ThinkMoney.com ‘welcomes’ base rate cut

Responding to the half-point cut to the Bank of England’s base rate, financial solutions company Think Money welcomed its already noticeable impact, and pointed to the implied likelihood of future cuts.

“There’s no question that we’re facing extraordinary issues today, both globally and nationally,” a Think Money spokesperson commented. “As a company, we were pleased to see the Bank of England taking this step – not just dropping the base rate, but dropping it by a substantial amount.

“Furthermore, we’re delighted to see major mortgage providers passing that reduction on to consumers. After so many months of negative news, this could make a big difference to many homeowners’ financial circumstances, as their variable rate mortgages drop from 7% to 6.5%.”

Anyone with a tracker mortgage, meanwhile, is sure to enjoy lower payments at once: The Times predicts immediate benefits for around 4 million people paying home loans that track the Bank’s base rate. ‘Those with a £150,000 mortgage’, it reports, ‘will see their interest-only repayments fall by £63 a month’.

“The same goes for other kinds of credit,” the spokesperson continued, “from secured loans to credit cards: people with tracker deals will certainly profit from the cut, and borrowers with SVR deals will be following their lenders’ reactions closely.”

New fixed-rate loans could also drop in price. “Now that the cost of credit has come down, lenders will be able to pass the savings on, giving their customers a better deal without placing their own profits in jeopardy – something which could have a profound impact on their stability at a time like this.

“Looking beyond the actual cut,” the spokesperson stressed, “it’s equally important to consider the implications – not just what the deal means, but what it says about the Bank of England’s assessment of our economy. First, the cut reveals how seriously it is taking today’s financial troubles. Second, it implies that the Bank is feeling more comfortable about inflation.”

As stated in the Bank’s news release about the rate cut: ‘The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability’.

“In other words, today’s financial crisis has become more of a threat to the nation’s GDP – but on the plus side, slowing growth does tend to slow inflation too. The Bank may well have liked to postpone the base rate cut until inflation came down closer to the 2% target, but given the choice between letting the economy deteriorate and losing some ground in the fight against inflation, it chose the latter.”

As for the months ahead: “The latest BRC-Nielsen Shop Price Index (SPI) for the UK reveals that annual shop price inflation shrank to 3.6% in September, down from 3.8% in August. It’s encouraging to see inflation on the way down, particularly as it gives the MPC more leeway when it comes to future base rate decisions. Various influential bodies are calling for the Bank to make further cuts to the base rate – and there’s reason to hope it’ll be able to do that.”

http://www.thinkmoney.com/mortgage/

Economic crisis calls for fast action on debt

Responding to the International Monetary Fund (IMF)’s report suggesting that the global economic slowdown is likely to worsen and spread to more economic sectors, Debt Advisers Direct (www.debtadvisersdirect.co.uk) have warned the public that extremely testing times may be ahead, and people should look to get their finances in order and clear any debts as soon as possible.

In their new Global Financial Stability Report, the IMF have warned of “growing turmoil”, saying that the state of the global economy has worsened since its last assessment in April 2008. They also said that Governments’ willingness to act would be crucial in “bringing about a return to stability in the international financial system”.

Although the global economic crisis has so far been mostly limited to the financial sectors in more developed economies, the IMF warned that may soon be about to change, with other sectors and developing economies likely to be affected in the future.

A note on the IMF press release said: “financial institutions in emerging markets, which until recently remained fairly resilient, will be confronted with a much more challenging economic environment: A combination of global credit tightening, and economic slowdown, which could accelerate a downturn in the domestic credit cycle in some countries. Those economies with greater reliance on short-term flows or with leveraged banking systems funded internationally are particularly vulnerable.”

A spokesperson for Debt Advisers Direct said that the threat of financial hardship applies to everybody – not just people on lower incomes or those already in debt.

“The nature of the economic crisis is that many peoples’ jobs are at risk, and that applies just as much to people earning high incomes as it does to low earners. At the same time, many costs of living such as food and energy are still on the rise, so most of us are likely to feel the squeeze to some extent.

“For that reason it’s essential that anyone who is currently struggling financially, particularly those struggling with debt, seeks the relevant advice as soon as possible.”

The Debt Advisers Direct spokesperson added that there are a range of debt solutions available to help people in various financial situations. “For those with a number of debts, a debt consolidation loan could be the answer,” he said.

“Debt consolidation involves grouping all of your debts into convenient single monthly payments. It can also reduce interest rates if you are consolidating high-APR forms of credit such as credit cards, and it can allow you to reschedule your payments over a longer period, making your monthly payments lower. However, this may result in paying more interest in the long term.

“Alternatively, for those who want a less formal debt solution, a debt management plan can reduce your monthly payments to an amount you can afford, as well as freezing interest and other charges.

“Or for people with debts of over £15,000, an IVA (Individual Voluntary Arrangement) is an alternative to bankruptcy which could help you keep your home and other assets.”

The spokesperson added: “Above all, it’s very important that anyone struggling with their debts seeks the appropriate advice immediately, because it’s very possible that things are going to get even tighter in the coming months.”

Base rate cut – economy still uncertain!

Debt management company Gregory Pennington have warned that the economy remains uncertain, despite a number of signals suggesting a potential recovery, and have advised anyone facing severe financial problems to seek professional debt advice as soon as possible.

The Bank of England Monetary Policy Committee’s announcement on Wednesday that the base rate would fall to 4.5% was intended to calm fears surrounding the money market and increase lenders’ willingness to do business with one another, subsequently increasing liquidity and boosting the loans market.

A number of lenders announced cuts to their mortgage rates following the base rate announcement – which may come as a relief to prospective homeowners or existing homeowners looking to remortgage, following many lenders’ reluctance to respond to the last base rate drop.

Meanwhile, petrol prices recently fell to as little as 103.9 pence per litre, while food price growth slowed by 0.2% in September, according to the British Retail Consortium (BRC) – arousing speculation that overall inflation has hit its peak and will now begin to slow.

However, a spokesperson for Gregory Pennington commented that while there are encouraging signs for the economy, there is no guarantee that further difficulty for the economy can be avoided.

“The first thing to bear in mind is that while the base rate cut is intended to help the economy, it was brought in as an emergency measure,” she said. “The threat of a severe economic downturn is still looming and there are no guarantees it can be avoided.

“The fall in oil and food prices are very encouraging, but both are heavily affected by external factors, largely outside our Government’s control.”

The debt management company spokesperson was keen to emphasise the continued need to take care over finances and manage debts effectively in the coming months. “There is still the possibility that things could get tighter in the near future, so it pays to tackle any financial issues now, rather than waiting to see what happens next.

“People who are struggling with debt are especially at risk, because their finances are already stretched – and any further rises in costs of living could make those debts unmanageable.

“As always, we advise anyone struggling with debt to seek expert debt advice as soon as possible. Leaving it too late could allow your debts to grow, which is particularly dangerous if costs of living do continue to rise.

“There are a number of debt solutions to help with various financial situations. A debt management plan is a flexible means of getting out of debt in which your repayments are based on how much you can afford, and in some cases interest and other charges can be frozen.

“Debt consolidation involves grouping your debts into one convenient monthly payment, therefore simplifying your finances, and your debt can also be spread out over a longer period of time, meaning monthly payments are smaller – although this can mean you pay more interest in the long run.

“For more serious debts of over £15,000, an IVA (Individual Voluntary Arrangement) might be more appropriate. These work by agreeing with your creditors to make payments based on what you can afford for a period of five years, after which the remaining debt is considered settled.”

Source: http://www.gregorypennington.com

MPs Support More Help for the Elderly

Between 1995 and 2005, the average borrower’s outstanding debt trebled, but the 55-64 age range saw a sharper rise per individual than any other age range. So says ‘Debt and Older People’, a report by the Personal Finance Research Centre at Bristol University, commissioned by Help the Aged and Barclays.

As they prepare for retirement, people should be able to sit back and enjoy the fruits of their years of hard work, rather than struggling to manage their debts. It’s extremely worrying to see some people carrying debts with them into retirement – with some still paying off mortgages in their 80s, as the report reveals.

So many were disappointed by the scale of the government’s measures to help older people stay warm this winter. As the Help the Aged website reports, a poll carried out by ComRes reveals that:

• Eight out of ten MPs think increased investment is needed in the Government’s fuel poverty programmes, including Warm Front.
• Two in three MPs believe the winter fuel payment should be increased. 
• Three in five MPs believe the extra tax revenue from rising energy prices should go to fuel poverty programmes. 

It seems the recent increases in the cost of gas have simply pushed many older people’s budgets too far. Winter heating bills can take up a significant proportion of any monthly budget, but older people with fixed incomes – and no real potential of earning more – have been hit particularly hard.

It all underlines the importance of clearing debts before retirement. Once someone has retired, their income isn’t the only thing that shrinks. Their options for managing debt often shrink too, along with the amount of ‘spare’ money they have once they’ve accounted for all their unavoidable expenses.

This doesn’t mean that debt solutions such as debt management and debt consolidation loans aren’t an option for older people, but – in general – the younger someone is, the easier it’ll be to manage their debts. After all, creditors are more likely to agree to a debt management plan involving reduced payments (rather than pushing for bankruptcy, for example) if they can see that the borrower can commit to making those reduced payments regularly until the debts are paid off.

But as long as the borrower acts in time, debt management can be a particularly effective way to pay off debts in time for retirement. A professional debt management organisation can help over-stretched borrowers do the maths – calculate how much they can really afford per month, and determine whether a debt management plan could help them clear their debts before they retire.

Find out more about managing your debt, consolidation loans, individual voluntary arrangements & protected trust deeds at http://www.thinkmoney.com.

IVA

IVA

If you have debts of around £15,000 (or higher) that you are unable to repay, an IVA (Individual Voluntary Arrangement) is a Government-backed debt solution that could help you get back in the clear by writing off a substantial amount of your debt. As part of the Insolvency Act (1986), it’s a legally binding means of getting out of debt that helped over 40,000 people per year in both 2006 and 2007.

An IVA proposal can only be put forward by a licensed Insolvency Practitioner. If the IVA is approved, you will pay a set monthly amount towards your IVA, usually for 5 years – after which your debt will be considered settled.

Before entering an IVA, your circumstances will be thoroughly reviewed to determine how much you are able to pay each month once living expenses have been taken into account. Creditors are likely to accept an IVA if they can see that a) you are not able to repay the full amount, and b) they will get more from your IVA then they would by petitioning for your bankruptcy.

How does an IVA work?

1) Firstly, you will speak to a debt adviser about your situation. If they think an IVA is your best option, they will work with you to draw up a proposal, telling your creditors how much they would receive if the IVA goes ahead.

2) The proposal is then submitted to your creditors for approval. A Creditors’ Meeting will be planned to give your creditors a chance to discuss the terms.

3) The Creditors’ Meeting invites your creditors to get together and vote on whether to approve your IVA proposal. For the IVA to go ahead, those who vote in favour of the proposal must collectively own more than 75% of your total debts.

If any of your creditors do not respond to the proposal, it is automatically considered a vote in favour of the IVA.

4) If approved, the IVA begins and you will pay a fixed amount each month, which will be divided between your creditors. This will usually take place over 5 years. Your creditors are legally required to stop charging interest and may no longer pursue any kind of legal action, unless the terms of the IVA are broken.

5) If you are a homeowner, you will probably have to free up the majority of the equity in your home in the 4th year of your IVA, and this will also be divided between your creditors.

6) If you successfully keep up payments for 5 years, the IVA is complete and you are legally debt-free. However, it may take up to a year afterwards for the IVA to disappear from your credit history.
Useful IVA resources:
http://www.debtadvisersdirect.co.uk/iva-solutions/iva-solutions.asp
http://www.gregorypennington.com/individual-voluntary-arrangements.asp
http://www.thinkmoney.com/debt/IVA.asp

Reposession advice: some tips

When a homeowner faces the threat of repossession, finding a way to make those monthly mortgage payments jumps to the top of their priorities list. Their first port of call should really be their mortgage lender, who may let them reduce or reschedule their payments until they can get their finances under control again.

There are, however, other places they can turn to. Often, people can’t pay their priority bills (such as their mortgage) because their non-priority bills (credit cards, personal loans, overdrafts, etc.) simply take up too much of their monthly income. In cases like this, they may have a wide range of debt solutions available to them, from debt consolidation to IVAs (Individual Voluntary Arrangements).

Helping them reorganise their non-priority payments, these debt solutions can free up the money they need for their mortgage payments. Different debt solutions are right for different people, so they should start by seeking debt advice from a professional debt specialist, who can help them decide which debt solution (if any) is right for them.

Debt consolidation
A debt consolidation loan may be a simple idea, but it can really help people with multiple debts. If they take out one new loan that’s big enough to pay off all their unsecured high-interest debts, they’ll have just one repayment to make per month, rather than many. This can greatly simplify their finances as well as reducing the interest they’re paying on their debt.

A debt consolidation loan can be an effective way for someone to reduce the amount they have to pay every month, as they can arrange to repay the consolidation loan more slowly than the original debts, although this could well mean they end up paying more in total.

Depending on their situation, they might consider consolidating their debts by remortgaging – taking out a larger mortgage and using the cash to pay off their unsecured debts. Even if this increases their mortgage payments, it can still reduce their overall monthly expenditure, as they won’t have to make any payments to other debts. Of course, it’s always important to think carefully before securing any debt against property.

But debt consolidation isn’t always the best way forward, and some people may be better off with an alternative debt solution, such as a debt management plan – or an IVA.

IVA (Individual Voluntary Arrangement)
For homeowners with significant debts (over £15,000, in most cases), an IVA could be a good way of reducing their monthly payments, freeing up cash for mortgage payments and writing off a portion of their debt. Normally lasting five years, an IVA is a legally binding agreement between an individual and their unsecured creditors:

· The individual agrees to make regular fixed payments throughout the IVA – basically, the maximum they can afford once they’ve taken their living expenses into account. They may also have to free up some equity in their home towards the end of the IVA, so they can pay their creditors more of what they’re owed.

· If enough of the creditors accept the terms, they’ll agree to write off any outstanding debt once the IVA has been successfully concluded. They also agree not to take any (further) legal action, as long as the individual keeps making the payments.

An IVA is only an option if the individual genuinely can’t make their normal payments to their unsecured creditors – but can commit to making those reduced payments for the duration of the IVA.

Read more about debt consolidation loans & IVAs at Debt Advisers Direct

Article Source: http://EzineArticles.com/?expert=Melanie_Taylor

debt consolidation remo – things to consider

If you have several debts you are looking to repay, a debt consolidation remortgage could be the answer. It allows you to consolidate your debts as part of your mortgage terms – effectively adding your debts to your mortgage. It also enables you to repay the debts over a much longer period than an unsecured debt consolidation loan, or other debt solution, making repayments cheaper (although repaying what you owe over longer could mean you pay more in total.)

Will I be able to get a debt consolidation remortgage?
It’s been well publicised over the past year that mortgages are harder to get than they used to be – a 10% deposit is all but a necessity, and lenders are being stricter about their lending criteria than in recent years.

Because they involve paying back both your mortgages and your debts, debt consolidation remortgages can be a little harder to obtain than regular mortgages. But with a sufficient credit rating, adequate deposit and a proven ability to repay it (i.e. good earnings), it’s still quite possible to get a competitive deal.

As debt consolidation remortgages rely on equity withdrawal, the amount of equity you have tied up in your home will also affect your ability to obtain a debt consolidation remortgage, and how much more you can borrow to pay off the debt.

Your equity includes any deposit paid on the house, any repayments you have made and any increase in your home’s value – essentially, it is the proportion of your home that you actually own. The more equity you have, the more equity you have the potential to withdraw – plus your lender will be more confident in your ability to repay.

Will it be affordable?
This really depends how big your debts are – i.e. how much extra you need to borrow. For example, if you have a mortgage for £100,000 and want to consolidate £50,000 of debts, you can expect your payments to go up by 50%. Consolidating £8,000 of debts on a £150,000 mortgage, on the other hand, would be much more affordable. If you are unsure whether your debts are too big for a debt consolidation mortgage, or want to know about other possible debt solutions, talk to an expert debt adviser.

Interest rates
Debt consolidation remortgages are offered at the same rate of interest as a regular mortgage – the only added expense will be the extra you borrow to pay off the debts you have consolidated into the mortgage.

This will vary depending on your circumstances: if the homeowner has a poor credit history, the interest rate is likely to be a little higher. Since the interest rate applies to the whole mortgage, not just the other debts, this could add up – so it is important to make sure you can afford the monthly repayments if you are going to take this route.

Article written by http://www.debtadvisersdirect.co.uk

SNP in debt

THE SNP spent in excess of £1 million more on campaigning than Labour last year, it was revealed yesterday.
Details of the parties’ accounts for 2007, published by the Electoral Commission, showed that the SNP spent £1,676,223 on campaigns last year. That compares with the £638,014 Labour in Scotland spent on its campaign.

The SNP accounts showed the party’s income last year was £2,562,970. But it spent more than that, with expenditure amounting to £2,803,560 – leaving the Nationalists with a deficit of £240,590.

The Labour Party across the UK cut its debt by more than £6 million to £18.9 million last year. Labour made a £7.51 million operating surplus last year against an £814,000 deficit in 2006.

Jack Dromey, Labour’s treasurer, said the party had shown “a new discipline of approach” and a determination to “live within its means”.

The Conservative Party reduced the amount it owed from £9 million to £7.75 million, while the Lib Dems ended the year £1.3 million in the black.

The Tories recorded a £1.57 million surplus, down from £4.2 million. The Lib Dems recorded an operating deficit of £366,677, compared with a surplus of £1.18 million in 2006.

The commission’s chief executive, Peter Wardle, said inconsistency between the parties’ presentation of their accounts made comparisons difficult.

He said: “The commission is consulting on prescribing regulations that will set out how accounts must be presented with more consistency and transparency.”

The accounts for the SNP also showed the party’s membership in 2007 was 13,944 – an increase of almost 50 per cent from 2003, when it was 9,450.

SNP in debt: Original < here >

Managing debt – 5 tips for saving money at home

If you’re in debt, you’re probably already managing your money very closely and trying to find ways to repay your creditors as soon as possible. At times like this, it’s easy to forget about the simple ways to make your budget work for you. A few savings here and there can make all the difference and help you get your finances in order more quickly.

Managing debt – different ways to save money

There are many ways to save money. Some are obvious, some are not so obvious. Some require a little work, some require no work at all! Just spend a couple of minutes jotting down all the areas you could save money. Today we’re going to look at just one area, but we could examine all sorts of areas to save money, such as:

• financial products
• groceries
• vehicles
• days out
• holidays

The list goes on, and on . . .

Saving money at home

Today we’ll take a quick look at 5 ways to save money in the home. A few thrifty tips to get you started:

1 – Manage your grocery budget
Grocery spending soon racks up, especially if you don’t budget properly. Before you next go to do the big shop, sit down and work out exactly what you need to buy. Be strict with yourself, set yourself a manageable budget. Write a shopping list and a target budget – take your list, a calculator and a pen with you.

2 – Try to save some energy
However you’re paying for your energy (bill or meter), you can start to make immediate savings by watching your energy use. Remember to switch lights off when they’re not needed, turn your appliances off at the switch (except your fridge/freezer of course) and keep the heating down.

3 – Grow your own
Have you seen how expensive tomatoes are these days? What about fresh herbs or organic eggs? OK, so it might be a bit much to suggest you can make significant savings in this way, but you’d be surprised at the satisfaction you’ll get out of growing your own. Play your cards right and you’ll save little bit of money in the process.

4 – Switch telecoms suppliers
There’s a good chance you’ll save money by switching your telecoms package. Broadband, line rental and TV subscription… it’s highly competitive industry and suppliers will often go the extra mile to get / keep you on board. Make a note of your current deal and get on the phone – talk to a few suppliers and see what they can offer, then talk to your current supplier to see if they can match it.

5 – Monitor your finances
Being a little more astute with your daily spending habits can have a massive impact on your personal bottom line. Take this seriously: as seriously as a Bank Manager would while monitoring his client’s overdraft. Draw up a spreadsheet of your income & expenditure and update it daily. Keep your receipts and be honest about your spending habits. Getting an accurate picture of your personal finances can be a major step forward in managing your debts.

When you’re looking after your money, a little bit of thought can go a long way.

Develop A Debt Repayment Plan

Develop A Debt Repayment Plan
By Paula Barton

This is one of the first things that you need to do, regardless of how you actually go about paying off your debt. Whether you are going to ’snowball’ your debt repayment, or whether you are going to consolidate your debts into one, you still need to construct a feasible debt repayment plan.

In other words, you need to sort through your debts and loans etc, to find out which method of debt repayment is the method that is going to work for you and your situation.

We should have sat down before this point to unravel the depths of the debt problems, by writing them down on paper. (Or, if you are more comfortable using a computer then type them instead of writing them down.)

By doing this, we managed to separate our debt problems so that they are smaller problems instead of one large problem that we might find very difficult to face up to.

At this point then, it is best if we go on to the next step and try to figure out what type of debt repayment plan is best for you.

To do this, you have the option of using any of the debt calculation software that is available these days, or you can even try your hand at doing this the old fashioned way, by hand, or if you want, by entering things into a spreadsheet and doing the calculations that way.

It really does not matter how you go about doing it, what matters is that you actually do it. Without getting things down on paper (so to speak), you will never be able to fully appreciate exactly to what level your problems go.

It will not be as easy for you to ignore, or forget about your debt and loans when you have it written it down somewhere so that you can see the complete extent of how much you owe.

Let me warn you here and now, that it is not going to be a pretty sight. If up to this point, you have managed to ignore, or otherwise not fully take in, the full extent of your debts – and I am assuming that you have, that is the whole reason you are reading this article – you won’t necessarily be prepared for what you see.

It’s much easier to fool ourselves into believing that we don’t have that much debt on us when we only look at individual debts and loans. It’s when you put everything together, so that you really see everything at once, that it’s honed in us just how much we are in debt. And that is when the panic starts to set in.

So, before you begin to panic, let me just say once more – seeing the total amount for which you are in debt, is not going to be a pretty sight, so brace yourself.

However, that said, when you do finally get over the shock of looking over your total number of debts, you can then proceed on, in a calm and orderly manner to the next course of action which you need to take, that of organizing yourself to be able to repay your debts and get your credit rating back on an even footing.

I have mentioned this before, but I will say it again: it’s not going to be easy pulling yourself up by the ears to get out of debt, and you will have to sweat and toil for it, but it can be done. And when the entire thing just seems to be too much for you to take in, always keep in mind – it can be done.

Debt can be a very worrying time, information can set you free. debt relief resource for debt management and how to handle debt negotiation.

Article Source: http://EzineArticles.com/?expert=Paula_Barton
http://EzineArticles.com/?Develop-A-Debt-Repayment-Plan&id=1022817