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Transform Your Nest into a Pot of Gold

A few decades back, when a person retired, he / she did not have to worry much about expenses and how to meet them. The average amount of money that a working individual could save was enough for the retirement years. With the increase in the cost of living and the lack of a proportionate increase in the family income, it has become a difficult task for retired people to make ends meet.

The situation is a bit easier for the home owners. They can release the equity on their home and use the cash received for their other expenses. Equity release plans are a way through which older home owners can unlock a part of the money tied up in their property and get some tax exempted cash. The equity release schemes are of two kinds – life time mortgages and home reversion plans.

Life time mortgages are the most popular plans and the majority of those who are going for equity release are opting for this. Under this plan, you would take out a loan on your property which will be paid off after the death or removal of the last surviving partner to a retirement or a care home. Thus there won’t be any monthly payments to worry about. After your demise the equity provider would sell the property, take their share and give the remaining amount to the rest of your family.

There are several benefits of this plan. You can release the equity on your property even at the age 55. If there is any price rise in the real estate market in the mean time, then you will benefit from it. You will get a fair estimate of the amount you can expect to receive from the scheme. Your property might generate enough money to leave some for your family and pay off your mortgage.

However, there are some disadvantages that you have to consider. The interests are compounded and thus the debts keep mounting. Therefore, you might not have any money left for your heirs after paying off the mortgage. You cannot pay off the debt before time. If you do, then early repayment charges will be applicable. Equity release on property may also disqualify you for any government pension grants.

The other equity release plan is the home reversion plan. Under this plan, you can sell the entire or a portion of your home to a home reversion company. When you sell part of it, the other part will be held in trust for you. When you sell to a reversion company you will get lump sum cash from them and the right to live in your own home rent free. After your death or removal to a retirement home, your property will be theirs. If you sell part of your home then they will sell that part and pay off the mortgage. The remaining will go to the trust. One major advantage is that you will know the exact amount of money that you are leaving for your heirs. But then you will become a tenant in your own home.

Author bio:

Jonathan is a freelance financial adviser. He has recently started writing articles and blogs. Here he talks about the advantages and disadvantages of the equity release on property plans.

Wonga Payday Loans – What Makes Them Different?

Wonga Payday Loans - What Makes Them Different?

With the growth of the payday loan market in the UK Wonga is probably the best known out of all the major players – thanks largely to their television advertising.

In truth Wonga’s television advertising and Viral marketing campaigns are probably the only things that really set them apart from other payday lenders.

If you look at the average payday loan television advert out there by the likes of QuickQuid and PaydayUk, as just two examples, the advertising campaigns tend to be pretty dire, only matched by the likes of those Cash 4 Gold adverts.

Ok, I’m probably being a little unfair to Wonga – there are aspects that do set them apart from other payday loan firms. Let’s take a look at a few:

Wonga are probably one of the only payday lenders that really are up-front about the amount they charge people. It’s fair to say they were ground-breaking in introducing people to their “slide-bar calculator” that effectively tells you how much you will need to pay back if you choose to borrow the amount you specify.

Wonga will only lend smaller amounts up-front – for instance they publicly state that the maximum amount you can borrow (as long as you can repay it) is £400. In comparison some payday loan firms actually state that they lend up to £1,000 – grossly misleading, especially since many lenders will not actually lend this amount the first time round. Wonga is at least transparent in this regard.

Wonga’s interest rates are lower if you borrow a payday loan over a shorter period of time – the lower the interest rate will be. For example, most payday loan companies fix the length of time over a monthly period so you are obliged to repay the loan with the full month’s interest. With Wonga you can actually specify the loan period – pretty flexible if you ask me.

So are Wonga the same as every other payday loan firm? Well – they are still a payday loan company – whatever else they claim to be, however, they do have a number of differences that make them stand out. Would I borrow from Wonga if I needed to? Probably.

Payday Loan Criticisms – Are They Justified?

Payday Loan Criticisms - Are They Justified?

Are payday loan criticisms really justified? We try to debunk some of the myths behind this form of lending.

Payday loans have come in for quite a bit of stick in the last few years – both justified and unjustified.

A large part of the problem with payday loans is the fact that many of their strongest critics are largely ignorant and misunderstand their purpose. In addition to this, if you look at the biggest critics out there, they usually have a political agenda and refuse to meet with the likes of PaydayUK and Wonga to discuss the issues. What does this tell you about those so oppose to this form of lending?

However, I am digressing and I’m not writing this to criticise back-bench politicians who are looking to further their waning careers.

So – What are the main criticisms of payday loans?

1. Payday loan companies encourage people to get in debt.

This is not and never has been true, as far as this writer is aware. Payday lenders are governed by the same authority as other financial organisations – the Financial Services Authority (FSA). Under FSA regulations lenders have to do what is best for the customer in the long-run. They will (or should under FSA) only lend to people they know can repay the debt at the end of the month.

2. Payday loans are frivolous

Is this really true? I don’t think payday loans have been advertised as a frivolous loan to be taken out lightly. They are advised as a source of credit if the borrower is unable to obtain credit elsewhere, such as bank overdrafts and credit cards.

Payday loans are advised for people who find themselves in a situation where they have an unexpected payment due, such as an unforeseen utility bill or car repairs. Regardless – even their strongest critics have to admit that, no matter how strictly regulated the industry might be, lenders have little power over what borrowers spend the money on.

3. Payday loans are expensive

Ok, from the outset payday loans do look expensive with ridiculously high Annual Percentage Rates (APR). However, critics wilfully misunderstand the fact that an APR is an interest rate measured over an “annual” period – usually a year. A payday loan is only supposed to last a month – it’s a small, short term loan that is paid off at the end of the month – not the end of the year!

Therefore, the “actual” interest rate is a lot lower – for example, on average, a borrower who takes a £100 payday loan may only pay back £120 at the end of the month. So the “actual” interest rate works out as 20% interest – but for a loan as small as this its peanuts! In the words of Alexander Meerkat – Simples!

4. Payday loans can lead to a spiral of debt for the borrower

Do they? It’s easy to use payday loans as a scapegoat for borrowers falling into heavy debt. However, did you know the majority of big payday lenders out there actually put safe-guards in place to prevent this?

The likes of PaydayUK and Wonga actually have teams to help manage your debt should their borrowers start to struggle – the last thing they want is for their customers to get into financial difficulties so they will work out a debt management plan that suits their needs.

In addition to this – it’s just as easy to fall into debt using credit cards and bank overdrafts. I fell into debt as a student with both of these forms of credit and struggled for the first few years after leaving University. Just something to bear-in-mind…

So – are the critics justified in their attacks on payday loan companies? I’ll let you decide for yourself.

Related articles:

Short Term Loans Briding the Gap until Payday?

Wonga and PaydayUK seek to educate UK about Payday Loans

Alternatives to Credit Cards

Feeling The Pinch – British Consumers Cutting Costs To Make Ends Meet

Feeling The Pinch - British Consumers Cutting Costs To Make Ends Meet

Feeling The Pinch - British Consumers Cutting Costs To Make Ends Meet

British shoppers could benefit from switching credit card accounts or to a cheaper utility provider after a report revealed that growing numbers of consumers have very little cash to spare.

The report revealed that 32% of people felt they had little to no money left over as they are increasingly concerned about the rising cost of utility bills, increasing fuel prices as well as the current state of the economy.

The report also suggested that more and more shoppers are tightening their purse strings, showing that more than 70% of consumers are changing their shopping habits and a whopping 65% are switching to cheaper grocery brands so they can stay within their monthly budgets.

The Director General of the British Retail Consortium (BRC), Stephen Robertson, suggested that “the squeeze on disposable incomes is getting tighter.” He added that around a third of people said they simply have no spare cash.

On a more positive note, Mr Robertson commented:

“With finances under pressure, consumers are becoming increasingly savvy, with 65% saying they are switching to cheaper grocery brands, often own-brand labels, to stay within their budgets.Competition within the sector is helping to take the edge off price inflation with a larger number of promotions and discounts on offer.”

Whilst consumer confidence did increase over the second quarter as more and more people felt better about personal finances and job prospects, it still remains relatively low when compared to last year.

In spite of this many economists are expecting to see an increase in consumer confidence in 2012, off the back of the London Olympics.

If you’re feeling the pinch of the credit crunch and suffering as a result of the recession then there are a number of options you could consider including:

  • Changing your existing credit card to one with a competitive interest rate or cash back benefits.
  • Switching to an affordable utility provider, in fact a company such as the Energy Helpline can help find you the cheapest provider for your area.
  • Switching to more affordable brands, such as supermarket own brands over the more expensive ones.
  • Switching your car to a smaller hybrid / eco-friendly model to cut the cost of fuel.
  • Look at your car insurance or home insurance and consider how much it’s costing you – is there a cheaper alternative?
  • Consider a small short-term loan such as a payday loan

There are a number of other cost cutting things you can do – the above are just a few! However, if you’re still really struggling with making ends meet and are faced with debt then you could consider a debt management plan to consolidate any existing debts into one lump sum that gets paid off every month.

Check out these related articles:

Top Ten Money Saving Ideas

Ten Top Tips For Making More Money

If you are looking for a cheap utility provider then check out the Energy Helpline:

Rise in mortgage payment affects debt management plan

Rise in mortgage payment affects debt management plan

Rise in mortgage payment affects debt management plan

The wrath of global recession looms over the homeowners and the magnitude of this crisis continues to unfold. People who are paying less in terms of mortgage payment might be disappointed to find that the base rate will soon rise. Homeowners who can still manage their payments might find it difficult to pay off when their payment increases.

Many homeowners might default on their mortgage payment with the rise in the mortgage rates. If you cannot afford a mortgage payment then you need to take help from an expert to avoid the problems in future.

Can rise in mortgage payment affect your debt management plan?

You might panic as the rise in the mortgage payment might affect your debt management plan as that restricts your ability to accelerate the reduction of your debt. But you might be aware that a debt management program does not have a rigid plan. Make sure that you adjust your debt management plan according to your financial situation so that you can avoid missing your payments.

If your debt management payment needs to be lowered to make it affordable then your creditors might terminate the terms of negotiation. Therefore, you have no other alternative than filing bankruptcy.

You can discharge your unsecured debts by declaring bankruptcy. It helps to put an end to the illegal collection practices of the creditors by filing bankruptcy.

But you should be aware of the adverse impact of bankruptcy on your credit report. Filing bankruptcy damages your credit report for 7 to 10 years. During this period you will not be able to get any loans as the creditors might consider you high risk borrower. You should also know that the court appointed trustee will sell your property and fund raised from it will be disbursed among the creditors to pay off your debts. Therefore, you might lose your valuable possessions. Declaration of bankruptcy will also ruin your professional career.

About author: This article is written by Christina Jones, who is a financial content writer associated with Oak View Law Group. You can contact her here: christina.jones60@gmail.com

Free money advisory service launched nationwide

A UK wide network of centres aimed at offering free, impartial financial advice through the Internet, face-to-face and over the phone has been setup by the Government to help consumers.

The Money Advice Service will provide impartial advice on money issues, from credit card debts and advice on improving credit scores to more serious financial matters.

The completely free service, funded by a charge levied on the financial services industry, replaces the Consumer Financial Education Body, which was formerly known as Money Made Clear.

The Money Advice Service is expected to offer a more thorough service, offering face-to-face meetings for the first time in an attempt to help UK consumers make the most of their finances.

The Chairman of the Money Advice Service, Gerard Lemos, stated that the service has been setup to make “people’s lives easier and better.” Mr Lemos went on to add:

“I firmly believe we can all enjoy life more given the right money advice at the right time in the right way. We’re not here to sell people anything and we won’t charge anyone – we are here to help people take decisions about their money and plan for a better future for themselves and their families.”

To find out more about the Money Advice service please visit www.moneyadviceservice.org.uk or call 0300 500 5000.

Rogue personal loan brokers target the vulnerable

The Citizens Advice Bureau (CAB) issued a stark warning after tens of thousands of vulnerable people have been tricked into handing over large amounts of money by cold-calling rogue credit brokers and debt management firms.

The CAB stated that consumers who are struggling financially are being targeted by rogue finance companies who contact them to offer to help find a loan.

The group went on to reveal that people who have been victimised by these firms were charged large up-front fees for the service. However, the loan frequently failed to appear and they were unable to get the search fee back.

This is a relatively unethical practice as most finance brokers that charge finders fees only retain the amount if they find a loan for you. However, in these cases it was found that, after the cold-caller took the applicant’s bank details they found that money had been withdrawn from their account without their consent to do so. In addition to this their contact details were passed on to other finance firms and were bombarded by spam calls, emails and text messages as a result.

Unfortunately, people who find themselves in a position where they are unable to borrow money from banks and other mainstream lenders due to poor credit scores tend to be targeted by finance brokers offering sub-prime loans and credit cards.

As a result the CAB have lodged a super complaint with the Office of Fair Trading (OFT), asking it to ban finance firms from cold-calling and charging up-front fees.

Chief executive of the CAB, Gillian Guy, commented:

“Our evidence suggests that rogue operators are cashing in on the desperation of people hit hard by the recession who are least able to afford it, and that this problem is set to grow much worse.”

Ms Guy added that there are too many loopholes in the consumer protection framework about unsolicited marketing and broker fees, allowing “bad practice to flourish.”

Creditwindow advises that if you do apply for a loan through a broker you should always check whether:

1. There are any up-front fees and check whether or not you get this back if the broker fails to find you a personal loan.

2. Read through any contract thoroughly before signing – make sure you know what you’re getting yourself into.

3. Most importantly – don’t get pressured into taking out a loan if you have any doubts whatsoever. Remember – the broker is in it for the business – not for your best interests.

Credit Card Surcharges Challenged By Consumer Group

Surcharges on credit cards and debit cards made by companies are faced with a “super complaint” launched against them by Consumer group, Which?

The group is urging the Office of Fair Trading (OFT) to launch an investigation into these surcharges, stating that they are often sprung on the customer at the point of payment and could be in excess of what it would cost the retailer to process the transaction.

Which? believes that the actual cost to the retailer is as little as 20p per debit card transaction or a meager 2% cost for credit card transactions.

Recently the DVLA, local authority agencies, estate agents and cinemas are all starting to add excessive charges for paying by card - credit card or otherwise.

The consumer group believes that businesses have a duty to clearly inform customers of any surcharges upfront, in a straightforward fashion, in any advertising or promotional campaigns and materials. Which? also feels that any surcharge fees should match the actual cost to businesses, or for the firm to absorb the tine cost of debit and credit card transactions.

Peter Vicary-Smith, CEO of Which?, commented:

“Paying by card should cost the consumer the same amount that it costs the retailer. Companies shouldn’t be using card processing costs as an excuse for boosting their profits.”

Mr Vicary-Smith, went on to add:

“Low-cost airlines are some of the worst offenders when it comes to excessive card surcharges but this murky practice is becoming ever more widespread, from cinemas to hotels and even some local authorities.”

Welcome to the Creditwindow blog

Hi and welcome to the official www.creditwindow.co.uk blog.

Creditwindow was originally setup as a consumer finance price comparison website. However, as time has gone on we have developed into something else entirely!

So, just what is Creditwindow and what is it’s point?

Creditwindow is being developed as a reliable source of financial news, advice and guidance to the British public, whilst still being a great place to search for financial products, from credit cards and bank accounts to guarantor loans, debt management services and more…

To find out more about some of the financial products we offer check out the following sections:

Personal Loans
Credit Cards
Guarantor Loans
Payday Loans
Debt Management
Credit Rating Services

Youth concerned over future debts and credit hassles

A recent survey by MyVoucherCodes.co.uk suggests that at least one fifth of teenagers claim they never want to get into any form of debt. Many of them are scared of the prospect of owing money, be it a credit card, personal loan or mortgage.

The report shows that over 20% of teenagers between 14 – 17 plan to never own a credit card or take out a loan, with 13% claiming that they did not want to end up in debt, like their parents.

A significant number of the respondents went on to state that they were concerned that their spending would get out of control should they have access to credit. At least 23% claimed that the interest rates charged on personal loans and credit cards put them off.

Possibly even more worrying, 7% of young people have completely ruled out University due to worries over the large debts they could run up whilst attending.

Personal Finance Expert, Farhad Farhadi, commented:

“I think a lot of young people have been put off the idea of debt having grown up during a particularly bad recession. The younger generation are more financially savvy now than teenagers were in the past and I think a lot of youngsters have evidently learnt a lesson from their parents, who may have got themselves into debt.”