Britons Are Keeping Cash in Their Homes By Michael Challiner

Keeping cash in our homes rather than in savings accounts is what five percent of us would rather do, according to MGM advantage, faith in high street banks and building societies has fallen according to the company’s recent Retirement Nation Study. The downfall of Northern Rock hit the north eastern area of Britain particularly hard. This said, confidence in these companies was at its lowest in Plymouth, it was revealed. Regardless of your wealth the trend to store your cash in your home was equally true, suggested the company.

Some eighteen percent of people struggling with personal loans and other debts also revealed they would rather keep their money beneath their mattress than trust it to a financial institute. Keeping hold of their money is what twenty five percent of respondents, with assets over one million pounds, said they would do.

Regardless of these facts, for the majority of us, we prefer to use savings accounts than any other way of investing. Fifty five percent of people asked favoured this method of saving as a means of protecting their future finances. Seventeen percent of people chose pension funds, with just over one in ten of us relying on the property market. In todays economic climate it was no surprise that just six percent of respondents would go for stock market investments.

The difference between men and women, in terms of the type of savings made, was apparent in the report. Some sixty percent of women have a savings account against just under half of males having the same. Also favouring this type of investment were the over sixty fives with again over sixty percent owning an account. Coming out on top though was the younger age group of sixteen to twenty four. This group trust financial companies most with two thirds of them owning a savings account.

Some investors are unaware of the most efficient ways of saving money, according to MGM advantage. Nearly a fifth of participants do not understand key financial terms like individual savings accounts, defined-benefit/final salary schemes, stakeholder pensions, pension credits, equity release mortgages, annuities and indeed independent financial advisory (IFA) services.

Investing in a mutual is something only ten percent of us would do. Instead of a question of trust this is probably due to a lack of knowledge. However, going to a mutual is something that double the number of those who use an IFA would do, rather than those who don't. That said, with less than a third of respondents understanding the term “mutual” it remains at the bottom end of the list of financial terms that are understood by the population. Included in these are “pension credit”, “stakeholder pension”, “defined -benefit final salary scheme”, “annuity” and “FSA”.

Talking about their financial situation is something people are not willing to do even with friends and family, according to Saga. Discussing their pension provision is something thirty eight percent of people will do whilst only fourteen percent will discuss personal loan or credit card debt.

Resource: http://www.isnare.com/?aid=344095&ca=Finances

Britons Are Keeping Cash in Their Homes By Michael Challiner

Keeping cash in our homes rather than in savings accounts is what five percent of us would rather do, according to MGM advantage, faith in high street banks and building societies has fallen according to the company’s recent Retirement Nation Study. The downfall of Northern Rock hit the north eastern area of Britain particularly hard. This said, confidence in these companies was at its lowest in Plymouth, it was revealed. Regardless of your wealth the trend to store your cash in your home was equally true, suggested the company.

Some eighteen percent of people struggling with personal loans and other debts also revealed they would rather keep their money beneath their mattress than trust it to a financial institute. Keeping hold of their money is what twenty five percent of respondents, with assets over one million pounds, said they would do.

Regardless of these facts, for the majority of us, we prefer to use savings accounts than any other way of investing. Fifty five percent of people asked favoured this method of saving as a means of protecting their future finances. Seventeen percent of people chose pension funds, with just over one in ten of us relying on the property market. In todays economic climate it was no surprise that just six percent of respondents would go for stock market investments.

The difference between men and women, in terms of the type of savings made, was apparent in the report. Some sixty percent of women have a savings account against just under half of males having the same. Also favouring this type of investment were the over sixty fives with again over sixty percent owning an account. Coming out on top though was the younger age group of sixteen to twenty four. This group trust financial companies most with two thirds of them owning a savings account.

Some investors are unaware of the most efficient ways of saving money, according to MGM advantage. Nearly a fifth of participants do not understand key financial terms like individual savings accounts, defined-benefit/final salary schemes, stakeholder pensions, pension credits, equity release mortgages, annuities and indeed independent financial advisory (IFA) services.

Investing in a mutual is something only ten percent of us would do. Instead of a question of trust this is probably due to a lack of knowledge. However, going to a mutual is something that double the number of those who use an IFA would do, rather than those who don't. That said, with less than a third of respondents understanding the term “mutual” it remains at the bottom end of the list of financial terms that are understood by the population. Included in these are “pension credit”, “stakeholder pension”, “defined -benefit final salary scheme”, “annuity” and “FSA”.

Talking about their financial situation is something people are not willing to do even with friends and family, according to Saga. Discussing their pension provision is something thirty eight percent of people will do whilst only fourteen percent will discuss personal loan or credit card debt.

Resource: http://www.isnare.com/?aid=344095&ca=Finances

Are Secured Loans the Answer? By Michael Challiner

Homeowners needing some spare cash are being attracted to secured loans as interest rates fall, despite the risks.

As personal loans and credit cards become harder to find with lenders being more selective, consumers are putting their properties up as security.

“There is no doubt that unsecured loan companies are tightening up their lending criteria, secured loans are becoming a very viable option as a result” says Tim Moss, head of loans and debt at comparison website Moneysupermarket.com

As with mortgages, failing to keep up with payments puts your property at risk of repossession.

Historically, secured loans were only available through brokers and were less popular as they were seen as a last resort for people with poor credit ratings. They also had higher rates.

However, secured loans with rates as low as 6.9 percent are now being offered direct to consumers by some companies.

“Loan brokers generally receive commission of between 2,500 pounds and 3,000 pounds per loan sold, so marketing secured loans directly to customers has allowed companies such as Fair & Square and Picture Loans to offer lower rates,” Moss says.

The terms have become easier to understand too. Neil Radley of secured loan provider Fair & Square says: “We recognise that people are often wary of secured lending, which is why we have been careful to make our loans as simple and ¬transparent as possible and to keep penalties to a minimum.”

Homeowners who face severe penalties to leave their low rate deals to remortgage are opting for secured loans, Moss says: “Home improvements are one of the most common reasons for people to take out a loan.

Radley says “Secured loans offer a means of getting some of the money out of your property without incurring penalty charges,”

If people also want to consolidate unsecured debts, a secured loan would be a good option, he claims.

“Our research shows a lot of people have unsecured loans and credit card debts they would like to consolidate at a lower rate to give them greater control,” he says. “Why pay 18 per cent or 20 per cent on a credit card when you could be paying just 6.9 per cent on a secured loan?”

Also saying “I believe secured loans will become more and more popular during the next year or so, that said, you must remember that loans of this kind
are secured against your home, so it is very important not to miss the repayments.”

Planning on taking out a secured loan for home improvements is Andy Symons, 33.

“We are having lots of work done and, as usual, the cost has spiralled above the initial quote,” says Symons.

“I also have some credit card debts I would like to consolidate at a lower rate, so I plan to take out a secured loan of about 30,000 pounds from Fair & Square to cover both.

“I am waiting to hear exactly how much more the work is going to cost before applying.”

This will be the first time Symons opted for a secured loan although he has had student loans and an overdraft in the past.

Resource: http://www.isnare.com/?aid=344092&ca=Finances

Higher Rates on Personal Loans for the Less Well Off By Sheila Challiner

Anyone who may fall into the lower income bracket and those with a poor credit record are going to have to pay higher interest rates, up to 19.9%, to enable them to borrow money for a personal loan.

It seems very unfair but it has recently emerged that the Nationwide Building Society, the largest in the UK, are basing their interest rates on the assessed risk of the individual client. Up until now, the system that has been used across the board within the industry has been very straight forward and rates have been based on the amount of the loan, not on the credit history of the borrower.

At Nationwide, as with many other lenders, the street cleaner or the lawyer, will not pay the same basic rate for a loan as before, but, the person with the smallest income will pay the highest rates and the higher earner who is likely to be financially secure will get their loan at a lower rate.

This trend has been implemented throughout many of the finance companies long before now, say Nationwide, and they are merely ‘jumping on the band wagon’.

At the end of the day, the final outcome is that those on lower incomes in our society will find borrowing much more expensive and harder to achieve – for some this could make it impossible to make a major purchase and for many, even harder to make ends meet.

In such troubled economic times the Nationwide say that they have to be cautious and cannot risk their finances against people who simply do not, or are not trusted to pay their debts. It is a time of major instability in the housing market with an increase in people losing their homes and also many becoming bankrupt.

Using the system of risk-assessed lending a well-off or low-risk person wanting to borrow 1,000 to 3,000 pounds would be charged at a rate of 15.9%, whereas the less well-off, high-risk customer would have to pay interest at a rate of 19.9% - quite a difference and in the cold light of day, compared to the Bank of England’s 2% base rate, 15.9% is plenty high enough.

As the amount borrowed increases, say to 5,000 to 7,500 pounds, the interest rate for the low-risk customer with a good credit history drops dramatically to 8.9%, but, for the high-risk borrower it only drops by 3% to 16.9%

Jeremy Wood, Nationwide's director of Consumer Finance, justified their move by saying: 'As a prudent lender in the current credit environment it is important that, in pricing personal loans, we are placing a greater emphasis on risk and lending appropriately.'

From the Moneynet website, Andrew Hagger, a personal finance expert said: 'The net effect is that the people who can least afford it end up paying more.'

The decision by Nationwide to follow suit behind other big financial companies has proved to be extremely controversial and very much on a tangent from the requests of other banks, Members of Parliament and the Government to be fair in their treatment of customers.

Plans have been revealed by Ministers to bring in a strict code of regulations for banks which will be regulated by the Financial Services Authority and legally enforced.

Resource: http://www.isnare.com/?aid=344199&ca=Finances

Behind the Scenes By Sheila Challiner

There are three well-know credit reference agencies that everyone seems to know about. Any check up on you financial situation is likely to be carried out through Experian, Equifax of CallCredit. If you want to find out just what any lender will find out about you should you ask for credit, you can contact any one of these agencies and find out without any delay. As little as 2 pounds is all it’ll cost and your file will be revealed.

Not many people will have heard of “National Hunter” though. It may sound like the “dead cert” for the Grand National, but in fact it’s a fourth credit agency. Their input is similar to the others, and their approval is necessary if you’re going to succeed with that application, but it’s going to cost you five times as much to find out just what data they hold on you. Under the Data Protection Act, this is the maximum amount they’re allowed to charge, the full 10 pounds.

This little-known firm was established in 1993 by a group of banks and is currently co-owned by a mixture of around sixty building societies, banks and lenders. Officially based in Stoke-on-Trent in Staffordshire, in actual fact National Hunter is operated by Experian, for the owners, and is based in Nottingham.

The purpose of this agency is to prevent fraud and is a major weapon in the war against financial crime. They will investigate each loan request and warn the lender if there is anything suspicious about the application. If this results in an application being marked as suspicious, then the lender’s computer is likely to turn down an application for credit, without actually informing the applicant of the actual reason.

Whilst many of the rejections are undoubtedly in order, what is worrying is that it’s not known what the extent of the numbers of files that National Hunter holds on individuals is, or how many rejections are as a result of an error. What if there’s been an honest error with the application or some confusing facts given, that can’t be checked? Can these be automatically discounted? There’s computer error to worry about too.

Circumstances which could cause applications to appear as risky could include such things as changes of employer in a short time, the same mobile number being used by more than one applicant, mistakes or miss-spellings in names, or possibly mistakes in identification documents. A change in stated salary can look suspicious but be easily explained and income which is difficult to check on would flag up a warning

Any one of these eventualities could be quite innocently made and could be easily corrected.

National Hunter would inform the lender of a risky application – marking it as “suspect”. If the lender’s computer then refuses the application without giving a reason or saying which data base was used for checking, then many individuals wouldn’t even have heard of National Hunter, let alone followed up their credit details with them.

If you’re unexpectedly refused credit, do follow it up with the lender. Mistakes can happen and you have every right to know the reason for the refusal and to be given the chance to put it right.

A follow up to this article is called “Checking Out Your Credit”.

Resource: http://www.isnare.com/?aid=344198&ca=Finances

The Pitfalls of Insuring Against Subsidence By Michael Challiner

You may have heard this advice before, but it is so important…..read the small print and check that subsidence is not excluded. You may find, for example, that outbuildings like garages are not covered .

You will not be surprised to learn that premiums will increase following a claim. The chief structural claims manager, Neil Curling, from Halifax Home Insurance, warns that you must disclose material facts, such as signs that walls are cracking or bulging or a history of previous subsidence. Failure to make a full and honest declaration of the condition of a property may result in the policy being declared void.

Subsidence is a expensive condition to remedy, often running into tens of thousands of pounds, so insurers are very reluctant to pay out. Solicitors often have to be called in to stop insurers from reneging on their obligations.

There is no substitute to a full structural survey on a property. Although it may appear to be an expensive luxury, it could pay for itself many times over in the long run. Subsidence may not be recorded on a search as the solicitor acting for the seller may be economical with the truth.

It will be very difficult to obtain buildings cover if a survey reveals that subsidence has taken place.

Nationwide Home Insurance confirmed that they will continue to cover an existing customer if subsidence occurs. They will also provide cover if they receive a satisfactory application from the new owners of the property, which has been purchased from their customer. However they will not provide cover for properties that have suffered from subsidence in the past, which is standard practise throughout the industry.

The following case study illustrates the problems you may encounter when claiming on your buildings insurance.

Jackie Summerfield and partner Paddy Boyle live in the town of Hastings where they own a Victorian house. 10 years ago, when they were tenants, the landlord discovered that the property was suffering from subsidence. Paddy recalls that they actually attended talks when the loss adjuster, who represented the interests of the insurer, and a structural engineer were present. Evidently the loss adjuster felt that only a bay window should be underpinned whereas the structural engineer advised that the property needed far more extensive underpinning.

After the underpinning had been carried out and paid for by the insurer acting for the landlord, Jackie and Paddy bought the property.

The property showed no further signs of distress until two years ago when a horizontal crack appeared in the lounge. Paddy says that he contacted their insurer, Zurich, and the original structural engineer. Although the couple had to pay 1000 pounds excess, Zurich underpinned the house for a further 60,000 pounds. The work took 5 months to complete and they were very happy with the result.

The problems had been caused by their house being founded on a clay soil which had slowly dried out. The shrinkage of the clay had caused the property to settle. Paddy has been delighted with the service provided by Zurich, who were happy to renew his policy. However when he approached other insurers for an alternative quotation they refused to cover the property as it had been underpinned.

Resource: http://www.isnare.com/?aid=343320&ca=Finances