When a homeowner faces the threat of repossession, finding a way to make those monthly mortgage payments jumps to the top of their priorities list. Their first port of call should really be their mortgage lender, who may let them reduce or reschedule their payments until they can get their finances under control again.
There are, however, other places they can turn to. Often, people can't pay their priority bills (such as their mortgage) because their non-priority bills (credit cards, personal loans, overdrafts, etc.) simply take up too much of their monthly income. In cases like this, they may have a wide range of debt solutions available to them, from debt consolidation to IVAs (Individual Voluntary Arrangements).
Helping them reorganise their non-priority payments, these debt solutions can free up the money they need for their mortgage payments. Different debt solutions are right for different people, so they should start by seeking debt advice from a professional debt specialist, who can help them decide which debt solution (if any) is right for them.
Debt consolidation
A debt consolidation loan may be a simple idea, but it can really help people with multiple debts. If they take out one new loan that's big enough to pay off all their unsecured high-interest debts, they'll have just one repayment to make per month, rather than many. This can greatly simplify their finances as well as reducing the interest they're paying on their debt.
A debt consolidation loan can be an effective way for someone to reduce the amount they have to pay every month, as they can arrange to repay the consolidation loan more slowly than the original debts, although this could well mean they end up paying more in total.
Depending on their situation, they might consider consolidating their debts by remortgaging - taking out a larger mortgage and using the cash to pay off their unsecured debts. Even if this increases their mortgage payments, it can still reduce their overall monthly expenditure, as they won't have to make any payments to other debts. Of course, it's always important to think carefully before securing any debt against property.
But debt consolidation isn't always the best way forward, and some people may be better off with an alternative debt solution, such as a debt management plan - or an IVA.
IVA (Individual Voluntary Arrangement)
For homeowners with significant debts (over £15,000, in most cases), an IVA could be a good way of reducing their monthly payments, freeing up cash for mortgage payments and writing off a portion of their debt. Normally lasting five years, an IVA is a legally binding agreement between an individual and their unsecured creditors:
· The individual agrees to make regular fixed payments throughout the IVA - basically, the maximum they can afford once they've taken their living expenses into account. They may also have to free up some equity in their home towards the end of the IVA, so they can pay their creditors more of what they're owed.
· If enough of the creditors accept the terms, they'll agree to write off any outstanding debt once the IVA has been successfully concluded. They also agree not to take any (further) legal action, as long as the individual keeps making the payments.
An IVA is only an option if the individual genuinely can't make their normal payments to their unsecured creditors - but can commit to making those reduced payments for the duration of the IVA.
Read more about debt consolidation loans & IVAs at http://www.debtadvisersdirect.co.uk
Article Source: http://EzineArticles.com/?expert=Melanie_Taylor
Wednesday, August 27, 2008
Friday, August 22, 2008
Debt consolidation remortgage: some things to consider
If you have several debts you are looking to repay, a debt consolidation remortgage could be the answer. It allows you to consolidate your debts as part of your mortgage terms – effectively adding your debts to your mortgage. It also enables you to repay the debts over a much longer period than an unsecured debt consolidation loan, or other debt solution, making repayments cheaper (although repaying what you owe over longer could mean you pay more in total.)
Will I be able to get a debt consolidation remortgage?
It’s been well publicised over the past year that mortgages are harder to get than they used to be – a 10% deposit is all but a necessity, and lenders are being stricter about their lending criteria than in recent years.
Because they involve paying back both your mortgages and your debts, debt consolidation remortgages can be a little harder to obtain than regular mortgages. But with a sufficient credit rating, adequate deposit and a proven ability to repay it (i.e. good earnings), it’s still quite possible to get a competitive deal.
As debt consolidation remortgages rely on equity withdrawal, the amount of equity you have tied up in your home will also affect your ability to obtain a debt consolidation remortgage, and how much more you can borrow to pay off the debt.
Your equity includes any deposit paid on the house, any repayments you have made and any increase in your home’s value – essentially, it is the proportion of your home that you actually own. The more equity you have, the more equity you have the potential to withdraw – plus your lender will be more confident in your ability to repay.
Will it be affordable?
This really depends how big your debts are – i.e. how much extra you need to borrow. For example, if you have a mortgage for £100,000 and want to consolidate £50,000 of debts, you can expect your payments to go up by 50%. Consolidating £8,000 of debts on a £150,000 mortgage, on the other hand, would be much more affordable. If you are unsure whether your debts are too big for a debt consolidation mortgage, or want to know about other possible debt solutions, talk to an expert debt adviser.
Interest rates
Debt consolidation remortgages are offered at the same rate of interest as a regular mortgage – the only added expense will be the extra you borrow to pay off the debts you have consolidated into the mortgage.
This will vary depending on your circumstances: if the homeowner has a poor credit history, the interest rate is likely to be a little higher. Since the interest rate applies to the whole mortgage, not just the other debts, this could add up – so it is important to make sure you can afford the monthly repayments if you are going to take this route.
Resources:
For more information on debt consolidation, debt management, IVAs & Trust Deeds visit www.debtadvisersdirect.co.uk
Will I be able to get a debt consolidation remortgage?
It’s been well publicised over the past year that mortgages are harder to get than they used to be – a 10% deposit is all but a necessity, and lenders are being stricter about their lending criteria than in recent years.
Because they involve paying back both your mortgages and your debts, debt consolidation remortgages can be a little harder to obtain than regular mortgages. But with a sufficient credit rating, adequate deposit and a proven ability to repay it (i.e. good earnings), it’s still quite possible to get a competitive deal.
As debt consolidation remortgages rely on equity withdrawal, the amount of equity you have tied up in your home will also affect your ability to obtain a debt consolidation remortgage, and how much more you can borrow to pay off the debt.
Your equity includes any deposit paid on the house, any repayments you have made and any increase in your home’s value – essentially, it is the proportion of your home that you actually own. The more equity you have, the more equity you have the potential to withdraw – plus your lender will be more confident in your ability to repay.
Will it be affordable?
This really depends how big your debts are – i.e. how much extra you need to borrow. For example, if you have a mortgage for £100,000 and want to consolidate £50,000 of debts, you can expect your payments to go up by 50%. Consolidating £8,000 of debts on a £150,000 mortgage, on the other hand, would be much more affordable. If you are unsure whether your debts are too big for a debt consolidation mortgage, or want to know about other possible debt solutions, talk to an expert debt adviser.
Interest rates
Debt consolidation remortgages are offered at the same rate of interest as a regular mortgage – the only added expense will be the extra you borrow to pay off the debts you have consolidated into the mortgage.
This will vary depending on your circumstances: if the homeowner has a poor credit history, the interest rate is likely to be a little higher. Since the interest rate applies to the whole mortgage, not just the other debts, this could add up – so it is important to make sure you can afford the monthly repayments if you are going to take this route.
Resources:
For more information on debt consolidation, debt management, IVAs & Trust Deeds visit www.debtadvisersdirect.co.uk
Wednesday, August 13, 2008
The credit crunch: a year on
The credit crunch: a year on
As the credit crunch reaches the end of its first year, debt management company Gregory Pennington (gregorypennington.co.uk) have advised people to keep on top of their finances, and warned that there may still be tough times ahead.
A spokesperson for Gregory Pennington said: “While studies suggest some of the country feel they have not yet been affected too badly by the credit crunch, these people may begin to feel the effects as future events unfold.”
A recent survey in The Times revealed that 66% of those asked felt their family would fare badly over the next year, while 77% felt the country as a whole will suffer. The spokesperson said that while these views are probably justified, there is still a lot people can do to lessen the effects of the credit crunch.
“The most important thing is staying on top of your finances,” says the debt solutions company. “Make sure you are meeting all your priority financial commitments before anything else, and try to build a budget around that. If you find you can’t meet those commitments, seek expert advice as soon as possible.
“We would also advise people to save as much as possible, because that little bit extra could come in very useful if things get tight.”
The fact that the remaining 34% of people questioned in the survey did not feel (or weren’t sure) that their family would suffer over the next year suggests that the credit crunch has not necessarily affected everyone. But the Gregory Pennington spokesperson warned that other problems linked to the credit crunch may start to kick in over the next few months.
“It’s important to distinguish between the different elements of the economic downturn we’re currently experiencing,” he said. “The credit crunch primarily affects people looking for credit – particularly homeowners, who may be faced with large arrangement fees or higher payments when they remortgage, and also those looking to obtain loans and new mortgages.
“People who aren’t reliant on credit, or homeowners who have a long-term fixed rate on their mortgage, may well have been largely unaffected – so far.
“But it’s now very possible that we will see the knock-on effects of the weak housing market combined with rising costs of living – higher unemployment, increasing amounts of people struggling to meet their comments, and more people facing problems with debt.
“Even if it does get to that stage, there are still things you can do. Seeking professional debt advice from an expert debt adviser is essential if you find yourself in financial difficulty.
“There are a range of debt solutions available to meet different situations, including debt management plans, IVAs (Individual Voluntary Arrangements), debt consolidation loans and remortgages, etc. One of these could be a lifeline if you find yourself with unmanageable debt, which is a growing threat in the current economic climate.”
As the credit crunch reaches the end of its first year, debt management company Gregory Pennington (gregorypennington.co.uk) have advised people to keep on top of their finances, and warned that there may still be tough times ahead.
A spokesperson for Gregory Pennington said: “While studies suggest some of the country feel they have not yet been affected too badly by the credit crunch, these people may begin to feel the effects as future events unfold.”
A recent survey in The Times revealed that 66% of those asked felt their family would fare badly over the next year, while 77% felt the country as a whole will suffer. The spokesperson said that while these views are probably justified, there is still a lot people can do to lessen the effects of the credit crunch.
“The most important thing is staying on top of your finances,” says the debt solutions company. “Make sure you are meeting all your priority financial commitments before anything else, and try to build a budget around that. If you find you can’t meet those commitments, seek expert advice as soon as possible.
“We would also advise people to save as much as possible, because that little bit extra could come in very useful if things get tight.”
The fact that the remaining 34% of people questioned in the survey did not feel (or weren’t sure) that their family would suffer over the next year suggests that the credit crunch has not necessarily affected everyone. But the Gregory Pennington spokesperson warned that other problems linked to the credit crunch may start to kick in over the next few months.
“It’s important to distinguish between the different elements of the economic downturn we’re currently experiencing,” he said. “The credit crunch primarily affects people looking for credit – particularly homeowners, who may be faced with large arrangement fees or higher payments when they remortgage, and also those looking to obtain loans and new mortgages.
“People who aren’t reliant on credit, or homeowners who have a long-term fixed rate on their mortgage, may well have been largely unaffected – so far.
“But it’s now very possible that we will see the knock-on effects of the weak housing market combined with rising costs of living – higher unemployment, increasing amounts of people struggling to meet their comments, and more people facing problems with debt.
“Even if it does get to that stage, there are still things you can do. Seeking professional debt advice from an expert debt adviser is essential if you find yourself in financial difficulty.
“There are a range of debt solutions available to meet different situations, including debt management plans, IVAs (Individual Voluntary Arrangements), debt consolidation loans and remortgages, etc. One of these could be a lifeline if you find yourself with unmanageable debt, which is a growing threat in the current economic climate.”
IVA adviser warns of rising utility costs
IVA adviser warns of rising utility costs
Following recent increases in utility prices, IVA experts DebtAdvisersDirect.co.uk (www.debtadvisersdirect.co.uk) warned of the probable impact on those already struggling to cope with higher living costs and record levels of personal debt.
Shortly after EDF Energy’s announcement of its decision to raise gas prices by 22%, British Gas owner Centrica announced an increase which would see the average gas bill rise by 35%, taking a ‘standard’ annual £650 bill up to almost £900.
“In itself,” said a spokesperson for DebtAdvisersDirect.co.uk, “this increase could be enough to push certain households into debt – or further into debt – but this is by no means an isolated instance. Today’s consumers are facing substantial increases across the board, from food and petrol to gas and electricity. The cumulative effects can be devastating: for many, there may simply be no way of finding another £227 per year, which works out to almost £5 per week.”
Zoe Mcleod of independent charity National Energy Action summed it up as follows: “Centrica is the second energy supplier to put its prices up. We expect this sequence to continue across all suppliers forcing more than 1 million households in England into fuel poverty. Across the UK fuel poverty could affect 6 million households by the end of the year.”
Despite British Gas’ reassurance that the increase would be postponed until April for the 340,000 customers who qualify for its ‘Essentials’ tariff, the effect on millions of other customers will be immediate. “With so many demands on their budget, consumers are facing some tough decisions,” the DebtAdvisersDirect.co.uk spokesperson continued. “They may feel forced to ‘juggle’ their debts using credit cards, or even to neglect some bills so they can pay others.
“As debt advisers with 15 years’ experience, we strongly advise against either course of action. However serious someone’s debts are, there are far better ways of handling them. The important thing is to seek expert debt advice – and to do it sooner, rather than later.”
In many cases, the right debt advice can help people cope with the extra strain on their finances: “Some people may be able to free up the necessary extra funds by learning to budget more effectively, or by renegotiating payments to their creditors. For others, however, no amount of debt advice will be enough – if their budgets are already stretched to the limit, they may need to look into professional debt solutions, such as a debt management plan or debt consolidation loan.
“In today’s economic climate, of course, the kinds of debt help available may be limited, as problems in today’s credit market are keeping some people from accessing the debt consolidation loans that could help them regain control of their finances. In cases like this, an alternative debt solution may be more appropriate.
“Debt management, for example, relies not on access to further credit but on negotiations between an individual’s creditors and the debt management professionals who ask them to accept lower monthly payments and grant other concessions. As always, we would recommend that anyone in financial difficulty seek professional debt advice as soon as possible.”
Following recent increases in utility prices, IVA experts DebtAdvisersDirect.co.uk (www.debtadvisersdirect.co.uk) warned of the probable impact on those already struggling to cope with higher living costs and record levels of personal debt.
Shortly after EDF Energy’s announcement of its decision to raise gas prices by 22%, British Gas owner Centrica announced an increase which would see the average gas bill rise by 35%, taking a ‘standard’ annual £650 bill up to almost £900.
“In itself,” said a spokesperson for DebtAdvisersDirect.co.uk, “this increase could be enough to push certain households into debt – or further into debt – but this is by no means an isolated instance. Today’s consumers are facing substantial increases across the board, from food and petrol to gas and electricity. The cumulative effects can be devastating: for many, there may simply be no way of finding another £227 per year, which works out to almost £5 per week.”
Zoe Mcleod of independent charity National Energy Action summed it up as follows: “Centrica is the second energy supplier to put its prices up. We expect this sequence to continue across all suppliers forcing more than 1 million households in England into fuel poverty. Across the UK fuel poverty could affect 6 million households by the end of the year.”
Despite British Gas’ reassurance that the increase would be postponed until April for the 340,000 customers who qualify for its ‘Essentials’ tariff, the effect on millions of other customers will be immediate. “With so many demands on their budget, consumers are facing some tough decisions,” the DebtAdvisersDirect.co.uk spokesperson continued. “They may feel forced to ‘juggle’ their debts using credit cards, or even to neglect some bills so they can pay others.
“As debt advisers with 15 years’ experience, we strongly advise against either course of action. However serious someone’s debts are, there are far better ways of handling them. The important thing is to seek expert debt advice – and to do it sooner, rather than later.”
In many cases, the right debt advice can help people cope with the extra strain on their finances: “Some people may be able to free up the necessary extra funds by learning to budget more effectively, or by renegotiating payments to their creditors. For others, however, no amount of debt advice will be enough – if their budgets are already stretched to the limit, they may need to look into professional debt solutions, such as a debt management plan or debt consolidation loan.
“In today’s economic climate, of course, the kinds of debt help available may be limited, as problems in today’s credit market are keeping some people from accessing the debt consolidation loans that could help them regain control of their finances. In cases like this, an alternative debt solution may be more appropriate.
“Debt management, for example, relies not on access to further credit but on negotiations between an individual’s creditors and the debt management professionals who ask them to accept lower monthly payments and grant other concessions. As always, we would recommend that anyone in financial difficulty seek professional debt advice as soon as possible.”
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