Many people think it is the banks that are the bad guys but they are wrong – complacency is the secured mortgage borrower's worst enemy.

You may have had a first charge and a second charge mortgage for some time now and might be paying your bills each month. For some people it might be tough, but most people manage to make ends meet at the end of the month.

But then you might be spending more on your credit cards, or you might be missing payments on things like unsecured loans or store card bills – letters pile through the door and things get missed. Things get left until a better time and some demands can be ignored.

You may wince every time you pop your credit card into the reader, but if you are given the green light by the shop you breathe a sigh of relief and forget about the state of your credit, preferring to enjoy your purchase.

You might have even moved over to your secured lender's higher variable rate unwittingly. You might have begun to pay more each month than you previously have done and don't even realise it – most of us have a dozen or more direct debits attached to our current accounts and let's face it  – how often do you even check your balance?

It is behavior like this that leads or debt, arrears and serious financial problems. If you are not on top of all your finances you may be amassing penalties and fines without even knowing about it. You may be sullying your credit score and making yourself black listed from future secured lending while you carry on, oblivious.

If you have a mortgage, a secured loan or any other financial responsibility you have to stay on top of things. That means regularly checking your current account, regularly checking your credit score and regularly making an assessment of your monthly budget. It means visiting your adviser regularly and allowing them to check your finances and it means always doing all you can to save each month.

Complacency is a borrower's worst enemy. Only you can make sure your finances are as good as they can be – and if you don't take that responsibility then it is you that will suffer in the long term.

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

it's the hardest time of year not to spend – gifts, food, trips and drinks – but if you want to make 2010 a better year for finances, you must think of your secured loan responsibilities before you think of putting presents on the plastic.

The adverts begin sometime in August and before we get the first frost of the year the shops are covered in tinsel and glitter – Christmas is big business and they want you to get spending. But for those who simply do not have the money and have spent the year making sure they can handle their mortgages and loans, it is a stressful time. Unfortunately, many turn to the plastic and put their Christmas on credit as the pressure mounts to spend.

This is dangerous – if you have seen your house price plummet this year, faced the possibility of unemployment or have been unsuccessful with a loan attempt now is not the time to be increasing your unsecured debts.

It is difficult, but you have to think of your secured loans this Christmas before you spend on credit cards – your secured debts are much more important to maintain than spending that bit extra this Christmas. Simply, spending irresponsibly now may mean your home could be at risk next year.

If you really need some extra money, talk to a financial professional. They will be able to help you go through your 2009 finances and tell you the truth about your money – if you can get hold of additional money through sensible secured lending they will do all they can to accommodate that and if you can't then they will help you plan your finances so you can still have a great Christmas, without putting everything at risk.

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

People are being warned to not underestimate the affect bad unsecured credit choices have on future potential secured loan decisions.

According to Confused.com, in the UK the closure of one in five credit card accounts by the provider was due to non-payment – people are getting so far into debt that the lenders are shutting the door on them – and that door can remain shut for a long time.

When you default on a credit card, you receive a black mark on your credit score. If you amass enough of those black marks the banks and building societies will simply see you as too big a risk to lend to in the future.

Joanne Garcia, head of credit cards at Confused.com says: "Credit card users in all regions need to understand how damaging it can be to miss repayments. While it may not seem like a big deal to miss a few payments here and there, credit providers – which include mortgage lenders – leave no stone unturned when it comes to checking a person's credit worthiness. It they see a history of non-payments it makes it much more difficult to borrow money."

A door in the face now may mean that you cannot secure a mortgage, a remortgage or a secured loan for many years to come. It takes a long time to rebuild credit scores, but you may need some sensible, safe secured credit much sooner than you can clean your black marks.

So avoid unsecured debt, and if you do have credit cards make sure they are under control. Talk to a financial professional about controlling your finances and looking to the long-term for secured success.

SOURCE: Confused.com, 18/11/09

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Which? magazine has recently found that unsecured loan sharks are still alive and well and are still preying on those who should be considering secured finance only during this recession.

An undercover store card investigation by the publication has seen an indebted graduate handed £2,750 of credit on the high street, despite him having earned less than £1,000 this year.

The consumer rights body sent 21-year-old graduate James Smith to pose as a shopper in 20 of the biggest high-street stores. He bought a variety of items costing between £50 and £100 and asked whether he could get discounts by taking out a store card – in total, James was able to get £2,750 worth of credit on cards from six stores with interest rates ranging from 18.9% to 28.9%.

Although he had twelve credit checks over two days, James was still able to get credit at the end of day two. Also, in eight of the twelve shops where James applied for credit filled in the forms containing terms and conditions for him, only asked him to sign at the bottom – arguably not giving him a proper chance to read the important small print.

James Daley, editor of Which? Money, says: “No one is James’ position should be given access to £2,750 on store and credit cards in just two days, or be able to continue getting credit after so many applications have been made in such a short space of time. The question remains whether stores should be handing out credit at all."

This case highlights that it is so easy to get credit and it is so tempting. But it also highlights the fact that too much credit without proper advice and guidance can destroy your credit score and make you a financial pariah for years.

Simply, you have to fight temptation. Unsecured debt, whether it is from a shop or a bank, is bad news. If you need credit, talk to a professional who can help you with a secured loan or a remortgage – secured debt is the only thing any borrower should be considering during the recession, regardless of temptation.

SOURCE: Which?, 18/11/09

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

Only 25% of people have ever checked to see if their details on their credit file are correct – all secured borrowers must go online and make sure that lenders can see the whole truth and nothing but the truth.
 
A survey conducted by Confused.com has found that 12% of people had gone online and found that their credit score had improved – but many more might be better off and not have a clue.
 
Joanne Garcia, head of credit cards at Confused.com says that with providers tightening lending criteria and rejecting many applications people are concerned that they might get a black mark on their credit score – so much so that 40% of people are now scared of credit scores. But if you never check your credit score you will never know.
 
Garcia says: “It is the 22 to 30 year olds who are the most concerned by the potential of a black mark on their credit score, as the financially savvy young look to the future and see problems about not only getting a credit card or loan, but also to finding a decent mortgage."

Get savvy yourself and get checking. Your credit score is what lenders see when they consider you for a borrower. If you have a black mark, or even worse if you have a mistake on the score, you could be turned down for credit.

Lenders are still saying no a lot more than they are saying yes, so you need to stand out from the rest. That means sorting out your finances and it means being on top of your credit score. And remember – if you can keep a clean sheet now, even if you cannot get credit you are going to be at the front of the queue for loans when things improve.

SOURCE: Confused.com, 11/11/09

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

Research from moneysupermarket.com has found almost a third of credit card users have no intention of paying off the balance of their credit card in the next six months.

If you have unsecured debt, you have to consider consolidation or at the very least plan a means to pay off the risky debt as soon as possible – the longer you are saddled with unsecured debts, the more you will suffer in the future.

The website says those carrying a £2,000 balance on a card with an industry average rate of 18.21% APR, who split the repayments equally over six months, will incur £144.19 in interest payments. Longer term, those who borrow over 12 months would pay £188.79 in interest.

If those borrowers were to consolidate their debt, their interest rate would be just a fraction of what it is now. That means they could save more and work towards paying off all their debts instead of keeping their head above water.

Peter Harrison, credit cards expert at moneysupermarket.com, says: "People must be extremely careful about carrying debt on credit cards for long periods of time – you don't want to be paying for this year's presents when the Christmas decorations are rolled out again next year, particularly as rates could be at dizzying heights.

He says that with interest rates rising on many cards, minimum repayments often only barely cover the interest accrued on the debt – by paying just the minimum borrowers could spend most of their life paying a credit card company a monthly sum on a debt as small as £500.

Harrison adds: "Those with credit card debt should look at ways to reduce the outstanding balance on their card, especially as providers have been known to increase APRs for longer standing customers."

SOURCE: Moneysupermarket.com, 09/11/09

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

Those with financial hardships who were relying on the equity in their property to complete their debt agreements are facing renewed hardship as they find there are little or no funds to call on.

IVA.com says it is now taking calls from worried debtors who are approaching year four of their Individual Voluntary Arrangements when the terms of their contract state that they are obliged to release equity from their property – but the property slump has drained those resources dry.

For many, the only option on the table is to extend the IVA for another year to a total of six – a grim prospect after four years of living on a very tight budget.

Terry Balfour, director of IVA.com says: “When property prices were buoyant the strategy of using equity to fulfil the terms of the contract was a viable option for many people signing up to an IVA. But since then the unforeseen drop in house prices has removed this vital safety net for many and they face renewed misery just at the time when they thought the end of their arduous journey was in sight."

If you are in a tricky situation, you need to talk to your mortgage adviser. A good adviser will know the best way to protect their client’s mortgage whilst fulfilling the demands of the creditors.

Balfour says: “They may suggest switching to an interest only deal to free up funds for a higher monthly repayment. This will make them a more reliable proposal to creditors and increases their chances of seeing the deal through to completion.”

Debt management is a booming business and there are a great many companies offering their services, but it cannot be stressed how important it is for people to choose carefully. The pressure of unmanageable debt makes people very vulnerable and it can cloud their ability to judge. It’s just not worth signing up for something that isn’t the most suitable vehicle just because it sounds like the easiest, quickest way out. You need to talk to a professional, with credentials.

Balfour adds: “The effects of the property slump on debt solution strategies should be a lesson to all concerned that nothing can be taken for granted and the best insolvency practitioners will know this. Choosing the best adviser, based on recommendation and research, is absolutely vital if people are to deal with their debts effectively. The wrong choice could see them suffer for longer and ultimately, lose everything.”
 
SOURCE: IVA.com, 06/11/09

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

Property ladder-obsessed homeowners could become a thing of the past as a new study reveals almost three quarters of the nation are happy to remain in their current home as a result of the economic downturn.

The research by Aviva shows that 68% of homeowners see their home as an emotional investment, where they seek relaxation and calm, rather than a commodity to make money for the future.

This is a good thing – people are happy to stick where they are and save, rather than using their home to fund lifestyles beyond their means. This also helps people increase their stake in their home, giving them more financial options in the future.

The study reveals a surprising re-assessment of how the nation views its homes in recession-hit Britain 2009: it found that 80% of people considered themselves to be home 'hoppers' before the recession while only 26% say the same today.

Dr Paul Keedwell, expert in environmental psychology at Cardiff University says: "A surprisingly large number of people across the UK report having a new-found emotional attachment to their homes. This is probably because of, rather than in spite of, the economic downturn, which has made many of us change from being house hoppers to house stoppers."

Simon Warsop, director of home at Aviva says: "In a country that has been driven by a property-ladder culture for so many years it is interesting to see that perhaps we are seeing the evolution of a new social trend – one where the home really is where the heart is rather than a commodity to do up and sell on.

"Clearly when the housing market picks up we may see our appetite for house hopping re emerge, but at the moment it seems we are clearly stopping in the place that makes us feel the most safe and secure."

SOURCE: Aviva, 05/11/09

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The average UK household now has secured debts, excluding their mortgages, of nearly £10,000 – but that is still overshadowed by the amount of unsafe unsecured debt held by Britons.

According to debt charity Credit Action's latest statistics, the average household debt in the UK is around £9,161, excluding first charge mortgage debt. Of course, because it is secured debt this is a relatively safe debt if handled correctly. Worryingly, this figure increases to £21,305 if the average is based on the number of households who actually have some form of unsecured loan, which is a lot more unsafe than secured debt.

On average, people have £12,144 of unsecured debt. It is figures like this which explain why the total UK personal debt at the end of September 2009 stood at £1,459bn – nearly one and a half trillion pounds.

Total secured lending on dwellings at the end of September 2009 stood at £1,229bn – meaning credit card, store card, car loan and personal loan debt makes up £230bn of the overall UK debt mountain. Even more worryingly, CreditAction has calculated that if you add to personal secured and unsecured debt to the 2009 budget figure for public sector net debt expected by 2014 then this figure rises to £116,180 per household.

Simply, the UK has too much debt to safely handle all the unsecured debt in the UK. We owe more as a nation and we can scant afford more credit cards and personal loans increasing the £1.5 trillion debt mountain that is strangling us all. If you think your debt mountain is too heavily weighted with bad unsecured debt it might be time to talk to a financial adviser.

SOURCE: CreditAction, 02/11/09

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New figures from Nationwide have found that the average UK house price is now worth more than it was a year ago – first time an annual price increase has been recorded for nearly two years.

The building society says that average house prices are now £161,816, a year-on-year increase of 2%, the first time the annual figures have risen since March 2008.

So house prices are back in the black. After all the scare stories and 'experts' predicting that house prices would freefall, normality has prevailed. And while it is true that this is just an average and some house prices might be still be in the doldrums, there will be houses out there that have increased considerably in value.

This will all depend on geography, local economy and the houses themselves of course, but your home might be one of those that has bucked the trend and has risen in value over the last few weeks, months and years. So you may have more equity in your home than you think – equity that can be reinvested in your home or put to good use tackling debt.

If you think your home might have increased in value over the last few months, talk to a mortgage adviser. They will be able to help you find an independent valuer to tell you exactly how much your house is worth. Then, if it has risen enough, they might be able to help you unlock that acquired equity. This could be in the form of a secured loan or a remortgage depending on what fits you best.

So talk to a mortgage adviser today. The frost that has kept the UK housing and mortgage market in deep freeze over the last year may be beginning to thaw – and you may now be able to get on with making your house and your money work better.
 
SOURCE: Nationwide, 30/10/09

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