speak to a debt management professional or charity, as they will often go through your finances with you to see where you can save money, and can also speak to your creditors to see whether more favourable terms can be negotiated to cut your repayments.
Bank of England may intervene with access to credit
August 30, 2010
It has been reported that the Bank of England may take measures to restrict access to mortgage loans capping them to stop lenders giving out risky loans. The claim comes from a senior official from the Bank of England. Charlie Bean, the Deputy Governor from the Bank of England, said that ‘direct constraints’ may be required to restrict access to risky mortgage loans.
According to the report home buyers looking to take out mortgages could be forced to put down higher deposits of at least 10-15 percent of the property value. Whilst many lenders have been demanding higher deposits from borrowers for some time this sort of intervention from the Bank of England could make it mandatory for lenders to demand higher deposits.
This is said to be the first time that a senior official from the Bank of England has indicated that the central bank may take action to directly intervene and reduce the chances of borrowers taking out risky mortgage loans. The measure could be taken as part of new powers that are set to be given to the central bank under the government’s restructuring of the Financial Services Bill, which is set to take place later on this year.
However, there are concerns that this move could further damage the property market, which is already experiencing difficulties as a result of many would be buyers being unable or unwilling to take on mortgages in the current climate.
A broker from London and Country Mortgages said: “The mortgage market is still very slow and the biggest hurdle at the moment is boosting the availability of home loans not restricting them. Very few first time buyers can afford a big deposit so it is important that they are not excluded.”
Questions you should ask yourself before you apply for a loan
August 27, 2010
Taking out a loan is often a big commitment for many people, and whether you are taking it out over twelve months or five years it can be a daunting thing to be stuck with a financial commitment that you could ruin your financial future if you do not stick to it.
There are many different loans available these days, and these can prove ideal for those that want to make a big purchase, pay for a one off luxury, or fund a special event amongst other things. However, before committing to a loan it is advisable to ask yourself a number of questions to determine whether you should be taking out a loan and if so what sort of loan you should go for.
How much can you afford to pay each month? You need to ensure that you go through your outgoings with a fine tooth comb so that you can see how much disposable income you have left to put towards a loan repayment each month. If you feel that spending anymore each month would be over stretching your budget then think twice before you apply for or commit to a loan, as you could run into problems with the slightest change in financial circumstances.
Is your credit good enough for a loan? Now more than ever lenders are very careful about who they lend to, and most will be keen to see that applicants have been responsible with their finances in the past. They will be able to determine this from the past credit history and current credit score of the applicant, and therefore by looking at your report before you apply you will be able to see what the lender will see when conducting a credit check.
How long do you want to pay over? When you take out a loan there will usually be a choice of repayment periods, ranging from a year to seven or even ten years - sometimes more depending on the type of loan taken. You should ask yourself what sort of period you want to pay over, but bear in mind that the shorter the repayment period the higher the monthly repayment.
How much do you need to borrow? It can be very tempting to borrow more than you actually need, but always remember that whatever you borrow you will have to repay with interest. Therefore try and stick to the amount that you need rather than going overboard and borrowing extra only to fritter it away.
Consumer demand for loans and credit falls
August 26, 2010
It has been claimed in a recent report that consumer demand for loans and credit has fallen in the last twelve months, with officials claiming that the lower demand for credit amongst consumers is a sign of the continued economic uncertainty and low confidence levels amongst consumers.
The report was released by the Finance & Leasing Association, which claims that the take up of finance has fallen because consumers still have little confidence in the economy despite the recession being over and signs of recovery of various markets. Many are still said to be concerned over job security, which is also knocking confidence levels.
The FLA has released data showing that in the twelve months leading to June of this year consumers used around 8 percent less credit than in the previous twelve months. However, whilst the take up of credit was lower in the last twelve months than the previous twelve months many people are still said to be using loans, credit cards, overdrafts, and other forms of finance.
In the second quarter of the year FLA members are said to have lent consumers £12.5 billion, and consumers have used the money for a range of purposes, such as buying vehicles, paying for holidays, and even for every day entertainment and eating out.
Fiona Hoyle from the FLA said: “This month’s figures suggest that consumers are uncertain about the economy. It may be that they are waiting to see the impact of public sector expenditure cuts on disposable income before making any long-term repayment commitments on credit. The statistics show that the credit market is still weakened. Last month, the Government announced a review of consumer credit and personal insolvency to take place in the autumn.”
Getting a mortgage still a struggle for first time buyers
August 18, 2010
Officials from a leading mortgage broker have said that many first time buyers in the UK are still struggling enormously when it comes to getting a mortgage loan. Industry experts from John Charcol have said that most first time buyers are still finding it a real struggle to get a mortgage loan and to afford a mortgage, which means that the dream of homeownership is still out of reach.
One senior official from the company, Ray Boulger, said that the main obstacle that was hindering first time buyers when it came to being able to afford a mortgage was the size of the deposit that lenders were asking them to put down. He said that the deposit levels that were being asked for were out of the reach of many first time buyers, as lenders have really increased the amount of deposit that they are looking for from tenants.
He also said that things for first time buyers were far harder than they were for home movers, as those that were just moving already had property often with equity in it that can be used for a deposit but first time buyers do not have this luxury and have to rely on savings or family to try and pay the deposit required be lenders require.
Boulger said that market conditions are still extremely difficult for first time buyers, and this backed up another recent report from the Chartered Institute of Housing, which claimed that homeownership was out of reach for many people in the current climate.
One would be buyer said:”Trying to find the deposit that most lenders are looking for has been impossible, so trying to get onto the property ladder will have to remain a dream for me for the moment.”
Loans being taken to pay for surgery
August 5, 2010
According to a recent report a rising number of consumers in the UK are taking out personal loans in order to pay for surgery. With many trying to cope in a society where the glossy magazine show photos of apparently perfect men and women the pressure is on the general public to try and look good, even if it means making surgical changes.
Having surgery such as cosmetic surgery can be very costly, and for many people the only option is to borrow the money to have the surgery carried out. Figures that were recently released have shown that a significant amount of money has been borrowed to pay for surgical procedures by those that did not have the money to make payment upfront.
Whilst the recession has caused a range of financial problems for many consumers figures suggest that many people are still prepared to find the means to pay for cosmetic surgery even if this means getting into debt. Personal loans have become an effective option for those that need to raise the money for cosmetic surgery, and there are a number of options and choices available.
Figures have been released by the British Association of Aesthetic Plastic Surgeons (BAAPS), and the data showed that in 2009 there were over 36,400 surgical procedures, which reflected an increase of 6.7 percent compared to the previous year. The Harley Medical Group also released data showing that the surgical procedures had increased over this period.
An official from Sainsbury’s Finance stated: “Although the majority of personal loans are taken out for the usual domestic reasons such as home improvements and buying cars, a significant number, even in today’s economic climate, are used to fund more unusual expenditure such as cosmetic surgery.”