Personal Debt, the Banks and UK House Prices

On July 1, 2010, in News, by Lewis Alexander
  • What have the above got in common?

Personal debt has been driven up by our previous government allowing banks to basically over lend, just like the previous government increased the countries own debt level.  It all has to be repaid at some point and now we find the banks are unable to lend against property unless people can provide a deposit, in some cases being up to 35% of the desired property value. Interbank lending reductions are also showing signs of returning.  This means money becomes even shorter in supply generally throughout the entire economy.

If we look at consumer personal debt levels, these have been created via irresponsible lending and irresponsible spending, but not in all cases.

Some people have also consolidated their personal unsecured debts such as credit cards and loans, store cards and catalogues into either a new secured loan against their home or into the existing mortgage by remortgaging the money from available equity in their home.

This is very risky when you think that in the very near future, interest rates will have to start going up again and that will mean that people again will feel the squeeze in their monthly budget as their mortgage or home repayment costs go up.  Some will be able to manage the increase and some will not, these are the people that really should be looking in their most trusted crystal ball at the moment.

When lending by banks against property reduces it can also mean that house prices in turn may fall, this is because people have to be more realistic about the value of their house for sale purposes if they really wish to move quickly, banks will only lend money against a property for what it is worth, not for what a vendor feels they have spent on it which actually becomes perceived added value.  The perception of increased value is not always there in the eyes of the banks at the point of lending!

International investment from outside the UK from people moving here or buying second homes here, coupled with the fact that demand in the UK for new affordable housing is outstripping supply and has done for the past couple of decades, means that this supply and demand issue for new affordable housing could be the only saving grace to our UK housing market, if the international money which usually goes directly into London stops due to global issues and the banks don’t inter lend, then the only people buying houses will be first time buyers with very large deposits, therefore a reduction in most house prices would follow.

If you have unsecured personal debts and a mortgage to pay each month you should make sure that the credit repayments are not eating up the majority of your income, if they are it is time to seek some personal debt advice.  If you think things could get out of control for you financially if you suffered a change in circumstance, then you should be planning ahead just in case.

When you repay credit cards and loans, sometimes you are servicing the debt by only paying interest that is accruing, this is as good as renting your debt off of your creditor, you must get into a debt reduction plan as soon as possible if this is the case.

  • Taking the first step to sorting a financial problem is usually the hardest, as with most unfamiliar things we do in life.

If you need professional advice regarding your outstanding personal finances then call our personal debt helpline today in confidence using 0800 018 6868, lines are open 24 hours and your call is free.

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Loan and Credit advice for People without an Income, Job or Salary

On December 23, 2009, in News, by Lewis Alexander

If you are trying to find a loan company that will lend you money without you being in full time employment, you must remember that the companies you approach are not duty bound to lend you money.

A lender or loan company makes a decision to lend based on the risk that you personally present to them regarding your ability to repay the credit you are applying for.

Examples of factors that lenders take into account when scoring your application for credit could be some of these that follow;

  • Are you working or not?
  • If employed is this full time or part time?
  • Do state benefits make up 100% of your income?
  • Do you have a UK bank account?
  • Does your employer pay you in cash?
  • Has a bad credit rating affected you from obtaining credit or loans recently from other lenders?
  • Will you be able to repay the loan if you suffer a change in circumstance, such as loss of job, split from partner or less hours at work?
  • Have you ever been declared Bankrupt, subject to an IVA or Debt Relief Order?

There are many factors that lenders will take into account when deciding to lend money to an individual and you should accept that each lender has different requirements that the proposed customer or client should be able to meet.

  • A lender does not have to inform you of how they decide on approving or declining your loan or credit application.

Different loans require people to qualify in differing ways.

For example, a debt consolidation loan could be secured against a home, this would require the individual to usually be a home owner because if they were not, there would be no property for the lender to secure the new loan against should the person fail to repay.

An unsecured loan requires no security but rates of interest are usually higher to balance a lenders risk of loss due to none repayment or an unexpected time delay to recover the money leant.

If you have been refused a loan and then made further applications for credit within a short space of time, you may be surprised to learn that multiple declines for credit within a short period can mark your credit score down further.  This is then an alarm bell to other lenders when they search your credit file to see if they are happy to lend to you because they see all the other lenders declines.

You need to realise that more credit is not usually the best route and by obtaining free financial advice from a trained debt advisor, you will be able to clear your personal debts without another loan!

Debt solutions such as an IVA or Debt Management Plan could assist you.

  • Some loan companies will charge you fees for an online loan search – be careful!

Can you really afford to part with another £50 or £60 without a guarantee of a loan? Some companies are making large gains from taking advantage of consumers in a vulnerable financial position.

When you have no other income apart from state benefits, it is hard to get a loan.  People on maternity leave can find it particularly difficult as they have a job but the income is reduced, creating extra risk to the lender.

If you think would benefit from a free telephone consultation with a trained loan advisor who can help you identify your best solution, call Lewis Alexander free using 0800 018 6868, our free from a landline personal debt helpline is open 24 hours a day 7 days a week and all calls are confidential.

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How does Debt Consolidation work?

On November 27, 2009, in News, by Lewis Alexander
  • How does Debt Consolidation work?
  • What is the best way to get Debt Help?

In our business of managing hundreds of clients finances and helping them with their debt consolidation, we have found that the biggest cause of stress in families is always regarding their personal debt and how best to manage the debt problem that can spiral out of control very easily.

We find that many people are not aware of the debt help that is available for people who genuinely want to reduce their debt and be able to cope with managing their income and expenditure.

There are many financial companies who have an excellent track record in helping people in this situation and these companies are able to ease their clients’ worries very quickly.

Debt consolidation is one method that can be used very effectively to reduce your outgoings and balance it with your in comings, especially with expert help.

  • Many people need educating in what one needs to do in this situation!

Contacting a debt consolidation company will help and educate them as to what decisions need to be made to effectively manage the current situation in the best possible way.  This in itself is a way that a client can receive immediate relief from the worries of not being able to cope financially and the ability to sit down or talk to a consultant over the phone will have long term benefits for the individuals financial future.

Over the many years of managing and clearing clients debts, our experience tells us that once a client contacts a debt management or debt consolidation company, they are put at ease, knowing that that they will not have to deal with a bailiff or collection agent knocking on their door demanding monies that they cannot afford.  The fact that the debt agency is there to help in this situation makes a huge difference.

  • What Is Debt Consolidation?

In the simplest terms, debt consolidation means that you take all of your individual unsecured or secured repayments such as credit cards, overdrafts, loans and catalogues etc and put them all together as one full amount owed. This full amount is the amount that is then arranged into one consolidated loan, offering the benefit of making one lower, affordable and reduced monthly repayment over a longer period initially, if necessary with the effect of reducing ones monthly outgoings.

  • The main purpose of this is to;

1)  Reduce the total amount of debt – this can be achieved effectively when you work closely with one lender who will pay off all your outstanding debt and consolidate it into one monthly repayment.

2)  Create one new payment to a new lender that is far smaller than all the individual payments to various lenders. Debt consolidation companies have much more experience dealing with lenders in this scenario and can also negotiate a much better rate of interest, effectively reducing your overall personal debt.

3)  Allowing you in time to reduce your overall debt if you can make slightly larger payments in due course will have the net effect that you would pay much less in interest over the whole period.

  • One of the benefits that occurs as a result of the above is that you end up with a much better organized financial statement regarding your income and expenditure.

We all find that many bills to pay means you have to be so much better organised and able to meet all the various payments at the due dates or end up paying penalties for late payments, causing you to pay much more in the long run and also affecting your credit rating along the way.

One outgoing for a loan is much easier managed than 10 different payments to various lenders!

  • What are my options when Consolidating my Debt?

1)  If you own your own home and have a reasonable amount of equity in your home you may consider the route of refinancing your existing mortgage to pay off other debts which will reduce your overall interest paid.

2)  If you have a fairly good credit rating you may be able to obtain a personal loan and many people would favor this as the equity in their homes has been drastically reduced in the last few years. You can find out more information about these specialist loans from good debt consolidation companies or debt counselors.

3)  If you have credit cards with large balances then you may opt to transfer all your other debts onto one single card, but you will end up paying higher interest or charges with this method.

4)  Many times you may be able to get help or assistance from family and friends, however, when one wants to keep a certain amount of privacy with financial affairs, most people are swayed against this course of action unless they have very good and open relations with family.  You are also likely to create tensions in family when the last thing you need is further tension, lack of privacy and stress.

5)  Seeking out a professional debt consolidation company – For many people this would be the best option, working closely with a time served and reputable company who have specialists in debt consolidation, debt management and debt reduction will really help you. The advantage is in the fact that they have an in depth knowledge of the areas concerned and also have very good working relationships with banks, credit card companies and general debt collectors and lenders. It is possible in many cases that they are able to negotiate better rates of interest and settlements.

It is important to note here that lately, there has been a surge in new companies operating in this debt arena, many of whom have very little track record and your interests are, shall we say, not their first priority!  It is very important that you do your homework and work with only the best companies that are prepared to look after your interests first, not their own.

Lewis Alexander Financial Management offer a first class personal Debt Management Service, nationwide throughout the UK. We are based in Manchester and we have helped thousands of client’s in our history.  We have in house specialists who concentrate on debt management and loan consolidation and we have been looking after a great number of our clients for many years now.

Call Lewis Alexander on their personal debt helpline using 0800 018 6868, our lines are open 24 hours a day, 7 days a week and your call is free.

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