The Big Money Guide

Author: Calvin Bennett

Rate War Predicted for Fourth Quarter

At last there is some good news for debt-ridden British consumers: instead of the expected increase in mortgage rates, about which we have written repeatedly in the past, the rates might actually be heading down in the near future.

The news comes after a survey by the Bank of England released a few days ago predicted a meaningful narrowing of mortgage rate spreads during the final quarter of this year. It also renewed fears over the economies of Eurozone countries.

The IMF warned of a slump in Eastern Europe and the German economy posted weaker than expected results, causing stock markets across the globe to plummet.

This means banks will have no choice but to compete for limited demand from consumers, and cutting interest rates might be the best option open to them.

Credit availability dropped for the first time in two years, which lenders attribute to a changing risk appetite, the Mortgage Market Review and expectations for residential property prices. Lenders reported that they were less prepared to lend more than 90% Loan-to-Value for the first time since the Bank started asking this question last year.

The survey also mentions: “Many lenders noted that operational issues associated with the implementation of the Mortgage Market Review had pushed down on credit availability over the summer.”

Credit score criteria were also reported to have become stricter during the third quarter, which is consistent with the drop in availability.

Lenders, however, expect both approval rates and loan availability to increase during the fourth quarter because of ‘market share objectives’.

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October 21, 2014
Expensive Bills and Mortgages Prevent Britons from Becoming Homeowners

A new study reveals that nearly 25% of tenants now have no other choice but to spend half or more of their income on rent. The study also found that 30% of tenants consider their rent bills to be unaffordable.

SpareRoom.co.uk, who conducted the study, also discovered that nearly 20% of tenants never expect to be able to afford their own home. This is double the number recorded in 2011.
A lack of mortgage availability, rising house prices and increasing rents all play a role in the negative sentiment among renters.

According to the latest statistics published by the Land Registry, the average house now costs £178,000 – very close to the record level of 2007. In London this can be as high as £500,000.

A director of SpareRoom.co.uk, Matt Hutchinson, stated: “For nearly one in five of Britain’s ever-growing population of renters, aspirations of home ownership are slipping away.” He also called the increases ‘unstoppable’ and says that first-time buyers are particularly hard hit. Many Britons, he added, would simply have to reconcile themselves with becoming lifetime tenants like their European counterparts.

This might be easier said than done. Britons are used to owning their own homes, and they would do just about anything to make that dream a reality, including emigrating. A recent Santander study found that more than a million people were prepared to emigrate if that would mean being able to own a home. Others were prepared to cut down on new cars and holidays.

Apart from not being able to buy a home, an increasing number of Britons are nowadays slipping into debt, usually harming their credit ratings in the process. Many of those individuals would benefit from professional debt management advice to get their financial affairs back on track if they ever hope to save enough for a deposit on a home.

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October 16, 2014
Problem Debt Costs the UK £8 Billion Per Year

StepChange, a national debt charity, has carried out extensive research on the cost of what it calls ‘problem debt’ – and the results are quite astounding. After studying the files of more than 100,000 of its clients, it calculated that the total cost to the UK taxpayer is in the reign of £8.3 billion per year.

The charity identified job related problems and housing issues as the two main culprits causing people to get into serious debt. It says the government alone could save as much as £3 billion if it offered better assistance to people with problem debt.

StepChange defines problem debt as debt taken on by individuals that they cannot afford to repay as agreed with the lender., and believe this puts severe strain on the country’s employment, mental health and housing systems.

The single biggest problem that individuals with problem debt often face is having to move to more affordable housing after falling into arrears on rent or mortgage payments. As a result, many then have to be paid housing benefits by the state.

Next on the list are employment-related costs such as individuals taking time off work because of the stress caused by unmanageable debt, as well as the benefits such people have to be paid if the job is eventually lost. The charity says this costs the country around £2.3bn per annum.

In its survey, StepChange also accounted for the cost of children being taken into care, divorce settlements and NHS mental health treatment caused by problem debt.

The debt charity believes that the government should do more to help, but a Treasury spokesperson pointed out that the Money Advice Service already plays a key role in this regard.

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October 14, 2014
Consumer Confidence Remains Weak Despite Strong Economic Growth

According to forecasts by the Bank of England, the British economy is likely to grow by a very healthy 3.5% in 2014. If this figure does materialise it will be the highest growth rate the country has experienced in the last ten years. However, the average British consumer is not sharing the much publicised euphoria about the country’s economy.

A survey released by research firm GfK last week indicated that the morale of British consumers has declined from a recent high in September as British families become less optimistic about the outlook for the country’s economy as a whole, and their personal financial situation in particular. The company’s headline consumer confidence index showed an unexpectedly large drop to minus one last month, after posting a reading of plus one in August, on par with the 9-year high reading of June.

The decline in September was mainly driven by a large drop in household expectations regarding personal financial situations and the outlook for the economy over the next year.

According to Gfk’s MD for social research, Nick Moon, it was likely that the index would remain around this level because consumers were not seeing the benefits of strong economic growth in the form of wage growth or improved living standards.

He added: “Many people are not themselves feeling any better off despite the growth in GDP, and this may be tempering the impact of positive media coverage of the economy.”

British households also continue to struggle with personal debt issues and many individuals are now seeking professional advice about debt consolidation, IVA’s and bankruptcy.

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October 10, 2014
Debt Management and Collection Qualification Available

Personal debt mismanagement is a growing problem in the UK often affecting individuals who can ill afford to get it wrong. Last year consumer debt in the country increased to a staggering £1.43 trillion! This is one of the reasons why the FCA decided to take over responsibility for the regulation of personal debt.

This situation has of course created a huge market for firms offering debt management advice and services such as debt consolidation, but until now there has been little in the way of training opportunities for individuals working in the field. That has now changed, with students now being able to acquire a formal qualification in debt collection and management. The course is to be provided by IFC University College with the qualification in CertDC (Certificate in Consumer Debt Collection).

The sometimes controversial subjects of debt collection and debt management will no doubt prove to be rather challenging for many students, however, the fact that they will have relevant work experience while they follow a structured curriculum will certainly improve the level of expertise available in the marketplace. This should also serve to improve the image of the industry as a whole.

The vice principal and head of faculty: banking, finance and regulation at the college, Martin Day, stated: “The growth in consumer debt and changes in the regulatory environment have resulted in a need for a new qualification which addresses the key legislative standards and the essential skills for professionals working in consumer debt collection.”

The really good news is that the first group of students commenced the course during September.

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October 9, 2014
11 Top Tips to Save Money

Energy prices are on the up, transport costs are at an all-time high and the food shop just seems to becoming more and more expensive. So, what can we do to cut down on costs and increase our bank balance? Well, these money saving tips just might be the answer.

1. Compare Supermarket Prices

It’s only natural you’d find it easier to head to your local supermarket for your shopping, but this could cost you more money than you need to spend. By going to a competitor, you could discover fantastic bargains that beat your local shop. One way to ensure you receive the best deals is to write a shopping list, browse online at each store’s deals and either order them over the internet or head there yourself. So, next time you need to go shopping, think about whether that extra bus journey could save you a significant amount of cash.

2. Late Deals

Everyone loves a good holiday. Whether you like nothing more than a beach abroad, a caravan park in Wales or sitting under the Aurora Borealis in Iceland, you can trust there’ll be a late deal on offer for you. By securing a late deal a few days before or on the day of your trip, you could potentially save hundreds of pounds. So, put off booking in advance and see what offers are to be had close to your holiday.

3. Buy Used Over New

You don’t have to spend a lot of money to have nice things. While most people love new items, you’d be surprised at the quality of used goods – and they’re a fantastic way to save money. So, next time you need a new DVD or game, head to your local second-hand technology store. Looking for a new TV? Try websites such as ebay.co.uk for a superb deal.

4. Debt Management Services

It’s surprising how many people suffer in silence when faced with debt problems, when there is a simple solution that could eliminate a person’s worries: debt management services. Debt can cause severe depression and stress to a person when it’s not necessary. A professional, experienced debt management company can take care of your debt problems so you can pay back the amount in smaller, more manageable amounts. So, don’t sit there at home panicking, do something about it and approach a debt management company today.

5. Sell Your Items

As stated earlier, websites like ebay.co.uk are a great place for used products, so why not sell your unwanted items here, too? Everyone has unwanted junk littering their homes when they could make a fantastic amount of money just by selling them on. Take a look at your old books, DVDs, ornaments or even Christmas decorations. Have you got an old bed that’s just sitting in a spare bedroom? Sell it. Got an old treadmill that’s just gathering dust? Send it to a good home.

6. Discount Codes

We all like a good bargain, don’t we? There is plethora of discount code sites that can ensure you get one. Buying online is easier than ever, and voucher codes make the process even simpler and more enjoyable. So, don’t pay full whack for a new washing machine or those nice pair of shoes, check out the promotional deals available online to see how much you can save.

7. Insurance

Most people are put off from the idea of paying weekly or monthly fees for insurance, when they really can be a great investment. While no-one likes to think about their homes being burgled, their fridge freezer breaking down or suffering from a serious or terminal illness, unfortunately these things can happen, and they can end up costing you a lot of money when they do. Insurance offers some peace of mind that you’re protected should the worst happen, and the small fee each month will ensure you’re not left with the burden of a heavy bill. Browse the market for the best home, contents, appliance, dental, critical and life insurance plans on the market. Having good insurance really helps when or if you ever need to make a claim. Steinberg Goodman & Kalish are a reputable firm who could help you through this process!

8. Switch Energy Suppliers

Energy prices are at a record high at the moment, and the rates are only going to go up in the future; therefore, you should consider changing energy providers to save yourself a good sum of cash. Compare your energy package against a competitor and see whether it’s worth switching over to a new supplier. You can switch providers at the click of the button and it could potentially save you hundreds of pounds a year.

9. Consider a Water Metre

Water metres are a great way to keep track of your expenditure in the home. While they’re not recommended for large families in big homes, they’re great for places that only house one or two people. The metre only charges you for the water you use, so you won’t be tied to a fixed monthly charge.

10. Quit Smoking

If you’re a smoker then you’re probably tired of hearing people tell you to pack in the fags, but you really should. On top of the many health benefits, giving up cigarettes can save you a whopping amount of money that can be used towards a new holiday or car – yes, the savings are that much. So, if you want thousands of pounds in your bank then quit today and watch the money roll in.

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June 25, 2014
How do consolidation loans compare to debt management?

If you are struggling to make payments on loans, overdrafts and credit cards at the end of the month, you may have looked at ways to solve your debt problems. Amongst the solutions you could consider, a consolidation loan or a debt management programme are two popular options. We have taken a look at both to identify a few factors that you need to think about when considering the best way to escape from your debt.

What is a consolidation loan?

A consolidation loan is designed for somebody that is struggling to pay back multiple debts. The idea behind this type of lending is to put multiple debts into one payment. This makes managing money easier as there are fewer payments to juggle with. It is also possible that the consolidation loan is taken out over a longer period of time than the original credit in an effort to make the monthly payments cheaper. The consolidation loan is used to pay off the other debts, so you then owe money to the firm who gave you the loan, rather than your original creditors.

What is debt management?

Debt management works in a totally different way. It is all about negotiation with your creditors to extend the repayment period and reduce the interest that you have to pay. Each case will be assigned a knowledgeable and well-connected advisor who will communicate with the creditors so you don’t have to. That means an end to hassling letters and phone-calls; the only person that you have to deal with is your one and only point of contact at your debt management company. This will be an immense relief to those who have experienced the stress of dreading every letter that comes through the door or shivers whenever the phone rings.

In many cases the negotiator will already have a relationship with the biggest lenders, so they will be more likely to strike a deal with them. This deal would likely include an extension of the period over which you could pay the money back. So, that means lower payments and more time, which is the exact thing that is needed when debt is getting the better of you. In some cases, the debt management company may be able to freeze interest on a loan or even reduce the amount that needs to be paid back. Seeking legal help, provided at stelklaw.com for example, can be beneficial when dealing with money issues. It may be an investment but will help you in the long run.

How do consolidation loans compare to debt management?

A consolidation loan can also reduce the amount paid out every month and extend the time that you can pay, but there are key differences to consider. The first, is that you will pay back interest on the loan. You must make sure that you check the interest rates and look for any hidden charges before committing to any loan. It is vital that the interest charged on the loan is lower than it is on the debts that you are currently paying. It is not only interest that you should compare; any charges that are levied on the credit you have. Try and work out the total cost of each option before making any decisions.

If you have found yourself struggling to pay your debts, then make sure you speak to experts immediately. The sooner you start sorting the problem out, the sooner it will be over. A debt problem can only get worse, unless you take action.

Have you checked if you are eligible for a PPI claim?

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March 13, 2014
House sales in the UK are set to rise
According to the Royal Institution of Chartered Surveyors’ house sales in the UK are set to rise. The next three months are looking positive for the UK housing market.

Rics have predicted a rise in UK house sales and have put this down to the support for mortgage lending. In recent months the Bank of England have launched their Funding for Lending scheme which has worked to support the UK housing market and mortgage lending.

The scheme is designed to help lenders by making cheap funds of around £80bn available to mortgage lenders. The lenders are then required to lend money to both commercial and personal borrowers. By doing so they are helping to boost lending rates and making mortgages more readily available.

The rise in house sales is set to be the highest since May 2010. This is really positive news for those who are looking to purchase a property. A spokesperson for Rics has said, “Although we would caution against reading too much into this, there are some grounds for believing that activity could pick up over the coming months.”

Money management

If you are currently saving to buy a property then this will be good news for you. When looking to take out a mortgage it is important that you speak to an expert. Understanding the best mortgage rates for you and your financial affairs is essential.

If you are struggling to manage your current monthly budget, and are planning on purchasing a property, then you may wish to get some expert advice. There are many different ways to handle your debts and a debt management plan could help you to take more control of your finances.

Failure to keep up the repayments on your mortgage could result in repossession. That is why staying on top of your monthly repayments is key. But a better understanding of your finances will help you to keep on top of your budget and ensure that you maintain your repayments.

Here are a few tips to stay in control:
- Check your current direct debits to make sure you are not paying out for things you no longer use
- Try to reduce and limit any unnecessary spending
- Try to pay off your credit card as soon as you can
- Do not stretch yourself too far. If you feel your mortgage repayments could be more than you can afford then speak to an expert
- Shop around for a good savings account
- If you are struggling to pay off your debts speak to a debt management company
There is no need to suffer in silence. Always speak to an expert and get advice on your financial matters. It could help to save you money and protect you from further debts.

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February 22, 2014
Are PPI claims likely to end in 2014?

Banks in Britain are currently trying to lobby the Financial Services Authority (FSA) to impose a deadline on customers making claims for compensation after being mis-sold payment protection insurance (PPI). So, are PPI claims likely to end in 2014 as the banks want them to? If so, what should you do?

The proposed PPI deadline

The discussions about a potential time limit on how long banks will be expected to continue compensating PPI mis-selling claims, have taken place between the British Bankers’ Association (BBA) and the FSA. This raises the prospect that the time to claim PPI compensation could be coming to an end. This will act as a wake up call to those who have been thinking about claiming PPI money, but who are yet to apply.

At the time of writing, there is no overall deadline on claiming PPI. Despite the fact that there are currently limits that stipulate that you must claim PPI within six years of taking out the loan associated with it, most people are still successful with claims relating to older loans. This is because any claim can be made up to three years after becoming aware that you can claim. Recently the big banks have started writing to customers to make them aware of the PPI scandal, which will make it easier for them to argue the three year ‘awareness’ time limit in the future.

So, are PPI claims likely to end in 2014?

The press have likened the requests to end PPI claims by early 2014 to allowing criminals to choose their own punishment. The FSA appears to be opposing the idea that the banks will be able to choose when the claims can end.

The FSA has said that it will listen to consumers before it makes any decision. There are even press reports that the banks themselves are starting to worry about the bad publicity and the likely deluge of claims that will follow an announcement of a PPI deadline.

Gillian Guy, the Chief Executive of Citizens Advice, said that, “For years PPI was mis-sold to people who either couldn’t use or didn’t even ask for it in the first place. A deadline could only be fair if, in exchange, the banks contact every customer who was sold PPI to tell them they may be entitled to make a claim.”

This all seems to mean that the banks’ request to end PPI claims within the next year is optimistic, however, we have seen that the banking industry is treated very differently to others when it comes to some matters. Compensation for mis-selling PPI could ultimately cost banks around £40bn, so they are desperate to put a lid on the scandal.

How should I claim PPI?

It is still important that you apply for any PPI compensation that you believe that you are owed as soon as possible. It is likely that even if the spring 2014 deadline is turned down, the banks will launch a publicity campaign to ensure that all their customers are aware of the situation. Under the current rules that will mean that PPI compensation claimants would be likely to have until some time during 2016 to complete the claim procedure. This may sound like a long time, but it can take many months to get compensated. If there is a rush of more claimants it could take even longer to make a successful claim, so it is well worth starting the process immediately.

Claiming compensation for mis-sold PPI is something that you can do yourself. All the advice you need is out there on the internet already, there is no need to get a claims management company involved. A great place to start researching PPI mis-selling is Martin Lewis’ Moneysavingexpert.co.uk or the Citizens Advice website.

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February 22, 2014
Top tips for saving money around the home

In difficult financial times there is often the need to tighten our belts and ensure that we are getting the best from every penny we earn. This can sound like a rather big chore, but there are many different ways that you can save money, starting with your home.

Here are a few top tips to help get you started. Once you get into a money saving mindset you will find that these ways will become a part of your everyday life.

1. Energy saving bulbs

Energy saving light bulbs are a great way of reducing your households energy costs. By swapping all your lightbulbs for energy saving bulbs you can significantly reduce the cost of your energy bill. Especially now it is coming into winter.

2. Lights off

When you are not using a room, switch off. Try to use your lights only when you need them. You will soon get into the habit of switching off the lights as you leave a room.

3. Turn down your thermostat

By turning your thermostat down by just a few degrees you will be able to save more heat and thus, more money. If there are rooms in your house that you very rarely use then you can also turn the radiators off completely.

4. Get rid of your tumble dryer

One of the biggest drains on your energy bills is a tumble dryer. If you are able to hang-dry your clothes you will be able to save more money than you realise.

5. Always make a list

When you make a shopping list you are more likely to stick to it. By wandering around the supermarket without a list you are certain to spend more money. By making a list you can help to save money. If you can reduce your weekly shopping by £10 per week that is an annual saving of £520. And remember, never shop hungry.

6. eBay

Autumn is a good time to clear out your cupboards, garage and wardrobe. Why not auction off your unwanted items on eBay? It only takes a small commission and is a safe way of selling your items.

7. Car boot sale

Another great way to make some extra cash is to have a car boot sale. Collect all the unwanted items in your home and plan to visit one of your local car boot sales. If you are not sure if you have enough items you can always plan one with your friend and split the profit.

8. Beware of automatic car insurance renewal

Renewing your car insurance is essential. Going with the same insurer is not. Make sure you do your homework. You could find you save yourself a lot more money. Websites such as moneysupermarket.com and comparethemarket.com are a great way to beat your current car insurance quote.

9. Gym membership

If you currently have a gym membership you are not using then now is a good time to cancel it. If you live close to work consider walking, running or cycling there. You could also purchase a second-hand exercise machine. Try your local Freecycle or Gumtree site.

10. Watch your impulse buys

If you tend to buy things on impulse then it could be time to reduce your spending. Set yourself a limit each month for a treat and avoid spending unnecessarily. Online shopping can help too as you are more likely to consider your purchase instead of purely buying on impulse.

If you are struggling to manage your finances you may want to consider a debt management plan. It is always wise to seek expert advice for anything you are unsure of. Services such as Keller Law Offices provide expert law advice for example.. But by making a few small changes in your household you will quickly be able to save a bit more money each month.

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December 28, 2012