One of the biggest problems people with multiple debts face is being able to actually pay off the debt while managing the interest – indebted borrowers don't have the freedom to pay off their debts.

Car loans, personal loans, mortgages, credit cards and store cards on top of all of the other bills life throws you mean you do not have much money to actually save and pay off the debt – many Brits are therefore doomed to a life of continuing debt.

If you can manage the demands each month this isn't necessarily a problem, but if you suffer a loss of earnings or are hit by an unexpected payment then you may find you miss a payment on one of your debts and then you could be in real trouble. One missed payment means a fine, a penalty charge or an increase of a rate – then all your debts are at risk as your outgoings suddenly increase.

The only way to solve the problem is to get some space and time to be able to save money and actually work off your debts. That can only be done by consolidating your debts into one, affordable loan – a secured loan.

By using your home's equity to consolidate debts you reduce the number of interest rates you have to service considerably – and because the one debt is secure, that rate is lower. So from many high rate payments to one, low payment means you have room to save and pay down the secured loan in good time and you reduce the chance of losing control of your finances.

So if you feel like your debts don't give you room to breathe, talk to a mortgage adviser about using your home to give yourself some freedom.

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

On average, the money earned by Brits over the first 50 days of the year was just enough to cover the interest payments on their debts for the year, according to Unbiased.co.uk.

That is the equivalent of one day's wages a week going towards servicing debts – for many this is just too much. It's hard enough to cover the interest payments let alone work towards paying the debt off. Unbiased says figures show that credit card debt has increased by just over £4bn in 2009, reached over £54bn because people just can't pay it off.

For some people the answer may lie in secured consolidation. By using your home to pay off your unsecured debts you are able to reduce all your outgoings to just the one payment. This means less outgoings from one month to the next and more importantly it means the borrower has time and space to pay off their debt, not just manage it.

Karen Barrett, chief executive of Unbiased.co.uk says: "Debts can quickly mount up to a considerable sum and this date demonstrates that debt is something that we need to take control of and actively manage.

"Tackling your debt doesn't have to be a daunting task and you don't have to do it on your own. With interest rates at an all time low, now is a better time than ever to action. Seeking independent financial advice will make sure you are making the right choices on your finances."

SOURCE: Unbiased.co.uk, 19/02/10

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

Secured debt lenders think that there are going to be more repossessions in 2010 as more people fall behind with their payments for mortgages, loans and other debts.

According to Moore Blatch, 67% of mortgage lenders and foreclosure experts are predicting an increase in the number of repossessions in 2010. They think that more people will simply be unable to keep up with paying their bills and the lenders will have no other choice but to take the property.

Of those who are predicting an increase in repossessions, 50% believe repossessions will rise by as much as 5%, while 17% believe a rise of as much as 15% and a further 6% foresee a rise in repossessions of over 15%. They think that growing debts will be the main reason for repossession, but unemployment and the possibility of rising interest rates may play their parts too.

But there are not all as pessimistic – more than a quarter of lenders thought there would be no change in repossessions in 2010, while 6% believe there will be a decrease.

Paul Walshe, head of lender services, Moore Blatch says: “The Council of Mortgage Lenders revised, and subsequently lowered their 2009 predictions for repossessions to 48,000 in 2010. However, much of this fall was due to the the Government's initiative to provide consistency in lenders’ approach to repossessions. This created a bottleneck which will start to clear in 2010.

"Sadly, the underlying cause of repossession, being excessive borrowing, is still causing people to default on their mortgages."
 
If you are struggling to pay your secured debts, you must talk to an expert right away. The lenders might be right and more people might not be able to handle rising rates, fees, penalties and short-term debt pressures. Do what you can now before you find there is no way back.
 
SOURCE: Moore Blatch, 10/02/10

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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

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

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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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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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

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