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The (Mortgage Payment) Holidays Are Over

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.

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