One Advice | Bankruptcy, IVA & Debt News

In light of the changes to the housing market, homeowners are more likely to stay in their home to make renovations than purchase a new home. According to a survey by Lloyds TSB, there has been a 19% increase in the number of loan applications for house renovation compared with the previous year.

The research also revealed that 59% of homeowners who were considering selling their home have put these plans on hold. Half of these now plan on carrying out additional home improvements in order to avoid debt management problems and increase the value of their property. The top improvements which new buyers have shown the most interest in are new kitchen or bathroom.

David Wishart, director of personal loans at Lloyds TSB, commented: “In recent months we have seen a significant increase in home improvement personal loan requests. For the last decade homeowners have been able to sit back and rely on rising property prices to increase the equity in their home but sadly this is no longer possible.”

The number of mortgage approvals has declined by 65% over the past year, with July figures almost matching the record low in June. The British Bankers’ Association (BBA) said the number of mortgages approved in July totalled 22,448, which represents a 10 year low of the value of mortgages approved at £3.2 billion.

The number of remortgage deals which are going through is down 21%, but this still makes up for half of all mortgage activity as more people are wishing to consolidate their debt with a remortgage.

BBA statistics director David Dooks said: “The monthly numbers of approvals for house purchases, which have fallen by some two-thirds over the last year, levelled off in July.”

It looks as though more first-time buyers are going to have to take better control of their debt management, as new research suggests that it could be 15 years before a first-time buyer loan agreement is reached, due to the time it takes to save for a deposit.

A poll by the Fair Investment Company revealed that the average first-time buyer only saves £1,668 a year. House prices are now at an average of £175,000 and many mortgage lenders are now looking for a 15% deposit.

Sharon Bratley, a chartered financial planner with Fair Investment Company, said: “My advice to prospective first time buyers is to save, save, save, our research shows that it could take years, so the earlier you start the better. It is also worth shopping around for a high interest savings accounts.”

The research also found that women would normally take longer to save for a deposit than men, with the average woman saving just £121 per month. However, if a male and female couple combined their savings, they could achieve a 15% deposit in just seven years.

Record numbers of UK consumers are defaulting of their debt, which can be viewed as a direct consequence of the credit crunch. The number of ‘charge offs’ (debts overdue by more than 180 days) has risen 3% since March, according to research by credit agency Standard & Poor (S&P).

Borrowers are being pushed beyond their means as livings costs are becoming more unaffordable, leading many to seek additional help to manage debt. Before the credit crunch became such a financial worry, the number of charge offs had been declining over the past three years due to more people opting to manage their debt through an Individual Voluntary Arrangement (IVA).

Help with Default Debt

If you have been missing payments then you might have been issued a default notice by your creditors. This is a letter to tell you that you are not up to date with your debt repayments and you are in default of your credit agreement. This could lead onto a CCJ (County Court Judgement) and if the defaulted debt is a mortgage or a secured loan then your home could be at risk of repossession.

But it is never too late to regain control of your financial situation. If you are struggling with your debt and you are worrying that you might default on your debt, please see if One Advice can help. We have specialist debt advisors who will help you find the debt solution which is right for your circumstances.

Take the One Advice 1 Minute Debt Test to see if you can become debt free in as little as 60 months with an IVA.

Those who are looking to get out a Christmas loan to fund additional spending may come across a few problems in getting their secured loan application accepted. Banks are warning that they plan to cut back further on their lending criteria in the continuing wake of the credit crunch, rise in unemployment and global economic problems.

According the the 2008  Bank of England’s quarterly Credit Conditions Survey, there will be a reduction in the amount of credit available over a range of products, such as mortgages, credit cards and loans.

This is bad news for the High-Street in the run up to the Christmas period. Many consumers are already under pressure with lack of disposable income and the rise of cost of living, leading many to seek additional debt advice. Many may look to get a Christmas loan in order to afford the extra cost, but these requests could now be rejected.

There has also been a rise in the number of people who are defaulting on their loan agreement, as over 44% of lenders said they have seen an increase in the number of households who struggle to keep make repayments.

This guest post was kindly submitted by DebtLoans.com.au.
Please note that this has been written by an Australian blogger and therefore some of the suggestions or information may not be appicable here in the UK. Remember that this post does not take the place of seeking professional loan or debt advice.

5 Strategies For Getting Lower Rates On Your Loans

How They Help
While most people are focused on just lowering their monthly payments, lowering the actual interest rate that you pay on your loans could be extremely beneficial. This is especially true with long-term loans like mortgages, where the total interest paid over the life of the loan could be more than the value of the home. In some cases, a lower rate could result in instant savings of thousands of dollars.

How To Get Lower Rates
Your creditors may try to act like your interest rates are already at the minimum they offer. Credit cards in particular offer you an initial interest rate, but always have the option to raise it to over 20% even if you miss only one payment.

To the consumer, interest rates may seem like they can only get higher—luckily, most of them are adjustable and negotiable. For your home loan, you may have to wait until the national interest rate changes, but other loans, especially credit cards, just require a few phone calls and no cost. (more…)

One of the results of the credit crunch means that more and more people are struggling to get their loan application accepted. The worry is that loan sharks are targeting those who are the most financially vulnerable. Consequently thousands of people could be forced to seek a loan from a loan shark because they cannot borrow money in a legal manner.

The New Local Government Network has warned that 35,000 more people will use illegal loan sharks as traditional loan sources dry up and their loan application gets turned down time after time.

Apparently 165,000 people already use loan sharks in the UK, and the organisation is calling for additional resources to be put into credit unions by local authorities, so that people who have been refused bank loans have an alternative source of borrowing which does not include loan sharks.

Chris Leslie, author of the report, commented: “There is evidence to suggest that the pernicious trend of illegal unsecured lending at extremely high rates of interest, or loan sharking, is making a comeback.

“The diminished availability of regulated sub-prime credit is creating conditions where a sizeable number of people have little option but to borrow from illegal sources.”

Young people are turning to payday loans and being hit with high interest levels in a  bid to keep their head above the water and to control their debt management problems.

The worry is that payday loan providers are advertising on social networking sites, such as Facebook, and are therefore targeting young people with money worries. Borrowers who are enticed may be unaware of the true consequences of payday loans, in particular the high rate on interest which can be attached.

The Consumer Credit Counselling Service are worried that more people will find themselves in increasing levels of debt due to the high APR attached to payday loans, whereas they perhaps could get accepted for a personal loan from a high street bank at a much more reasonable interest rate.

Frances Walker, CCCS spokesperson, said: “Payday lenders are a growing phenomenon in the context of the credit crunch because as people, particularly the less well off and very young for example, find it very hard to find credit”.

The number of applications for a debt consolidation loan is expected to increase during the first six months of the year, according to research by Sainsbury’s Finance. They say that the need for personal loans always seems to be higher during this part of the year, in particular January where more of us look to deal with credit card debt which has built over the Christmas period.

Many of these personal loan applications could be to consolidate credit card debt, a debt consolidation loan can make it easier to manage personal finances. It is often easier to manage just have one new loan payment which will cover all of their previous creditors.

About the debt consolidation loan applications increase, Steven Baillie, head of loans at Sainsbury’s, said: “Debt-consolidation is always a good idea if you have multiple sources of debt, maybe a store card and credit card or a historical loan.”

Many people worry about their credit rating; whether their credit rating is good or bad and what can be done to improve their credit score. There can be good reason for this worry, a bad credit rating can prevent you from being accepted for a loan, mortgage, credit card or store card, especially in these credit crunch times where creditors are more wary about who they lend money to.

In order to understand your true financial circumstances, such as how credit worthy you are perceived to be by lenders, it is important that you know what your credit rating shows.

What does my credit rating show?

Your credit rating is what lenders will use to judge how you have managed money in the past and, therefore, what type of client you are likely to be in the future.

Information available on your credit rating shows details of any debts you have and whether or not you have been making regular payment.

What factors could affect my credit rating?

There are a number of factors which could affect your credit rating, such as:

• Missed payments to past or current debts. Information about your missed payments will usually stay on your credit rating for three years.
• The number of recent loan or credit card applications you have made. If you have made a number of credit applications at once, potential lenders may worry that you are desperate for cash or there is potential fraud.
• Applications for a loan or credit card which have been rejected. If you have been rejected for a loan or credit card it is advisable that you wait a while before you apply again.
• Joint accounts. If you have a joint account with someone who has a bad credit rating this could also negatively affect your credit rating.
• If you have have been declared insolvent, by declaring bankruptcy for example. Bankruptcy typically affects your credit rating for six years but this could be longer with a Bankruptcy Restrictions Order.

I have been turned down for a loan which I need to repay my debts, what should I do?

Chances are if you have been turned down for a loan in the past and you are struggling to repay your current debts, you do not need to take out further debt but instead make your current debt more affordable to you.

Although you might think that a debt consolidation loan is needed to reduce creditor payments and leave you with one lower monthly payment, this is not the only way to achieve this. You may find that your credit rating means that a debt management plan is the more appropriate debt solution for you.

One Advice could be able to offer you one of our financial solutions products which makes repaying your debts more affordable to you. For further advice and information, please contact our debt advisors on 0800 048 175.

Almost five million loan and credit card applications were rejected during the last six months of 2008, according to research published by MoneyExpert.com. 56% of Brits who have applied for either a loan or a credit card have been denied.

Those who are most likely to be refused either a loan or a credit card are younger adults aged 25 to 34, as almost a quarter (21%) failed to get accepted during this period.

MoneyExpert advise that you should not apply for multiple credit cards and that those who have a poor credit history may not be accepted for market leading offers, so should be careful before applying.

Apparently the era of cheap loans has come to an end, according to Tim Moss, head of loans at moneysupermarket.com.

Those who are looking for a loan can now expect to pay 8.46%, which is a considerable gap between Britain’s base interest rate, which was at 3% when this research was conducted. Only two months prior, the average loan and base rate were much closer with just a 2.92% difference.

In reference to the research, Moss commented: “Loans are not the cheap form of borrowing they once were.”

Can I Get a Cheap Loan?

Now that there has been a decline in the number of cheap loan available, and the number of 0% credit card deals are declining, what should you do if you are facing repayment problems with your current debt and cannot get a debt consolidation loan?

It is advisable to note that there are no-loan alternatives when it comes to dealing with your debts, such as a debt management plan. This will reduce your monthly payments into an amount which is much more affordable.

For further information and to find an alternative to a cheap loan, please contact the One Advice team directly on 0800 048 1752.

Many of us maybe looking for a loan to help fund our Christmas spending, but there has been increasing concerns about the interest rates offered by so-called ‘quick fix’ payday loans.

A PayDay Loan is typically used as a financial emergency and to fill in an income gap between paydays, but some of these loans are being lent with almost a straggering 10,000% APR. This research, by uSwitch, found that a £750 loan from a pay day loan company could cost the consumer up to £1687.50, if payments are deferred for five months.

Louise Bond, personal finance manager at uSwitch.com comments:“These loans really are quick-fix solutions which only work for some people – for others they act as a fast track to a tangled web of debt.”