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

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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

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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

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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

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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

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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

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If you have found that you can no longer jump about from one credit card to the next it might be time to begin managing your debts with a mind to scrapping them later.

Traditionally, many cardholders transfer balance to a new 0% balance transfer card. However in the current market, many people are finding it increasingly difficult to access new deals, with only four out of ten applications being accepted, according to moneysupermarket.com.

So if you can’t move the debt it’s time to handle the debt. The first thing to do is to check your credit rating – make sure you have a good credit rating before doing anything. If you have a bad rating you will be limited in what you can access, credit-wise, and you may have to come up with another plan to clear your debts.

Realistically plan your budget for repaying your debts – If you are looking to switch a debt to a zero per cent deal, then aim to pay off this debt before the balance transfer period ends. First make sure you can afford the monthly repayments to clear the debt and then come up with a sensible plan of action over the year.

If you are unable to find a new card deal, consider a secured loan. A loan will allow you to move all your debts onto your mortgage, giving you a smaller repayment over a longer period. This is a perfect option for those looking for room to save and to move back into the black over the long term.

If you are unable to move your debt, then aim to pay off the balance as quickly as possible. Paying off £150 a month on a £3,000 balance on a card with an average rate of 18.31% would take just two years.

Peter Harrison, credit card expert at moneysupermarket.com, says: “It is extremely difficult to switch cards at the moment so you need to be savvy about tackling your existing debts. The best approach largely depends on your credit rating and how much you are able to repay every month. Careful planning is required to ensure credit card debts are cleared in the most efficient way possible.”

SOURCE: Moneysupermarket.com, 12/01/10

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If you have unsecured debt it’s better to pay it off when you can so as to be able to get hold of secured, cheaper debt when the time is right.

Figures released by the Bank of England have shown that in November, borrowers repaid £376m of unsecured debt and while that was £215m less than the total repaid in October, it’s good to see that people are trying to pay off unsecured debt rather than amass it.

Howard Archer, chief UK and Eurozone economist at IHS Global Insight, says: “The fifth successive net repayment in consumer credit in November is clearly the consequence of many consumers` desire to reduce their debt. It is yet another example of consumers looking to improve their financial situations in the current difficult and worrying economic environment.”

If you have unsecured debt problems, lenders cannot trust you to be able to pay off secured debt. In their eyes they see someone who has taken short-term solutions instead of thinking carefully and saving instead of borrowing. Too much credit card debt, store cards and personal loans points to a borrower who may not be able to deal with a bigger, long-term loan.

Talk to a financial professional about working off your unsecured debt, either through sensible budgeting or through secured debt consolidation to allow you to become a better potential borrower. The person who has worked off debt, budgeted wisely and has listened to sage advice is the person who will be accepted for future secured loans and mortgages.

SOURCE: IHS, BoE, 07/01/10

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Sometimes it might not feel like it, but there are options out there for homeowners struggling with secured loan debts.

It’s particularly hard at this time of the year, with many consumers looking to reduce their New Year debts, but by talking to a financial specialist you may find that your January blues can be solved.

One option is for a secured loan. According to Nationwide, in January 2009 alone, almost 60% of all loans issued were for debt consolidation purposes. By consolidating debt, you reduce your outgoings and give yourself some much needed room to begin saving and move back into the black.

Richard Napier, Nationwide’s head of credit cards and personal loans says: “For those already in debt, the New Year can signal greater money worries. Money worries are made worse if the debt is spread across many sources such as credit and store cards, overdrafts and loans.”

Napier says that with additional mortgage borrowing, existing debts could be rolled into lower and more manageable monthly mortgage payments. So if you already have a mortgage, it may be worth speaking to a mortgage expert to see how they can help you.

Moving debt onto unsecured cards will only lead to more fees, more bills and more financial worries. But by rolling debts into a mortgage, your monthly payment becomes your only outgoing. That means you can save money, can breathe easier and can be safe in the knowledge that your lower rate debts are safe and secure.

SOURCE: Nationwide, 06/01/10

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If you are thinking of moving your credit card balance to a new credit card think again – consolidation may be a better option for many people facing spiraling debts.

More than 4.5 million Britons are planning to move in excess of £3.2bn pounds between credit cards in the first three months of 2010, according to Santander. While the research found that cardholders planning a balance transfer in the New Year will transfer an average sum of just £1,140, compared with £2,290 in 2009, people could still be walking blind into greater adverse debt problems.

Moving debt to another credit card just prolongs the inevitable. It might mean low rates for a while, but once the introduction periods have passed, credit card debt is double-digit rates of interest and the risk of worsening credit ratings and harsh penalties and fees.

But by consolidating the debt using a secured loan, all that can be avoided. Consolidation means lower rates of repayment and less risk to credit ratings. It also has long-term benefits – as your house becomes more valuable, your debt diminishes.

Of course consolidation is not right for everyone, and admittedly moving to another credit card is an example of pro-active financial management. But to be sure, and to assess all your options, talk to a financial professional. They will give you an impartial and fair opinion of what’s best for you, in the short and the long term.

SOURCE: Santander, 02/01/10

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