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Expert wrongness
At this time of year, you often hear lots of so-called financial experts spouting predictions about the year ahead. As a result of the current economic turmoil there are more pundits than there are pregnant pauses in ……………Jeremy Clarkson’s pieces to camera.
And guess what? 99% of the time …………………………………. they’re wrong.
For example, at the beginning of 2008, many property experts – such as the Council of Mortgage Lenders and Halifax – were predicting that house prices would either increase or stay flat. In fact, they fell by at least 10% on average across the nation, with some areas suffering even bigger falls. Now of course they are headed even further south.
What about the recession – over by Christmas? Which one?
Truth is, pundits fill media space and you can choose whichever prediction suits your aspirations. Or you can choose none and make some careful plans to cover as many outcomes as possible. Chief amongst these ought to be that things will be tough for quite some time so you need to concentrate on vital issues – after allowing for food and warmth you need a roof over your head so plan your finances to meet mortgage or rent payments. And don’t forget personal loan repayments. Failure to manage these will affect your ability to get further credit if it becomes essential.
January 23, 2009 at 4:34 pm | personal loan | No comment
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IVA good idea?
An Individual Voluntary Arrangement (IVA) may become necessary for people who have got into financial difficulty and want to clear their debts without getting into bankruptcy.
To put an agreement in place an IVA practitioner is appointed and proposes to creditors that the debtor will pay back only a proportion of what is owed (typically between 30p and 50p in the pound). If 75% of the creditors agree the deal goes ahead and last for 5 years. No interest accrues during this period and when it is over the individual is debt free.
The IVA company will typically propose that the debtor pays back between 30p and 50p in the £1 and if the creditors agree, the IVA contract will last for five years. Interest will be frozen while the debt is being repaid and after the contract has ended, the individual will be debt free. During the contract the individual will not be able to apply for any credit. One of the key benefits of taking out an IVA over bankruptcy is that the individual is safe from repossession.
Although IVAs sound useful, in most instances a good debt management plan will be sufficient to help a person tackle their financial problems. Most IVA companies claim that only around 3% of people that phone its call centres are recommended to proceed with an IVA.
IVAs and bankruptcy are severe methods of dealing with difficult debts. Clearly it is far better to consider carefully your ability to repay personal loans but, where difficulties arise, a consolidation loan should be looked at first.
January 21, 2009 at 6:45 pm | Loans General Info | No comment
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Things ain’t what they used to be
Borrowers with mortgage deals that still have years to run can, in theory, face demands from the mortgage lender to repay the loan in full within 30 days. Most mortgage contracts now carry many terms and conditions that allow the lender to pull the plug on the agreement. One leading lender includes the right to vary the contract ‘for any valid reason’.
Getting and keeping a mortgage has become very much harder as banks struggle to maintain funds. If lenders suspect your information is not 100% correct they will often reject you. If your salary has dropped over the year preceding your application you may be rejected, as it may if you have missed even minor payments (i.e. mobile phone).
One mortgage deal in four now requires a deposit or equity stake of 40%.
For the first time since such figures were recorded, in 1965, banks and building societies will collect more in mortgage payments than will be lent to new customers. As the world of home loans gets tougher, securing funds may become a case of ‘who you know’ and specialist help may well be the only way forward. On-line sourcing support, such as may be found at personalloansmadeeasy.co.uk, will become increasingly important.
January 20, 2009 at 4:06 pm | Loans General Info | No comment
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Train travel can be so variable
As Barak Obama enjoys his historic re-enactment of Abraham Lincoln’s inaugural train journey from Philadelphia to Washington, spare a thought for the working masses huddled together on a First Great Western train trying to get from Swindon to Reading each morning and back again at night – and paying over £4000 per annum for the privilege
With season rail tickets often already costing £1000-£4000 per year the rise this month of an average 6% is not good news. Yet the cost of buying weekly or daily tickets works out much, much higher so finding the money to buy longer term tickets makes sense, even if a personal loan is required.
January 18, 2009 at 7:55 pm | Loans General Info | No comment
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If it ticks all the boxes, watch out for the ‘Wow’ factor
Usually a bridging loan does not have anything to do with borrowing money to purchase a bridge. No, usually a bridging loan is what you desperately want when you’ve found a new home which is terrifically better than the terrific house you’re trying to offload, but can’t.
You can possibly see a pitfall just by reading the above. It’s the word ‘desperately’. When you’ve found the next ‘house of your dreams’ you want to grab it quick, make it yours, cut out the competitors etc.
In that frame of mind you’ll be ready to sign up for whatever deal helps you get it. But be careful before you dive in. These loans are expensive and are usually considered to be a last resort.
You will probably end up with a mortgage and a bridging loan and have to pay off both loans at once. Expert advice says you not use a bridging loan simply as a way of beating property chain problems.
However a bridging loan can tide you over in the short term and the extra expense may save you from losing money already spent in the purchase process, as well as reducing stress. But if you do it for the wrong reasons you may end up in financial difficulty which, when you look at the consequences, may elicit a rather large ‘Wow’.
January 17, 2009 at 6:35 pm | Bridging Finance | No comment
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