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The (Mortgage Payment) Holidays Are Over

The (Mortgage Payment) Holidays Are Over

by | Sep 25, 2020 | Mortgage News

Autumn is very clearly on its way.  Schools, colleges and universities are reopening.  At least some workers are heading back to their desks.  In short, the summer holiday season is over.

So too, is the financial holiday season.  The furlough scheme is winding down and borrowers are being encouraged to move back to their regular payments.  This means that anyone with a mortgage may want to think carefully about their finances over the immediate, medium-term and long-term future.  Here are some tips.

Build up a cash cushion

Currently, it’s anyone’s guess what will happen with the credit markets.  That being so, there’s an even more compelling case for building up a cash cushion to give you some protection from life’s hard financial knocks.  How much of a cash cushion you will need and want will depend on your situation, but something is better than nothing.

Review your insurance

Similar logic applies here.  Insurance cover is a predictable expense, which saves you from the worry of how you’re going to deal with an unpredictable expense.  It’s particularly valuable to people who would struggle to “self-insure” through savings/investments and/or access to credit.

Work on your credit rating

If you have credit, then you want to pay the minimum amount of interest for it.  There are various factors which determine how much interest you pay.  One of them is your credit rating.  It, therefore, makes sense to do what you can to make it as good as it can possibly be.

Step one is to get hold of a copy of your credit record from the main credit reference agencies.  In the UK, these are Equifax, Experian and TransUnion, plus Crediva.  Make sure that there are no mistakes in it.

Then take care of any basics, like putting your name on the electoral roll and checking that any companies with which you do business have your current contact details.  Also, make sure that these contact details are entered as consistently as possible.  For example, if you live in John Smith Street, then always enter it as John Smith Street rather than John Smith St or any other variation of your street name.

If you have any credit accounts you don’t use, then take the time to close them properly.  Then focus on managing anything that remains.  Make sure that you do everything possible to make at least your minimum payments in full and on time.  If you really can’t then speak to your lender rather than just missing the payment.

If you’re dealing with debt, then focus your efforts where they make the most difference.  There are two ways to go about this.  One is to tackle the debt with the highest interest rate and then move on to the debt with the next highest interest rate and so on.  This is known as snowballing.  The other is to start by paying off small balances, close the credit accounts and then move on to snowballing.

The second approach can be useful if you want to try to get a better deal on credit such as a balance transfer.  This is because it clearly shows a potential lender that you no longer have the opportunity to run up further credit on the original account(s).

Actively look for the best deals you can find on everything

First of all, question every purchase before you decide whether or not to make it.  Ask yourself if you really need it and if the answer is no, ask yourself if you really want it enough to justify the financial impact it will have on you.

Secondly, when you do go ahead and make a purchase, do your research and make sure that you are getting the best possible deal on it.  This goes for small purchases too as the cost of them can soon add up.

For more information, help and advice, please contact us

Your property may be repossessed if you do not keep up repayments on your mortgage.

Owning a home is still possible

Owning a home is still possible

by | Oct 10, 2019 | Mortgage News

It’s no secret that it can be tough to get on the property ladder, either as a genuine first-time buyer or as someone who’s bought before but gone back to renting for whatever reason, for example, to spend some time abroad.  The good news is that, in spite of all the challenges, it is possible.  Here are some tips to make it happen.

The less you spend on rent the more you can save

This may seem like stating the blindingly obvious but it’s one of the many realities of life which can be a whole lot easier in theory than in practice.  To be perfectly blunt, putting together the deposit you will need to buy a home of your own is likely to be a lot easier if you are prepared to make compromises on where you live in the present.  Living with your parents may be the ultimate example of this (their house, their rules) but this is not necessarily a practical option for everyone.

For those living away from home, making compromises may involve choosing a smaller space over a bigger one, accepting a longer commute, or choosing a less-desirable area over a more chic one.  Obviously, all of these options have to be subject to the common-sense test.  There is a limit to how small a space a person can reasonably live in for an extended period of time and there is no point in choosing to live in a place where the housing is affordable but the commute is long if it means that you are just swapping housing costs for commuting costs (and time) and you clearly want to avoid living in a place which is actively unsafe.  All the same, however, all things being equal, you should probably give preference to the place with the lowest housing costs as rent is typically a substantial expense and hence anything you can do to reduce it can make a real difference to how quickly you can save for a deposit.

Always look for ways to increase your income

The nature of your employment will largely determine how feasible it is for you to earn extra money in your main job, but if you’re in a position where you get a fixed salary for (officially) fixed hours and have little scope to earn extra on top and you’d prefer to stay in that job, at least for the foreseeable future, then you can still look for other ways to earn extra money.  Getting a second job can bring all kinds of complications (including your current employer being unhappy about it, you new employer making requests which conflict with your main job and your tax being messed up, although this last should not happen), but there is nothing to stop you setting yourself up as self-employed and building your own little side-hustle.  Just remember that you will need to register as self-employed and pay taxes on whatever you earn.

Take care of your credit rating

If you’ve saved and worked to put together a solid deposit, it would be heartbreaking to be turned down for a mortgage because of silly mistakes such as going over the limit on a credit card or missing a payment.  Standard advice here is to put all payments on Direct Debit so that you never miss one, however, there is an alternative approach, which may save you a little money, at the expense of some organization.  Put as many payments as you can on manual and pay them the moment you have the money to do so, for example on payday or when you get your earnings from your side hustle (remember to set aside money for taxes).  This will minimize the interest you pay.

Your property may be repossessed if you do not keep up repayments on your mortgage.