Tips On How To Handle Your Debt Situation

Tips On How To Handle Your Debt Situation

The best way to tackle debt is to deal with the situation face on, many people tend to ignore their financial circumstances which can make their debt impossible for them to handle. There are countless things you can do to help you solve these problems. The best option for this would be to make a plan; you can do this by looking at your monthly outgoing's.

Take a pen and paper and write down how much your monthly outgoing's are, start with utility bills, rent/mortgage, shopping and any other outgoings you have, once you have calculated how much you need for all your expenses you can work out what you have left to spend or save for rest of the month. This is a good way of making sure you do not exceed your monthly income.

Once you have created a budget it may be helpful for you to get more advice from a debt advisor they can help you decide on the best solution to clearing your debts in the best and fastest way by assessing your circumstances.

More and more people are finding that they are getting further into debt because they are not aware of the solutions that are available to them; however there is a lot of advice out there and available options such as a debt consolidation loan. If you are looking to get a bad credit debt consolidation loan it would be a wise decision to do your homework first by looking at more than one Loan Company.

It is common for people to think that because they have a bad credit score it will be more difficult for them to get help, this is not necessarily the case although there will be fewer companies willing to help it isn't impossible. In most cases the interest rate will be higher for people with poor credit however it doesn't mean it is not obtainable. In fact some companies use people facing bankruptcy as an example.

A debt consolidation loan will merge your monthly bills into one single loan this can help take the pressure off you as your monthly outgoing's can be significantly reduced, however you will be paying off the debt over a longer period of time so the decision to consolidate your loans should not be taken lightly and should be carefully researched.

Final Comments

Improving your debt will take hard work and dedication this is why a debt consolidation loan shouldn't be taken lightly, much consideration should be taken to make sure monthly payments can be met.

What Do Mortgage Lenders Look at When Assessing an Application?

What Do Mortgage Lenders Look at When Assessing an Application?

Applying for a mortgage can often seem to be a complicated process, and in many cases, the mortgage lenders themselves do nothing to dispel the mystique. The folklore and legend which has built up over the years is quite astounding, ranging from rumours that having a home telephone number scores more points than a clean payment history, to those who maintain that you can tell whether the loan will be granted or not by the colour of the application form used. Whilst there might have been an element of truth in some of these legends years ago, they have very little to do with the decision making process today. Nowadays, when you apply for a mortgage, the lender will assess three distinct aspects as follows:

Security

Quite simply, the security is the value of the property less the amount of the mortgage required. This is also referred to as the equity in the property, and the greater this amount is, the more likely it is that the lender will be willing to grant the loan. A large amount of equity could also result in a lower rate of interest being payable.

Mortgage lenders will place a different emphasis on the amount of the equity in a property, depending on whether prices are rising or falling. In a rising market, the value of the equity is increasing, and therefore a lender can accept applications where the amount of the mortgage is the same or only slightly less than the value of property. When house prices are falling, lenders will insist on their being a much bigger difference between the value of the house and the amount they will lend, resulting in a large deposit being required. Currently, there are one or two lenders who will lend up to 90% of the value of a property, but only the best applicants are accepted, and the interest rates are very expensive indeed. For any real choice a deposit of at least 15% is needed, and it is only those who can put down 25% who will qualify for the best rates.

Ability to pay

Assessing an applicant's ability to pay is no more complicated than subtracting what they spend from what they earn. The difficulty lenders face is in being able to do this accurately. Establishing what an applicant earns is reasonably straightforward, and many lenders will rely on copies of pay slips etc, accompanied sometimes by a telephone call or letter to the applicant's employer. In the not too distant past there were schemes referred to as self cert or self certification, whereby an applicant with enough equity or a large deposit could simply state what they earned, and be excused the trouble of having to provide proof. Unfortunately, there have been too many instances where applicants inflated their earnings, and such schemes are now few and far between, and only available to those who have a genuine reason for not being able to formally prove what they earn, such as some self employed people.

Proving spending can be trickier, and this is where a good mortgage broker can be invaluable. All lenders will deduct the annual cost of servicing other debt such as loans and credit cards from income before they assess affordability, but they don't all deduct the same amount. Whilst most lenders will deduct 3% per month for credit card balances, there are still some lenders who deduct 5%. For someone with a credit card balance of £10,000, this could result in a difference of up to £12,000 in the maximum loan available. A good mortgage broker will also know which lenders can take alternative sources of income, and this can make a significant difference to the maximum loan available. For instance, whilst most lenders only consider earned income for mortgage applications, there is one very large lender who will allow both Working Tax Credit and Child Tax Credit to be counted, and will even gross these amounts up, pretending that tax had been deducted before receipt.

When it comes to establishing how much an applicant spends on living expenses, most lenders have now accepted that most applicants for a mortgage will tend to substantially underestimate their outgoings. As a result, many of them use figures for average expenditure obtained from census surveys and the like, with only limited room for manoeuvre. Assessing applications in this way ensures as far as possible that the lenders do not grant loans to those who cannot afford them. Unfortunately, this means that there will be some cases where applications are declined when the loan is easily affordable to the applicant.

In assessing ability to pay, lenders will also look at not only the level of income, but the likelihood that it will continue into the future. Therefore, an applicant who has had a stable employment history will be more attractive than one who has switched jobs frequently, or has recently taken up their position. The frequency with which an applicant has changed address in the past will also be taken into account.

Willingness to pay

Lenders are keen to ensure that they only grant mortgages to those who will be committed to keeping up with their repayments. To assess this, they will look at current and past credit commitments, and whether payments were made in full and on time. In past years, some lenders would turn a blind eye to the occasional missed payment on a catalogue or mobile phone, but in the current climate where mortgage lenders have only limited funds to lend, only those with very good credit histories will be accepted.

In the past it has always been the case that a high score in two out of the three areas would be enough for a lender to agree a mortgage, but in the current climate, it is more usual for a high score in all three areas to be required. The few schemes which still exist for those who have a chequered credit history or complicated income are very specialised, and most are only available via suitably authorised brokers. There are currently no schemes, specialised or otherwise for those who do not have a deposit or equity.

APR ? AER ? EAR ?

APR ? AER ? EAR ?
What do the terms APR, AER and EAR mean?

Do you often look at the advertisements for loans, mortgages and savings and wonder what APR, AER and EAR actually mean? Well you're certainly not alone. Even banking staff can get confused!

The Financial Services Authority specifies the exact mathematics behind these calculations and polices their use. All financial institutions have to stick to the exact calculations and the FSA lays down rules as to when and how the figures have to be disclosed. There are no exclusions! But it's no good if the public don't understand what the terms mean.

So lets do our bit to lift the mists of misunderstanding!
APR stands for "annual percentage rate"

It is used to describe the true cost of the money borrowed on mortgages, loans, and credit cards.

The calculation for APR takes into account the basic interest rate, when it is charged (i.e. daily, weekly, monthly or annually), all initial fees and any other costs you have to pay.
As all lenders calculate APR exactly the same way, it enables you to make direct cost comparisons between lending products.

So if one building society is offering you a mortgage at 4.8% plus an arrangement fee of £600 and a bank is offering you an interest rate of 5.2% with a £150 fee, then the APR figures will show you which of the two mortgages is cheapest.
There are then two further expressions that use APR.

When you see X% APR variable , this means that the cost is currently X% but the interest rate is not fixed and from time to time the interest rate is likely to vary (up or down).

The second variant is X% APR Typical variable. You'll frequently see this _expression in promotions for loans. It means that the lender is not being totally specific about the interest rate you will be charged as their rates vary, usually in response to your personal credit rating and the amount of money you want to borrow.
Therefore X% APR Typical variable is used to give you a general idea of what interest rate you can expect to pay.

The addition of the word "Typical" means that at least 66% of their approved applications are offered that rate or cheaper. Then when a loan offer is confirmed to you, the paperwork will disclose the actual APR or APR variable you are being offered.
Now lets look at EAR.

EAR is the abbreviation for "equivalent annual rate". It's used to illustrate the full percentage cost of overdrafts and any type of account that can be in credit and also go overdrawn.

The calculation shows you the true cost if you use the overdraft facility. In common with the APR calculation, EAR takes account of the basic rate of interest and when the interest is charged to the account plus any additional charges.
So in most respects EAR and APR achieve the same thing -

it's just that APR applies to a pure lending product whereas EAR applies to a product, such as a bank current account, that can be in credit or go overdrawn.

By the way, the calculations for both EAR and APR always exclude any Payment Protection Insurance you've bought to ensure the monthly repayments are maintained if you are off work due to accident, sickness or unemployment. That's because this insurance is always optional and is not a condition of the lending.
AER is totally different.

It's only used in relation to savings and interest based investments. It's all about the rate of interest you'll receive on your money.
AER means "annual equivalent rate".

It shows the true rate of interest you will have received by the end of the year taking into account the regularity of which interest is added to the account (as the payment frequency has a compounding affect on the amount of interest you receive). The AER calculation also removes the affect of any promotional offer that disappear after a few months - a popular trick used by banks and other institutions to boost their savings products to the top of the Best Buy tables.

It's not easy to remember all this but we hope we've shed some light on some of the jargon you're faced with!

The Underlying Problem In Credit Cards

The Underlying Problem In Credit Cards


There's no arguing about it, credit cards provide ease and convenience for its holders. But today, debt problems resulting from credit card use seem to grow by the minute. Surveys prove that compared to the past years, credit card companies today have been imposing interest rates and other costs that are sometimes way too much than what they should be charging. As a credit card holder, how should these changes affect you?

Whether you already own a credit card or is still planning on getting one, being aware of the true costs associated with your card is definitely your best defense against unreasonable charges. Are you really aware of what exact fess your card charges you every month? What are the factors that you should check on in choosing the right card for you? Let's discuss some of the possible problems that you should know about your credit card.

Choosing the Right Credit Card

Multiple APR. Some credit cards have more than one APR that may apply to varying credit card transactions. Don't immediately assume that the low APR offered for your balance transfers will be the same as the rate that applies to the purchases you will charge to your card.

Take note that if you use a low APR or a zero APR balance transfer credit card on your shopping, you could be charged with an expensive APR on these purchases. Thus, examine carefully how much APR will apply to your balance transfers, purchases, and cash advances.

The introductory period. Introductory offers usually last about 3 to six months while some credit cards may extend their promo rates for up to a year or more. The important thing is that you know exactly how long the low interest rate will last and how you can make the most of that given period.

For instance, if you're getting a balance transfer credit card with a 6-month introductory offer, make sure that you'll be able to pay off all the balances you transferred within that period to avoid incurring the regular interest rates of the card. Consequently, find a credit card that will maintain reasonable rates even after the introductory period expires.

Know the consequences of the rewards. You may easily get enticed by the ads promising to give you freebies, rebates and other bonuses from your credit card purchases. But watch out about the consequences that may come with rewards credit cards.

For example, how much is the APR you'll pay if you carry over your balance from month to month? How much is the annual fee on that card? How much are the penalty charges if you delay your payment? Will the interest rate, annual fee, and penalty costs offset the value of rewards you can get? What happens if you make even just one late payment? Will your chance to earn rewards be forfeited? Don't just take a look at the rewards being offered, understand carefully how the reward program works and the fees that come with it.

Financial Advice: Risk vs. Reward

When investing your money, it's important to take risk versus reward into account. Like so many other areas of life, the risky path has the most potential for a big payoff, but the safe route is all but guaranteed to earn you at least a little something. Knowing your personal risk tolerance level and using this in conjunction with where you are in meeting your financial goals will help you determine the best way to balance your investments.

Smart Investing Means Knowing Yourself

What is your personal tolerance for risk? Would you rather hope for the big payoff and possibly lose money in the meantime, or would you prefer to invest your money in solid accounts with a small rate of return? While no investments are guaranteed, the small accounts can provide you with a fairly reliable return over time. All the same, riskier investments become significantly less risky, statistically, over years, often leading to great returns. After a year of dwindling accounts, it's hard to be confident that riskier investing can be worth it, but if you have enough time left before retirement, playing risk versus reward may be a great bet.

Smart Investing Means Knowing Your Long-Term Goals

If you are almost ready to retire, it's probably safest to keep most of your wealth in medium- to low-risk investments. While these types of investments don't have the same return potential as high-risk ones, they also aren't likely to leave you with less money than you started with. When you look at it like that, it may sound strange to recommend riskier investing to anyone. How can high-risk investing possibly beat the odds?

Try to think of risk versus reward this way: if you invest in a high-risk fund, the value may go up or down. When it's up, you are making money, which you can put back into the investment or invest elsewhere. When it goes down, you may be losing some money on the fund, but you can buy more shares at a decreased rate at this time, giving you higher earning potential in the future. When examined over the span of many years, the higher risk options often provide a greater rate of return than less risky investments. If you have many years before you retire, this may be a great method to build your wealth.

No matter what your feelings are towards risk vs reward, you should seek the help of a financial advisor. These professionals can help you determine both what your personal feelings are toward risk, as well as how to best meet your financial goals. Investments that may seem too risky on the surface may have better returns over time, and seeking the help of a financial planner is the best way to know what the right choices are for you. Maximizing your wealth with the right mix of risk is critical, and with proper research and guidance, you can make it happen.

2009/10 student finance

If you want to study after the age of 18 years,Knowledge is becoming decidedly more expensive.

Debts

Barclays predicts students graduating in 2010 will face £30,000 debt, and the Universities UK report published in
March found that by 2016, the average graduate debt would be £26,400 if the fees are increased to £5,000. Many Universities are
advocates for more money to meet the rising costs of higher education.

Although the figures show that graduates can expect higher than average income, well-paid jobs may not occur at
number of years after high school. And for many the premium in earnings may not be enough to clear their
personal debt pile for decades.

So unless you have rich parents, it is wise to learn about and prepare for the different areas of student finance, each with associated costs.



Tuition

As the name suggests, these are the fees payable for the actual course you want to take. Were introduced in 1998/1999.
Previously the costs were paid by the government. This change was made to help fund a growing appetite for more
education and that during their working life can graduates can gain £400,000 more than non-graduates.

Not everyone has to pay tuition fees. If your parents' combined earnings are under a certain threshold they will not have
to pay a penny. From the threshold upward, the contributions operate on a sliding scale.

University in 2010/11 to increase fees 2.04% on £ 3,290. Fees are currently £ 3,145 a year, but increased to £ 3,225 in 2009/10,
and £ 3,290 per year.

Once you are accepted on the course - even conditionally - you should apply to your Local Education
Authority (LEA) to determine what financial support you can expect. Even if you think that there is little chance
that you will need to pays less than the maximum fee, it's worth asking.

The family income threshold for a full maintenance grant will remain at £25,000 and at £50,020 for a partial grant.
Around two-thirds of students receive a full or partial grant, although partial grants are often minimal at less than £500
per year.


Student Loans

Most students will need to finance their day-to-day lives by one or more student loans. These loans are unsecured
with extremely low interest rate, which reflects the rate of inflation. This means in real terms, you only pay back
The exact amount you borrowed.

You should contact your LEA for a loan at the same time you apply for aid for tuition. Your LEA will assess
amount of credit you are entitled, and prompts you to say how much you want to use. (If you
Studiy in London, you will be entitled to more.) Then you need to tell, Student Loans Company (SLC) of this amount, and
It will pay money to your account on the first day of term.

You can apply for a loan for each year of your courses and you do not start making repayments until April
After graduating and then only if you earn above a certain threshold, although this amount is quite low. The amount you repay each
month will depend on how much you earn. In the unlikely event that you never earn over the threshold, the credit will be
wiped when you turn 65.

Maintenance grants for students at university in 2010/11 will be frozen at £2,906, while fees increase
Loans to cover the fees will increase, but because there is no increase in loans to meet living expenses.


Student overdrafts

Most large banks offer interest-free overdraft on their student accounts in the hope that you
remain loyal to them, when you start earning big money in the future.

The amount you get will depend on the overdraft at the bank and will apply to all applicants of their students. Good benchmark
is about £ 2,000 interest-free.

Although the current account does not cost anything if you stay within its borders, if you go over your overdraft, you will be charged a hefty fee
interest rates on the difference - and usually one-off unauthorized overdraft fee as well.

As regards repayment of an overdraft, there is no specific time limit. But after leaving university, interest-free overdrafts
simply evaporate and you will be charged at the same high prices that apply to overdrafts on standard current accounts. It
It is worth noting that some banks provide a grace period after graduation to the higher rate kicks in.

Credit Cards

Banks rarely make favorable conditions for student credit cards. If you have a credit card from a bank, you will pay exactly the same
high interest rates as everyone else. The only difference is that the student credit card has a lower borrowing limit.

If there is any way you can get through university without a credit card, do it. The typical £500 that you will be able to
access on a credit card will hardly determine whether or not you can stay at college – more likely you will end up sitting
on the balance while paying high interest rates for three years having forgotten what you spent it on.