It is not just us regular people who suffer from secured debt problems – according to the Mail on Sunday, even Conservative MPs can wind up having their homes repossessed.

The paper recently reported that one of David Cameron’s rising stars had her house repossessed over an unsettled debt of £324,000. Adeela Shafi opened the 2008 party conference and tipped to be an important MP if the Conservatives came into power this year.

But that did not stop her mortgage lender seeking a county court judgement over £324,000 owed by her after she missed mortgage payments. This led to a judge deciding that the home had to be repossessed. But her miseries didn't end there – the paper says that the property had to be sold for a knockdown price of £250,000 and now Shafi is liable for the remaining £74,000.

This tale highlights two things – one, if you do not keep up repayments on your debts then you can lose your home, whoever you are. And two, if you get into serious difficulty and receive court judgments then you need to find some expert help fast to stop the courts taking your home.

If you are struggling with your mortgage or any other secured debt, talk to a financial professional before you lose your home. It doesn't matter who you are or what job you have, defaulting on your debts is a serious issue.

SOURCE: Mail on Sunday, 06/02/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

A consumer debt charity has warned that more and more Brits are falling into insolvency because they cannot handle their secured and unsecured debts.

The Consumer Credit Counselling Service recommended insolvency to 39,663 of its clients – that's an annual increase of 93% in overall insolvency recommendations.

More than 20,000 people came to the charity and were recommended bankruptcy, nearly 12,000 were recommended Individual Voluntary Agreements and more than 7,000 offered debt relief orders in the last 12 months.

Delroy Corinaldi, CCCS director of external affairs says: "Although there has recently been positive signs in the economy, our figures highlight the high numbers of people with unmanageable debt, for which insolvency is the most appropriate solution."

There is no doubt that those people who came to the CCCS were in need of an insolvency, but it needn't get that far. Insolvencies are literally the last throw of the dice and are very difficult to come back from. Between that first red letter through the letter box and insolvency there are a world of options to consider.

If you are struggling with your secured and unsecured debts, talk to a mortgage adviser about those options before you run out of them.

SOURCE: CCCS, 04/02/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

Thanks to the continuing tough economic climate, the focus in all lending activity is risk and as a result unsecured personal loans have seen some of the sharpest increases of recent times.
 
In fact, personal loan rates stand at a nine year high, according to Moneyfacts. Lenders are unhappy to offer money to people with no security. On the other hand, lenders are still offering money to people who are able to afford to secure debt against their home, safely.

Michelle Slade, analyst for Moneyfacts says: “Unlike on a mortgage, there is no security that a personal loan debt will be repaid. In such a risk adverse market, lenders are only offering loans to the most creditworthy applicants and then at a premium."
 
The website says there is now a £1,055 difference between the cheapest and most expensive £5,000 personal loan – for those people who are unable to secure the cheapest deal, that's expensive money indeed.
 
Andrew Hagger of Moneynet.co.uk says: "With banks and building societies still adopting a far more cautious stance even when it comes to mortgage lending, even with your property as collateral, it’s no surprise that the appetite for unsecured lending has pretty much dried up."
 
If you want affordable loans, you need security in 2010, and that is only possible with a secured loan or a mortgage. Talk to a secured finance specialist about your ability to use your home as a means of getting hold of cheaper credit.

SOURCE: Moneyfacts, Moneynet, 01/02/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

The Government has released detailed plans to control the sale and rent back market, good news for secured borrowers who are suffering with their debts.

The Financial Services Authority has released full regulation of Sale and Rent Back – particularly the much stricter conditions on promoting these schemes and making sure that people in debt trouble are not abused.

Sale and Rent Back is targeted at those who are in financial difficulties who may be vulnerable to selling techniques which obscure the downsides. The last thing those who are struggling need to hear is a cowboy pouring honey into their ear, telling them that they should sell their home to pay off their secured and unsecured debts.

As a result, the FSA says it will be banning cold-calling, leaflet dropping and the use of emotive phrases in promotional material will be crucial, along with tighter monitoring of the activities of these firms.

Adam Phillips, chairman of the Financial Services Consumer Panel says: "Sale and Rent Back can provide rich pickings for firms seeking to make money from people who are desperate.  Firms have been able to lure vulnerable people into deals which they later regret when the rent rises or they lose their home: people see the promise of being able to stay in their own home and get cash up front quickly, without necessarily being warned of the longer-term consequences.

"However, we still have worries that firms will try to exploit consumers both within the rules, and by trying to operate outside the rules. The fact that only around 80 firms have applied for FSA authorisation, when the OFT had judged that there were over 1000 firms undertaking sale and rent back, means the FSA must watch the authorisation boundary carefully."

If you are at your wits end, only ever consider selling your home and renting it back after your have spoken to financial advisers, your lenders, debt charities and your family. It can be a sensible option, but only to a small minority – for the other struggling secured borrowers there are always less severe options.

SOURCE: FSA, FSCS, 29/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

Mortgage lenders of the UK are finally beginning to offer higher loan to value mortgages, so those whose equity was decimated through secured borrowing now have a hope of a cheaper mortgage in the future.

Before the credit crunch, secured borrowing was all the rage. Because borrowing was so cheap and credit so bountiful, everyone borrowed to keep the credit party going. But since then, those who geared themselves up with debt have not be able to get hold of a mortgage because they did not have enough equity left in their home to be considered a prudent bet by lenders.

But things are slowly improving in 2010. According to Moneysupermarket, the amount of 85% LTV products increase by 22% since the end of 2009 and 90% LTV products increase by 11% over the same period. Hannah-Mercedes Skenfield, mortgages channel manager at moneysupermarket.com, says: "Lenders seem to have started 2010 with their doors open and are clearly more open to mortgage lending than they have been for some time."

This news, coupled with continued house prices increases over the last nine months, means that more borrowers who have been left out in the cold over the last two years now have a chance to get hold of a home loan.

If you have been unable to get hold of a mortgage due to a lack of equity, it might be time to go and talk to a professional mortgage adviser. They will be able to assess your situation now, in 2010, and see whether you would be eligible for a new mortgage.

SOURCE: Moneysupermarket.com, 26/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

The benefits of secured borrowing have been highlighted by new data from Halifax after it found that over the last decade house prices have, on average, doubled.

The data is sourced from the Halifax House Price Index, and despite a fall of more than one-fifth between mid 2007 and mid 2009, house prices increased by more in real terms than in any other decade over the last 50 years. The bank says house prices increased by 105% during the past decade, taking the UK average house price from £81,596 at the end of 1999 to £167,020 at the end of 2009.

Martin Ellis, housing economist at Halifax, says: "The noughties was a significant decade for house prices. Overall, prices increased considerably despite the marked decline towards the end of the decade.

"The majority of towns that experienced the strongest price growth began the decade with lower than average property prices, which provided the platform for bigger price gains. Seaside towns fared particularly well as the attraction of having a home on the coast helped to boost demand."

So why does this highlight the benefits of secured borrowing? Well, proof that house prices doubled confirms that many people have more assets than they think. And while it is foolhardy to think that house prices will rise anywhere near this much in the next decade, houses are currently holding their worth and that amassed equity is safe for now.

To see if you could take advantage of this massive leap in prices you need to talk to a secured mortgage adviser. They can help you assess how much your home is worth and what you can do with your biggest asset. Amassed equity should only ever be spent wisely, so talk to an expert before you unlock any of your most prized asset.

SOURCE: Halifax, 27/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

Experts have warned that store cards and credit cards are not offering borrowers a good deal and are designed to encourage overspending rather than sensible money management.

Website Moneyfacts.co.uk is calling for more transparency and control of credit and store cards and has even gone to the Government to call for a better deal for consumers on credit and store cards.

Samantha Owens, principal consultant for banking and economic insight at Moneyfacts, says: "Credit cards form an integral part of the financial services industry and allow customers to transact with convenience, reassurance of safety and added consumer protection. But credit cards also come with the risk of a greater temptation to overspend. It is one of the most expensive forms of credit and has little or no structured repayment mechanism."

Moneyfacts says there is a real problem with customers' understanding and while more can be done to educate credit card users. People are too quick to take on unsecured credit without being aware of the consequences.

The website is right – easy unsecured debt encourages people to spend without teaching them the consequences. While a carefully managed credit card can be to your advantage and can be a useful way of making the most of your money, it is easily misused and will get you into debt trouble quickly.

If you are worried about your unsecured lending there are secured options out there to help you. Talk to a financial adviser about what you can do to steer clear to unsecured credit and improve your finances securely and sensibly.

SOURCE: Moneyfacts, 21/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

An estimated 12 million Brits are funding their day to day spending through their credit card balances, creating more debt problems for themselves in the future.

According to the Post Office, 38% of all Brits intend to use their unsecured debt in January for daily purchases such as grocery shopping. It says reflects the extent to which the recession impacted on people's finances during 2009, with many more set to suffer financially well into 2010.

Unsurprisingly, 2.6 million people expect they will end up spending more on their credit cards this January compared to January 2009. And it's not just in January when people believe they will feel the pinch – a further 3.3 million expect they will up their unsecured borrowing overall in 2010, with 3% planning to take out another credit card or increase their credit limit.

When it comes to repaying credit, almost half of all credit card holders have no plans to pay off their credit card bills in full each month and six per cent will only pay off the minimum amount. A further one in five believe it will take them over a year to pay off their unsecured debts. 

Az Alibhai  head of lending at the Post Office says: "The continued trend for people to rely on their cards for basic day-to-day purchases is a concern. Whilst the recession has left many with no choice, these debts build up quickly if not paid off in full each month, and can be extremely costly over time when interest is added."

The worst debt you can have is spiraling unsecured debt. By consolidating your credit card balances into secured debt you can reduce your outgoings, improve your credit rating and give you some time and space to start getting back into the black.

SOURCE: Post office, 20/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

You may be able to handle all your secured debts without any risk of defaulting but would your family be able to cope with the debt responsibility without your income?

The average household with dependent children has £91,648 still outstanding on their mortgage now compared to £88,500 last year, according to Scottish Widows. And when it comes to short term debt, the average household with dependent children has carried over £8,653 over the last three months.

These debts may not be huge and are certainly manageable with a good income, but what happens if you get sick for a long time? Or what happens if you are involved in an accident, need surgery or have to care for a sick family member? What happens if you die? Could your family take on the long and short term debt alone?

Millions of households are leaving themselves at risk of being unable to survive financially if one of the bread winners become unable to work – but Scottish Widows says 62% of Brits have not protected themselves for the long term should the worst happen and they lose their household's main income.

Clive Allison, protection director at Scottish Widows, says: "Nearly half of families with dependent children now rely on two incomes to maintain a decent standard of living, and as our stats show, this isn't likely to ease off any time soon. For many families, sacrificing half their income when they have children is a luxury they just can't afford.

"People are leaving themselves exposed to a lack of income should anything happen to the main breadwinner, and large personal debt to repay on top of this could make things even more difficult. Families need to make sure they protect themselves financially so if they do get into difficulties they have the vital back up in place to look after their families and loved ones."

SOURCE: Scottish Widows, 18/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

More people are coming to retirement and realising that they simply cannot afford to fund themselves for 20 or 30 years – for them the answer may lay in unlocking their home's equity.

Retiring is becoming more expensive – the average retired household needs to find up to £429 extra a year to cover an increase in their cost of living, according to MGM Advantage.

It has found that the annual average household expenditure for a retiree is estimated is £23,106 and £14,926 where they are aged 75 and over. While a good pension may cover most of this it may not cover all of it, and it may not cover all of it after a long retirement.

Aston Goodey, sales and marketing director of MGM Advantage says: "Many retired people have had to endure a rise in their cost of living. This, coupled with the fact that people are generally living longer is placing considerable pressure on retirement income. All the more reason to seek financial advice to ensure you achieve the best possible income in retirement."

By using some of the equity in your home through equity release, you can add to your pension pot and you can cover shortfalls during retirement. You do not have to use all of your equity and it needn't cost you a lot to take on the responsibility but it will aid your retirement and make your finances work during your final years.

SOURCE: MGM Advantage, 13/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog