There may be a lot of truth in the saying ‘money doesn’t grow on trees’, but it can grow for you, if you bank, save, and invest wisely, and make the most of opportunities available to add to your income. Intelligent-investor is a personal finance blog that hopes to send you on your way to doing just that.
Click onto the blog and you’ll find advice on managing your debt, easy to read details on ISA’s and other savings opportunities, how to get the best deal on different insurance policies, and a personal finance guide for day to day and business investments.
Consumers are becoming more and more disillusioned with banks following a series of scandals and the mis-selling episodes. Instead, they are now choosing building societies for improved customer service and better rates. Building societies that exist as part of the mutual sector now make up about £2.9m of the gross mortgage lending market which an 8% increase for March of this year when compared to March of 2013.
Figures also reveal that mutuals were able to capture 25% of all gross lending for the month of March which is a 22% increase when compared to the previous year. Over the starting three months of 2013, gross lending saw a 20% increase compared to the first three months of 2012.
Business advisor Stephen Williams from Deloitte stated that mutuals are continuing to increase and it is likely that they will see an even high demand as more people are able to get back onto the mortgage market this year.
David Webster the annual conference chairman of the Building Societies Association stated that mutuals are able to offer a great deal of diversity to the financial sector and offer consumers choice and competition. IN addition, they help to stabilise the financial sector with a basic approach that allows them to receive high praise from their customers.
A spokesman for the British Bankers’ Association responded to the figures by explaining that they always encourage customers to shop around first to make sure that they get a good deal and now that building societies and banks are able to compete for business it is to customers advantage to wait.
Many are now looking for alternatives as well and this is where building societies come into play. Mutuals are known for taking care of their members over shareholders which is another reason why many feel more comfortable working with them.
A record breaking amount of Scottish citizens filed complaints last year about financial services they received. Many banks were said to have turned their backs on households and customers that were struggling to make ends meet.
Complaints received by the Financial Ombudsman Service from Scots peaked in 2012 according to new figures. Glaswegians were the most likely to issue a complaint compared to any other city resident in the UK. The ombudsman service reported that it saw a large increase in complaints from people in all regions of Scotland in terms of issues that they faced with financial institutions.
Over 180,000 Scottish people contacted the Ombudsman compared to just 100,000 in 2011. According to the FOS, Scotland actually accounted for 10% of all the complaints it received in 2012. The FOS also reported that overall they saw an 80% increase in Edinburgh and Glasgow cases and an increase in complaints from Dundee and Inverness that was almost a 200% increase.
The largest issue was the mis-selling of payment protection insurance followed by disputes between consumers and firms about what the product costs should have been for different financial products. It received almost twice as many complaints about PPI totalling over 28,000.
Banks have already placed £15b aside to pay of victims of PPI mis-selling and the figure is expected to grow to be even more before all customers are properly credited for issues that have arisen from PPI cases. The fact that banks are rejecting about a third of all claims has not helped the situation.
In addition, the figures also show that the financial sector at large was not accommodating to the financial struggles many of its customers now face. Many complaints hinted at the failure of building societies and banks to work with those who are having financial troubles.
Years ago, when the UK housing market was booming and home prices were high, lenders made a great many interest-only loans, in which the borrower’s monthly payment covers accumulating interest but none of the principal. These mortgages were a boon to many buyers, but they were based in part on the assumption that by the time the principal came due, the property securing the loan would have substantially increased in value.
With the real estate market in a long-term slump, the fact is that today many of those properties could not be sold for the price that was paid for them, much less enough to pay off the entire principal balance of £50,000 or more. According to a review published by FCA (the Financial Conduct Authority) there are more than 600,000 interest-only mortgages with due dates before 2020, and almost half of those borrowers will have a serious problem with repayment.
The FCA says that with careful planning, most of those facing a shortfall will be able to find a viable option for paying off the mortgage, but only if they engage with their lenders and start planning well in advance of the maturity date. To facilitate that engagement, FCA is working with the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA) to make sure lenders contact their borrowers and work with them on repayment options if needed.
Most borrowers have a repayment plan in place, but at least 10% really have no idea and/or no real understanding of the terms of their loan. The ones most at risk are those with loans maturing in the next few years, but over the next 30 years another 2.6 million interest-only mortgages will be coming due, and according to FCA’s calculations, nearly half of the borrowers will be facing a shortfall of at least £50,000.
Borrowers with loans coming due in the near future should be fully aware of their obligations and how they can be met; discussion with the lender is crucial especially in cases where there is any doubt about the borrower’s ability to pay. Lenders are called on to work with borrowers and help them find the best plan for repayment so they don’t end up defaulting on their loans and/or landing in a financial bog.
Over the last year mortgage debt has fallen a great deal as a result of the low mortgage rates and homeowners making smart decisions when it comes to managing their mortgages. However, brokers are continuing to advise that homeowners continue to shrink the sizes of their loans by taking advantage of products on the market that allow lenders to borrow extra payments back and making the most out of the funds that are available to them at a great discount.
In other words, brokers are stating that when overpaying a mortgage homeowners must be careful and versatile with how they plan to do so. Figures released from the Bank of England last week reveal that Britons are now paying off home mortgages at an unprecedented rate with the total amount of mortgage debt falling by about £9.1b over the course of the second quarter of 2011.
This is the largest drop seen in the mortgage market since mortgage rate data was first collated at the start of 1970. However, the Bank of England stated that a bigger reason for this is that there was not much new borrowing and instead many people are choosing larger repayments which brokers are warning needs to be approached carefully.
According to brokers, instead of choosing tracker or fixed mortgages an offset mortgage is often the most suitable option for mortgage owners as the unique products allow borrowers to have access to any of the funds that they have built up as a result of over-payments. Most traditional mortgages will allow mortgage owners to pay as much as 10% per year of their balance and still manage to escape any penalty, and those that have standard variable rate mortgages do not have to worry at all about incurring a penalty for overpaying.
Brokers are warning now that as a result of the credit crunch set-ups that allow borrowers that have overpaid to underpay in the future or take a brief hiatus from payment are not as common with some lenders limited the amount that can be withdrawn back from the mortgage, if at all. Therefore, those who choose to overpay on a mortgage need to be careful with their over-payments to avoid harsh penalties if they need to borrow any of the funds back as the rate at which is it is re-lent could be almost double.
Choosing the right garage door can not only enhance the overall look and style of a property but can help make a home more energy efficient, which will ultimately save a homeowner money.
Similar to how an ill-fitted front door will cause drafts to pour into the house, make a central heating system work harder and put unwanted pennies onto gas bills, a garage door that has not been fitted correctly will cause leakages of air which will prove to be an inefficient insulator both in the winter and in the summer.
If a garage door doesn’t have any insulation, the garage is likely to get very hot in the summer and extremely cold during the winter months. If the garage is attached to another room in the house, the room temperature of the garage is likely to be transported to the attached room, which will also become too hot in warm weather and too cold in colder weather.
An insulated garage door will mean that cold and hot air cannot enter the room so freely, which will work in a homeowner’s favour in extreme temperatures. An article in the New York Times said that a garage door is: “A potentially large source of heat loss.” In order to save money on heating bills and make a garage, and its adjacent room, more comfortable rooms to be in no matter what the temperature is outside; it makes sense to replace existing garage doors that are not insulated, with insulated alternatives.
Whether your garage is heated or not, having insulation built in to the door will make a significant difference in regulating the temperature, which in turn will increase the usability of the area from somewhere one hurriedly parks their car and rushes into the house, to somewhere one can work on projects, such as woodwork or painting.
Whilst replacing a garage door will naturally require an outlay of money, it is estimated that the savings one makes of having an insulated garage door fitted can be as much as £200 per year. In this sense a new insulated garage door will effectively pay for itself within a few years.
From roller garage doors to side sliding sectional doors, Hormann has a range of garage doors which offer a stylish and energy efficient garage door to complement a stylish homeowners’ commitment to saving money on their energy bills.
Once upon a time those who still had good credit could head out to a mortgage brokers and get the opportunity to refinance or invest in a new home with the best mortgage rates that the market could offer handed to them on a silver platter.
However, over the last few months mortgage rates have slowly started to climb upwards again, even for those with good credit. Of course, those with poor credit or on SVRs are getting hit the hardest as their interest rates are climbing and there is no telling when they will stop. The question that is on everyone’s mind therefore is why they are increasing at all.
First of all, inflation is continuing to hold off, and that means that the Bank of England has not been forced to raise the Base Rate. While you would think that this is a good thing, it means that banks are wary of the fact that a change in the base rate will have to come soon.
The longer the rate sits at 0.5% the higher the chance that it will move upwards soon; which has most banks concerned enough to start to increase their fixed mortgages and other variable rates so that they do not get stuck losing too much money when it does.
The second reason is because the housing market is starting to improve slightly. While homeowners are not able to get into the market, the great buy to let mortgage rates have inspired many new landlords to enter the letting business.
With home prices so low properties are getting snagged left and right, and this has made banks a bit more confident about charging slightly higher rates because it is becoming clear to them that investors are willing to pay them right now.
Finally, the last reason that mortgage rates are continuing to stay up is the Eurozone sovereign debt crisis. It has been quiet lately without too much new anxiety on the table, but the financial troubles of Portugal, Greece, Italy, and other countries are still looming over the EU and this is making many bankers nervous still.
What happens in the Eurozone over the next year can have the potential to influence interest rates in a very negative way, so for those who fail to see what the crisis has to do with the UK a look at the mortgage rates may explain it.
Research released from Moneyfacts showed that there are almost 400 new mortgage rates introduced or at least changed during the past month. This is a lot of activity for a mortgage market that is considered to be stale by many and with this many changes most people would expect to see someone been fitting.
However, Moneyfacts stated that those who need a 90% LTV bracket are not actually benefiting from any of the rate cuts even though they are the ones that actually need the most help. Instead, most of the fixed mortgages were brought down by about .04% as a result of combining new rates with the old rates. This took down the average fixed mortgage product to about 4.74% instead of the previous 4.78%.
Five year fixed mortgage products also dipped down much lower than they were before losing about .09% on their overall total coming down to 4.75% from the average of 4.84%. Of course, the amount of deposit that was required changed the average rate accordingly with higher deposits resulting in lower rates.
The increase in banking activity is thought to be a direct result of the intense mortgage lending scrutiny that the entire banking industry is now under. Many banks are reevaluating their mortgage rates in an effort to take advantage of the new Funding for Lending Scheme offered by the Bank of England.
According to this scheme, banks can borrow money for less overall lending costs if they agree to pass the savings onto their customers. Therefore, banks that borrow from the Bank of England following the rules have to slash the rates they offer customers in return and this has led to many of the changes seen in July as banks take a pre-emptive approach.
The Funding for Lending scheme officially will get under way in August and will let some banks borrow up to 5% of their loans at a very low fee for four years. Out of the 398 rate changes that took place in July 205 of them were rate reductions proving that banks are getting ready to adopt the new scheme.
Moneyfacts does warn that while this seems like great news, it is going to be those who can afford a high deposit who will benefit the most while first time home buyers are not going to see a major difference in what they are offered.
Increases in electricity and gas prices have placed millions of households into debt. uSwitch.com, the price comparison website, found that about one out of every five customers is now in debt with their energy company which is a six percent increase compared to last year.
However, the company stated that het average amount of debt has decreased by about £8 so not all of the news is bad. The tariff increases that have just taken place however mean that this figure might start to rise very significantly as soon as the next round of bills goes out.
Director of consumer policy at uSwitch.com, Ann Robinsons, stated that the increasing number of households that are in debt to their suppliers is a very clear display of how much pressure people are sitting under in order to just pay their most basic bills.
She went on to say that the fact that more than a million households have fallen behind in 2012 added to the fact that over five million people are in debt to their energy suppliers should be an indication that the high prices have had a large impact on the country.
Robinson explained that impacts of getting behind on an energy bill are not that large as most of the time it is just a worry. Monthly payment will usually increase and most people will worry about meeting the higher costs, but unless a bill goes completely unpaid they do not need to worry about the electricity being shut off.
However in some cases an energy supplier might demand that a prepayment electricity or gas meter be installed at a home in order to prevent this type of debt from accruing again in the future.
The price of home insurance is expected to increase in known flood areas. Households that are in areas that have a high flooding risk should expect to see a high hike in their rates as a deal that guaranteed affordable rates for all home owners is soon coming to a close.
Those that live in flood risk properties that are often affected by winter floods and other large amounts of rainfall have been told that they should be prepared when it comes time to renew their home insurance premiums because they may be quite high.
The Government and the insurance industry has been locked in negotiations that seem to be going nowhere leaving many homeowners potentially out in the dark when it comes to steep increase in their home insurance.
In June a previous agreement that forces insurers to offer reasonable cover to homes that have had flooding damage in the past or are in high risk areas that may have flooding problems will come to an end.
Over the last few months there have been many talks and at the end of the last few months still nothing has been resolved making it seem impossible that any deal will come to fruit by the close of June.
The Statement of Principles that has been guiding the industry requires the government to invest heavily in flood defences to prevent flooding, and in return the insurance industry has to provide cover for all homes including those that are hit by floods.
An Association of British Insurers plan was discussed last year that would have placed a cap on home insurance premiums and high risk properties by putting a levy onto all home owner insurance policies but a conclusion to that plan was never reached and now many flood risk homes might have to face becoming uninsured.