Most Brits still take the view that once they reach retirement, their home will provide for them – although this might be the case for some, it is better to err on the side of caution and ask a financial adviser about your long-term financial potential.

According to a report by LV=, the over-50s homeowners they surveyed believed that an average of £27,250 has been wiped off the value of their homes, when in fact over-50s homeowners have lost £80bn overall in property value due to recent housing market falls.

This is a concern when the insurer says 1.3 million people still plan to use their property value to help provide retirement income. Only 2% say have been turned off the idea of using their home to fund retirement, while a further 11% plan to take advice on unlocking the value of their home before they retire.

The new research also highlights the impact of the long-running house price boom on pension savings behaviour among over-50s homeowners now nearing retirement – people assume their home will provide for them but as any good adviser will tell you, assumption is a dangerous thing.

One in eight people have consciously saved less into traditional pensions because of the perceived spiralling value of their home and a further 13% say they couldn’t afford to buy their own home and invest in traditional pensions, because property prices were so high.

We are all getting older, living longer and saving less – this is a bad concoction and will lead to many people being unable to do what they want to do in their later life.

However, many enterprising over-50 year olds have plans to recoup some of their lost equity and make the most of their property. One in six will make home improvements to add to the value of their house, and one in five say they will save extra money wherever they can. Nearly a third say they will simply bide their time for property prices to recover.

Vanessa Owen, head of equity release ay LV= says: “In a matter of months millions of pre-retirees have seen both their property and pension fund values battered. House prices still have some way to go before full recovery but with increases for six consecutive months now, and Brits are feeling more confident that their home can still play a big part in helping to finance their retirement.”

To find out how your home can help your retirement, and to find out what else you can do to fund your later life talk to a financial adviser. They will tell you the truth, lay out all your realistic options and do everything they can to make your retirement successful

SOURCE: LV=, 01/12/09

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Three in ten British employees are concerned about being made redundant in the next 12 months, a survey for the homelessness charity St Mungo’s revealed today – but how many of them have covered their secured loans with the right insurance products?

Not enough it seems. Since last year, there also hasn’t been a decrease in the proportion of British adults who are concerned about being forced to leave their home during the next 12 months due to falling behind on their mortgage debts, according to St. Mungo’s.

Getting into debt, especially mortgage or rent arrears, is a recognised ‘trigger’ that can lead to homelessness. Around two thirds of St Mungo’s residents in the charity’s own poll said losing their job had contributed either directly or indirectly to their becoming homeless.

People who do not cover their debts with redundancy, critical illness, income protection or life insurance face their home being taken from them if they lose their job – and as we all know, no one’s job is entirely safe in a recession.

Charles Fraser, chief executive of St. Mungo’s says: “Losing your job, and falling behind on home payments, remains the spectre at the feast for many this Christmas and into 2010.”

There is a simple way of avoiding losing your home, whatever happens to your job, and that’s by taking out some cheap, simple insurance products. Talk to your mortgage adviser about keeping your debts safe and ultimately keeping a roof over your head if you lose your job.

SOURCE: St. Mungo’s, 23/11/09

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The Financial Services Authority has finalised plans to bring secured loan lending under its wing – much like regular residential mortgages, soon secured loans will fall under the glare of the Government’s financial watchdog.

The Association of Finance Brokers says stretching regulation so as to cover second charge mortgages as well as first charge loans is a good thing for borrowers.

Robert Sinclair, director of AFB, says: “We fully support this announcement as we have long been calling for an alternative regulatory regime under FSA. In our view this will benefit brokers, lenders and consumers. We welcome the fact the Government and the regulators have listened to brokers in seeking to deliver a better environment for business and consumers.”

Brokers know secured loans – they understand how they work, who needs them and what you need to do to make the most of them. So when brokers say regulation of secured loans by the FSA is a good thing, you know it will benefit their clients – which means you.

But what will it do? Well it will make sure, first and foremost, that you are protected. Regulation by the FSA will mean that secured loan lenders and brokers must, by law, treat all their customers fairly and must also make sure that any loans are the right choice. But it will also make sure all the loans are created with the borrower in mind, it will make sure that brokers and lenders are not making too much money from you and it will make sure that you have recourse if something goes wrong.

Ask your broker about the new regulatory regime. Most good brokers, like The Mortgage Broker Limited, are already regulated by the FSA. They know how it works, they know what their job is and they know that their main remit is to make sure that you are getting hold of the best financial products possible.

SOURCE: AFB, FSA, 25/11/09

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Secured loan lending is in the doldrums right now – but it is still alive and it is still an option for some people who need the help of a sensible, secured finance option.

New figures from the Finance & Leasing Association show consumer credit market remains under pressure – it says secured lending markets fell in the middle of 2009 by 84%, compared with Q2 2008.

And while, thankfully, risky unsecured fell too, store instalment credit continued to grow, with new business up by 5% in June and 1% in the second quarter of 2009. This is worrying – store cards can be even less competitive than credit cards and personal loans and can cause even more debt problems. The only sensible loan that homeowners with debt problems should ever consider is a secured loan. Using your home’s equity, it means the rates are lower, the penalties are less severe and the debt is more manageable, with some professional guidance.

Geraldine Kilkelly, head of research and chief economist of the FLA says: “In the last six months we have seen new credit levels continue to fall.”

Talk to your mortgage adviser if you are struggling with debts. There are still some secured loan options out there for a chosen few – sensible options that will help you get on top of debts and move out of debt.

SOURCE: FLA, 24/08/09

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Two thirds of financial advisers failed to pass all of Which?’s benchmarks for equity release advice in a recent set of Which? mystery shops.

The consumer watchdog’s researchers visited 40 advisers and found that only a third of them met all its benchmarks for good advice.

Overall, five out of 12 equity release specialists passed the Which? test. It also found that eight of 28 financial advisers met the Which? benchmark also.

It says 23 advisers tested failed to carry a fact-find and seven didn’t even ask about the researcher’s income. Some advisers didn’t mention how quickly the debt would grow or discuss the effect of compound interest. One IFA said there was no chance of using up all the equity in the customer’s’ home “unless you live to 150”.

Which? editor Martyn Hocking says: “Which?’s investigation has uncovered some major flaws in the equity release advice process. We’d like to see a tightening up of the advice process.”

The equity release body, Safe Homes Income Plans warns that people have to remember what has been excluded from Which?’s as well as what has been included.

Director general Andrea Rozario says: “Although there are estimated to be over 7000 people who have taken the specialist equity release exams, the fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is absolutely no room for complacency.”

If you are considering using your home’s equity as means to fund your retirement, make sure your adviser is fully qualified, has customer testimonies and can prove that they are asking all the right questions when it comes to good equity release advice.

SOURCE: Which?, SHIP, 23/07/09

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Less lenders are offering less unsecured loans and credit cards, meaning more borrowers will have to opt for secured borrowing to get through the downturn.

Latest figures from Moneyfacts.co.uk show a 37% drop over the last two years in the number of lenders offering unsecured personal loans. And of those lenders that remain in the market have increased the cost to borrowers, with the average rate on a £5,000 loan increasing by 3.7%.

Louis Kaszczak, head of Moneyfacts.co.uk, says: “Many lenders are pulling away from unsecured lending as the risk of customers defaulting continues to increase.Borrowers struggling with repayments will inevitably forgo repayments on unsecured lending first, while trying to maintain their secured lending commitments such as their mortgage.

“Those lenders that do remain are charging a much higher rate of interest in order to offset the potential risk – borrowers requiring a £25,000 loan over five years will now have to pay an additional £1,334 in interest, compared with two years ago.”

The website also warns that only two thirds of customers will get the advertised typical rate and as a result, borrowers need to be wary of making too many applications as this will leave a mark on their credit file and may have a detrimental effect on their changes of being accepted for a loan.

Unsecured lending is simply not a viable option right now. It’s too expensive, it’s not competitive and it will not help any borrower. By seeking out some secured finance a borrower can be sure of a lower rate, a better chance of future financial success and a cleaner credit history.

SOURCE: Moneyfacts.co.uk, 15/07/09

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As the recession rolls on rates continue to get worse – and none more so than unsecured loan rates. This is a worry because as they rise, more people could find themselves in more financial difficulty.

In just four weeks, seven unsecured personal loan providers have implemented rate hikes of 1% for new personal loan customers, increasing the average loan rate from 8.74% to 9.07%, according to uSwitch.com.

This may seem like quite a small ‘tweak’, but on a £10,000 loan over five years, the total amount of interest paid will increase from £2,283 to £2,371.

This is a real problem for borrowers that are struggling with several debts and are desperate to consolidate. Last year, 1.3 million consumers used an unsecured personal loan for debt consolidation. If this trend continues throughout 2009, consumers trying to do the right thing and keep all their debts in one place will end up paying almost £100 more in interest compared to this time last year.

Louise Bond, personal finance expert at uSwitch.com says: “Hiking loan rates in the current climate is just making an already difficult situation practically impossible for consumers. Much as we understand that the banks are struggling, these are big hikes for people to swallow. With all eyes on mortgages and savings, it seems unsecured loan providers are slipping under the radar slightly.”

It simply doesn’t pay to take out an unsecured loan. The rates are not competitive, the terms are stringent and the penalties severe. If you are looking to consolidate debt, talk to a financial adviser about taking out secured, sensible debt – it won’t drag you down and will help improve your long-term prospects.

SOURCE: uSwitch.com, 30/06/09

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The latest credit card market analysis from uSwitch.com has revealed that almost 2 million consumers have been rejected for balance transfer deals in the last year.

More and more people are trying to manage their credit card debt the easy way by moving it to another credit card, using the 0% interest until the next card comes along. But the credit merry-go-round is coming to a halt and more people than ever are finding that they are saddled with their debts. For many people, the 0% party really is over as they have reached a dead end.

As a result of lenders saying no, these consumers will have to fork out £535m in interest payments in the next 12 months as they are unable to switch to a new provider. In total, £3.5bn of credit card debt is now stuck on interest bearing credit cards as consumers cannot switch to their next 0% deal.

Across all types of credit card, more than one in ten consumers, totalling 3.32 million, has had an application declined in the past twelve months. This is a clear sign that providers are still acting on the air of caution and only lending to those with a squeaky clean credit record.

Louise Bond, personal finance expert at uSwitch.com comments: “We can’t ignore the fact that the country is in economic turmoil – a situation which has been catalysed by bad consumer credit. The knock on effect for credit card customers is that those with a less than perfect credit history could find themselves being turned down for the next best 0% deal, forcing them to pay interest. This is a huge problem for switchers as these people have accumulated debt based on the fact they do not have to pay interest on it.”

Remember – the knock on effect of rejected credit applications is that it will appear on your credit report and, in the long term, have a negative impact on your score. With this in mind, it’s important to check your report before applying for products to make sure you stand a good chance of being accepted – constantly reapplying to different suppliers will make the situation worse.

If you can’t get another credit card because your debts are too high or your credit score is simply not good enough, seek out some professional financial advice.

SOURCE: uSwitch.com, 24/06/09

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The Bank of England recently revealed that as many as 1.1 million people in the UK could be in negative equity – but if you are in negative equity, there is nothing to be concerned about.

Negative equity is where your home is worth less than your mortgage, and it’s becoming a common problem for those who took out high loan to value mortgages or secured loans a few years ago. House prices are as much as 11.3% lower than they were a year ago, so those who only had 90% or less equity now own none of their own home.

This isn’t anything to be worried about. The media may link negative equity with arrears and repossession but it couldn’t be further from the truth. A lender will not repossess you if you are in negative equity nor will they charge you any more for your mortgage or secured loan each month.

Negative equity is something that can be perfectly manageable, even in this tough period. As long as you keep up with your mortgage repayments, and any other debt payments such as secured loan repayments then there is no reason why a lender would be unhappy with you.

Of course negative equity does mean you will find it very difficult to get hold of any more credit – if you are in negative equity then you will have nothing to secure credit against. But, with some careful financial planning and some saving then there is no reason why you cannot begin to combat the negative equity by investing back into your home.

Talk to a mortgage adviser about what you can do while you have negative equity. You may not have many options, but as long as you are fully aware of your situation and willing to do something about it then there is no reason to fear negative equity.

SOURCE: Bank of England, 12/06/09, Nationwide, 29/05/09

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Last week George Osborne, the shadow Chancellor, said that Britain must become a country of people looking to stop spending and start saving – but what can you do to become a saver instead of a spender?

Osborne said: “The long term priority is to re-focus from the rush for short term gains to the pursuit of long term returns – because in short, you cannot build lasting prosperity on a mountain of debt.

“Our households have become the most indebted of any major economy, more even than America’s, with debt to income standing at 175% for the average British family compared to 140% for the average American family.”

Anne Young, savings expert at Scottish Widows says: “We must be encouraged to save more. Research from Scottish Widows reveals the nation’s savings behaviour is being severely affected by the current difficult economic environment. Over four out of five Brits say having no money is a major barrier to saving. The burden of debt on people’s pockets impacts people’s savings, as 42% cited it as a barrier to saving this year.

“It has become more of a priority for people to reduce their current debts and simply get by on a day to day basis rather than saving for their futures. However while paying off debts should still be a priority, in climates like these, it is important to save even a small amount now to get into a saving habit and build up some capital. And we should all regularly review what we are doing as our ability to pay debts and save can change.”

So debt must be cut before saving can begin, and that’s tough when people are struggling with rising credit card rates, soaring personal loan fees and financial responsibilities in all other directions. It makes it impossible to think of the long-term when your short-term debt is holding you down.

So get rid of the debt using your home’s equity and get on with becoming a saver instead of a spender. Using a second mortgage’s low rate you can consolidate and save every month, giving you the room to move in the right direction for the long-term.

SOURCE: Conservatives, 08/06/09, Scottish Widows, 09/06/09

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