I think many of us are in financial dire at the moment and wonder whether this would still be the case if we weren’t constantly told about recession and our poor loans situations (see article) all over the news.  So is it just me who thinks that the population will always react to what we are listening to? Take repossessions for example, last summer there was nothing major on the news, no real life scenarios about Mrs Smith having her property repossessed - why?

Well, I’d say because last year there was no sensationalism in that story whereas now there can be. We’ve been talked up into believing there will be a major increase in repossession (and indeed there is, and there will continue to be so), but I’m convinced as a society, we just conform and do as we are told to do by what’s being televised. Mrs Smith might well have been irresponsibly leant money to, but not all repossessions are down to irresponsible lending and instead might be due to a change in circumstance (with inadequate protection in place to cover these eventualities should they ever arise), and thus financial planning (in hindsight) is paramount.

The most vulnerable are obviously those who have had problems in the past, not minor historic defaults as many high street lenders will consider you a prime case on anything of a low amount and which can be genuinely explained. I’m referring to those who, when they took out their mortgage, had recently been subject to some form of adverse credit such as a CCJ, major default or some mortgage arrears. So is it a good time to start looking at mortgages if you fall into this category? Well the answer is ‘maybe’! Because if you’re paying the lenders variable rate then it could be that you are in fact being penalised, and if you’re on the bank’s LIBOR rate (the inter bank lending rate) then again this is higher than the Bank of England’s base rate (If you’re not sure then you can check your original mortgage paper work but most sub-prime lending was based upon the LIBOR rate). However, if you’re currently on a fixed rate scheme or if the mortgage you have is based on the Bank of England’s base rate then you are likely as well to stay as you are. I would however, consider your overall financial planning and any protection needs you might have. I have listed some links below to find out more about current mortgage schemes, rates and new products because of the latest interesst rate movements.

• Mortgage Quotes for ‘Prime’ Borrowers (ie No Adverse Credit History)
  CLICK HERE >>>
• Mortgage Quotes for ‘Sub-Prime’ Borrowers (Any sub-prime or adverse credit mortgage lender)
  CLICK HERE >>>
• Loan Quotes
  CLICK HERE >>>

Well as it’s Armistice Day I thought it appropriate to take time out to remember those that fought for us in those darker times. I for one will never forget what our soldiers did for each and every one of us and I would encourage you to take a moment to reflect upon the life you live.

However difficult the times are ahead financially, most of us have our health and are able to enjoy life on a daily basis. Without our ancestors we might not actually be so lucky.

Andy.

Base Rate down to 3% and VAT expected to reduce by 5.5% to 12%

So for me Gordon Brown has raised his profile and once again proved he’s the right man for the job during this recession. I’am not overly political nor I am I a staunch Labour, Conservative or Liberal voter, but I do like to read up on party manifesto when a general election nears.

Due to these interest rate and imminent tax cuts I am almost reminded of the Tory Government of the late eightees and early nineties where Government borrowing rose to record levels and the economy almost ground to a halt. Whilst I firmly believe that nothing like this will happen today I do have an air of scepticism over the reasons behind the new approach by a man whose leadership was in massive decline (Have you actually noticed how little we see of David Cameron on the TV right now?). It would of course be natural to assume the reasons behind all the changes are more likely to be because our leader is trying to poll extra votes and popularity in these tricky times.

I however, personally believe that Gordon Brown has took action, took the bull by the horns so to speak.

We all know that whilst Tony Blair was at Number 10 there were little chance of any real challenge to Party leadership and we further know that the man making important financial decisions behind the scenes was Gordon Brown. Could it be then that the new Chancellor is, dare I say, useless, and that Mr Brown himself has orchestrated these changes? I think so, and I’m now watching with anticipation to see how long it will take for a Cabinet re-shuffle.

So what about the rate cuts I hear you ask?

Well the biggest single problem in our housing market right now is the inability of First Time Buyers to get onto the property ladder due to a lack of deposit. I’m not advocating the return of 100% mortgages but I would like to see further reduction in house price values and a change in lending policy for the major banks and building societies that would allow more use of assisted deposit schemes (in that I’m referring to family gifts as opposed to negotiated reductions in the purchase price of a property).

Only when First Time Buyers can access properties will we begin to see an upturn in the economy, which will in turn facilitate and ease the burden on the Buy to Let investor market. So will the rate cuts actually improve the property market? Well the answer is a firm no! But it will help existing tracker mortgage payers and those people coming off fixed or discounted rate schemes as the payment shock scenario has been massively aided. Actually, this does have a profound effect even on the Buy to Let market but the problems there are not necessarily to do with the credit crunch, and more to do with extremely poor decisions by the newbie landlord under even worse advice from the mortgage broker and or developer (anybody who bought a new build apartment on a no-deposit down and cash-back deal must have had alarm bells ringing, even moreso if they were having to contribute to the mortgage payment each month).

The tax cuts won’t as mentioned suddenly get the housing market moving but will improve it slightly. The rate cuts will however, for sure, reduce the number of repossessions and significantly aid the majority of mortgage payers coming off schemes. The reduction in VAT would, if implemented, help small businesses and contribute also to the purchase price of material goods (assuming of course that retailers themselves do not act like the banks and refuse to pass on these cuts (but that’s another story)).

Summary:

• Gordon Brown’s profile has been raised
• Country to be in HUGE debt
• Cabinet re-shuffle imminent
• Rate cuts do not help First Time Buyers chances of getting onto the property ladder
• Further reduction in house prices needed
• Payment shock ‘massively’ aided by Bank of England’s decision to cut rates to 3%
• Talk of VAT reductions to help small businesses and consumers

Resources:

• Speak to Mortgage Adviser (External Link)
• Speak to Debt Adviser

So we’re over a year into the credit crunch now and heading into what some are calling a full blown recession.

I agree with them!! Already we’ve seen many mortgage lenders close their doors forever or cease lending completely, and the interbank lending has all but ceased too. So what is likely to happen over the next couple of years?

Well I’m no authority on how the economy will evolve but I do suspect it will get worse before it gets better. Watching the news last night (or it may have been the one show I can’t remember exactly) it was suggested that the so called recession we are entering may be more akin to a ‘V’ rather than a ‘U’. By that they mean a very quick ‘in and out’ recession and nothing drawn out like other recessions. This might well be true but let’s remember then that the banks problems started over a year ago and consumer lending virtually came to a halt in or around March this year.

That was followed by the the knock on effect of building sites closing down and the employment sectors within the associated trades began to decline. As far as I know, I wasn’t aware that the retail sectors were really affected yet, which would kinda run true when you look at the latest inflation figures of over 5%, so as we hear of these rises in unemployment (currently at their highest levels since the mid nineties if I remember correctly) what will come in the ensuing months when people stop spending on the high street.

Well, it’s a snowball effect that hasn’t even started yet. As you’re reading this you probably haven’t given too much thought as to what will happen so let’s start with Christmas, where I’m sure we’ll all go out, as usual, and spend like crazy trying to make our loved ones happy. No doubt the majority of us will put this spending onto some form of plastic with a view to paying it back in the new year.

Come February, when all the bills are well and truly in we’re likely to stop spending on luxury items, which will include going to the pictures, going out drinking, buying new clothes, and generally having a life. This is when the high street and retail trades will be hit and as such when the recession begins to make its appearance.

It isn’t always the best thing to take out a consolidation loan or mortgage for such occurencies so if you have debts owing to a number of creditors then perhaps it would be wise to speak with a specialist debt adviser.

So is there any such thing as poor loans or is this just a euphemism for people who are looking for a loan and have a poor credit rating?

I’m often curious to know why people looking for loans, particularly those with a poor credit rating looking for poor loans, find themselves on price comparison websites and expecting some form of realistic indication as to what is likely to be offered to them. When in all probability the results proffered would be completely unavailable, out of date, non-existent or worse, completely fictitious!

Take for example one major price comparison website that often advertises on the TV. I’m not prepared to mention their name here for obvious reasons but there is a section on there website that asks about your credit history prior to showing a list of possible results as to what you might expect to be offered.

The credit history referred to however is not checked by the website so they have no idea about your likelihood of obtaining any form of poor loans from the institutions displayed. How can they? They themselves are nothing more than a comparison site, they have no idea as to what ‘criteria’ the lending institution might use and furthermore, they are relying on very limited information given to them by you, in regard to your credit history but neglecting to consider something much more important which is your ‘credit score’ (which, by the way, can be obtained free of charge from ‘Credit Expert‘).

Poor loans are complicated because there are many factors which are used to determine whether you will be offered the loan, particularly if you do have a poor credit history. Let’s take a look at some elements that might be considered when the lender is thinking about offering you a loan, or to be more specific, poor loans.

• Are you a homeowner?
  The starting point for many lenders offering poor loans will be with this question. In the last few years there have been some lenders willing to offer poor loans to non-homeowners but with the current financial status the likelihood for being offered poor loans is somewhat reduced.
• Do you have any equity in your home?
  With the right amount of equity it’s fairly certain that someone, somewhere will be willing to lend you the money you need. However, poor loans require more equity than a loan application from someone with a good clean credit rating. The reason is obvious when you think about it, the risk is much higher because the likelihood is that you have some adverse history when it comes to repaying credit (though not necessarily through any fault of your own).
• Are your problems historic?
  Some lenders will look sympathetically on people whose problems were through no fault of their own, were due to some form of circumstance such as a marriage breakdown or other tragic event, or simply where the problems are historic and not, it must be said, major adverse events.

The considerations above are not exhaustive and are not meant as any representation as to the citeria that lenders will use - but I’m not aware of any lender that does not use them. That said, the actual rate you will be offered for any poor loans application will vary from lender to lender and this is where different institutions come into their own.

A good example to give you in respect of lender’s criteria would be one application I received earlier this year where the client, who shall remain unnamed, had a mortgage with a subprime lender, an arrangement on a very large unsecured loan, and one or two smaller credit defaults more recently. Now many financial advisers’ would simply look at this and pass the case on to a sub prime specialist, or poor loans section within the lending institution chosen.

However, knowing the criteria well, and having established a great relationship with them I was able to place this application with the Abbey on their high street rates. Needless to say this client no longer needs to be pushed down the poor loans route anymore (providing of course that all payments are maintained).

Going back to the point in question, and in contemplation of the questions asked on the price comparison website (in relation to credit history)  it is clearly not the case that the Abbey would have been presented to my client had the adverse entries been disclosed. This is why I get confused about people with known credit problems, and therefore looking for poor loans, as to why they would ever seek information from a website that is unregulated, misleading and dare I say, incorrect.

If you are looking to obtain rates on financials then it is near on impossible to get accuracy directly from a website because the rate you will be offered is determined by the circumstances surrounding your application. If you are chasing the best rates then an adviser can often influence the lender, or simply present your application better than you could do yourself.

Resources:

• Obtain your Free Credit File from Credit Expert
• Loan Quotes for all applicant types including poor loans applicants.
• Mortgage Quotes for all applicant types including poor loans applicants.
• Specialist Debt Advice for people struggling to repay a number of debts.

At the moment it’s hard to switch on the TV or pick up a newspaper without the credit crunch being mentioned.

The credit crunch is making life tougher for millions of Brits. It’s well known that it has affected everyone, whatever their level of income or assets may be, and we have all noticed the price of petrol rising, the ever increasing utility bills, the worrying state of the property market and the extra costs of general living. But it is undeniable that some have been more affected than others.

And unfortunately it seems that those who have less to spare are the ones who are most affected. A large number of people these days live to their means. If this is the case for you, you will no doubt be feeling the pinch. Not many of us have the luxury of having spare funds available at the end of the month. For those that do have a little left over at the end of the month, you may find that you have to dip into that to save getting into debt.

For those who are living to their means the odd rise here and there is likely to be pushing them over. Most of us aren’t too bad at budgeting, but there’s not much you can do when there is more going out than coming in. Worryingly, the up hill financial struggle isn’t likely to end anytime soon.

Even by tightening your belt and watching what you spend you may find you are still being noticeably affected.

Figures from discount super stores have shown an increase, proving that we are trying to manage our finances a little better. Fast food chains and take out restaurants are getting busier as we are deciding to eat in rather than eat out. As a nation we seem to be trading down in a bid to save a little.

To take more of a productive approach to your finances, I would suggest getting advice on debt management. There are a number of companies out there that can offer advice both on and off line. They will be able to help with any debt problems that you may have, by highlighting what debt solutions are best for you.

Hi & welcome to personal debt adviser. The site is run by myself, Andy Wallace, and over the coming weeks and months I intend to write about various issues including budget finance, reclaiming bank charges, payment protection insurance (PPI) mis-selling and so on. I’ll also focus on ways of dealing with your creditors should they be chasing missed and late payments.

I intend the site to be a well designed and easily accessible resource to all financial matters, legal issues, recourse and redress. The options available to you as an individual and the ways in which to proceed with your intended action will all be detailed here in simple form, bulleted lists and in clear and concise, easily understood text. If you would like to speak with a professional adviser then there are pages on the site that will request a little more information about you before sending your details through.

When dealing with your debt issues you may be advised to request information held about you by your creditor. This is a legal right you have under the Data Protection Act 1998 and a simple ‘Subject Access Request’ comes with its own legal obligations to the creditor. A statutory fee of £10 should be included with the request.

A starting point for many is to obtain their credit report. There are three credit reference agencies in the UK which are:

• Experian
• Equifax
• Call Credit

Each of your creditors may use just a single Credit Reference Agency, or publish to more than one. It is therefore advisable to apply to them all so that you know exactly what information is held about you. Details on how to apply for your credit file will be published in due course in the ‘Guides’ section.

Speak again soon,

Andrew Wallace LL.B (Hons)
Personal Debt Adviser