Many consumers aware of debt levels
September 16, 2010
It has been suggested following recent research that many consumers in the UK are aware of their debts and taking care to manage them as effectively as possible. A recent report suggested that many people were aware of their debts, including credit card debt, and were taking steps to manage their debts.
The recent survey was published by Accountz, and over 92 percent of those that were polled as part of the survey were said to have been fully conscious of the amount of debt that they had to handle. An official from the company said that it appeared that many consumers considered their debt levels to be a serious issue, and were keen to get it sorted out.
As part of the survey the group also looked at overdraft facilities being used by consumers, and the results of its survey showed that just over 30 percent of consumers had not used their overdraft facilities recently. Quentin Pain from Accountz said that it appeared that repaying debts was becoming an increasingly major issue for many people, and something that a larger number of consumers were looking to focus on.
Pain stated: “Interestingly over the past 12 months this level of debt has only increased by 0.8 per cent which is relatively flat year on year.” He also said: “This high level of awareness over personal debt indicates that now more than ever us Brits are becoming more astute in money management.”
He also went on to address the issue about consumers owing the taxman money as a result of computer problems at HM Revenue & Customs, stating that tax officials needed to ensure that they were lenient and understanding with those that were trying to focus on repaying their debt.
Secured or unsecured – which is the best loan option?
September 14, 2010
When it comes to getting a loan there are a number of different options available to consumers, and the main two categories that are available are secured and unsecured loans. These loans are suited to different needs and circumstances, and it is important for consumers to ensure that they choose the right loan for their needs and their circumstances.
The two types of loans are very different in terms of the amounts available to borrow, the repayments terms, and even the rates of interest charges. The risks involved with these two types of loans are also very different. With unsecured loans there are no risks involved in terms of collateral, which is names the home of the borrower. However, this is not the case with secured loans, which are usually secured against the home.
These days those that have bought their properties over recent years cannot opt for a secured loan because they do not have the equity required in their homes. This means that their only option is to go for an unsecured loan, which does not require any collateral. On the other hand those that are homeowners with a reasonable level of equity in their homes may find that they have the option of either a secured or an unsecured loan.
In order to get a secured loan you will need to prove that you have the necessary level of equity in your home, which is the balance between the amount that you owe on the property and the amount that it is worth. Secured lending has been severely restricted since the global credit crisis, so it is worth bearing in mind that the choice of loans may not be as great as it was several years ago.
On the other hand if you are looking to get an unsecured loan you should bear in mind that you will generally need to have good credit to get this from a traditional lender. Again, the choice of loans is not as great as it was in years gone by due to the financial climate, but there are still some competitive deals available, especially on loans for £7500 or more. The cheaper unsecured loans for £5000 charge higher rates of interest so it is important to work out whether you will be better off opting for a smaller loan with a higher rate of interest or a slightly larger loan with a much lower rate of interest.
CML argues with FSA over interest only mortgage loans
September 9, 2010
It was recently announced that the Financial Services Authority was planning to limit the availability of interest only mortgage loans in the UK, which are classed as riskier mortgage loans than the more traditional capital and repayment loans. With interest only mortgage loans the borrower makes repayments on the interest on the loan over the mortgage term, which means that at the end of the mortgage term the principle loan balance is still outstanding.
However, the Council of Mortgage Lenders has now argued that it would not be in the best interests of consumers for the availability of interest only mortgage loans to be limited in this way. The CML has said that lenders have become more cautious about taking risks, and as a result the number of interest only mortgage loans had shrunk. The group said that within the last year almost 75 percent of mortgage loans had been repayment mortgage loans.
The principle loan balance on an interest only mortgage has to be paid at the end of the mortgage period, and to do this borrowers are advised to set up a sideline investment to raise the money to clear the mortgage loan at the end of the term. The CML said that there were now 8 percent of interest only mortgages that had a specified repayment vehicle in place, and 14 percent that did not have one in place.
The CML has argued that interest only mortgages are popular with many borrowers, and this included capable borrowers who would have investments to repay the mortgage loan at the end of the term, buy to let borrowers who would repay the loan through the sale of the property, older people whose borrowing would be settled after they died, and younger people who wanted to get onto the property ladder without overstretching themselves financially.