Are the banks really open for business?

Our Banks are telling us that they’re lending again, and that they are reaching their lending targets – nearly!

But we keep hearing stories of agreed facilities being withdrwan, or only being renewed at huge extra costs. And of continuting difficulties for people trying to move house, or buy their first property.

On top of that the banks are still not paying decent rates of interest on many of their accounts and millions of us haver money floating about in accounts paying no interest at all.

We own many of the banks, or so we’re constantly being told. Should we not expect better of them?

What’s your experience of our Banks.

Are they lending eonugh money, and quickly enough? And if not how do you think we should get them to increase their lending?

Tell us what you think.

My house, my home?

Some sections of the press are still full of dire warnings of 25% drops in property prices in parts of the UK this year or while others give us the the good news that prices will stabilise, and may even start to rise during 2012

We’ve decided not to get involved in that argument right now.

That might sound like a bit of a cop-out, and in a way it is. But that is only because there is another point that is sometimes missed out in this ongoing debate about the future of property values. Whether prices rise or fall, and whether you make money or lose money, you need a roof over your head. And if more of us thought about that rather than how much money we were going to make out of the buying and selling of our houses, then perhaps the many answers that the pundits are giving to the question over the future of property prices will be less relevant.

Your house can either be somewhere to live, in which case it’s your home, or it can be for investment, in which case it can provide an income or some cash when you sell it.

It can’t be both!

If you continue to live in it it’s your home not an investment and if you don’t live in it because it’s rented, or because you sell it to realise the capital you have tied up in it, then it might be ‘your house’ but it certainly won’t be your home!

I know, this is becoming a circular argument. But it is an important one. Huge rises in property prices over the last couple of decades have meant that more and more of us are taking this ‘property can’t fail’ line to justifying not having a good mix of investments, or more importantly as an excuse for not making proper arrangements for retirement as in “I don’t need a pension, I’ll just sell my house when I retire.”

Property has been king for years now, and returns from property have outstripped those from most other assets, although detailed analysis will show that timing could have a major impact on your profit.

Now I happen to think that property can be effectively used as part of a well structured plan for retirement. But it generally only works if it’s a second or third property purchased specifically for rental with no requirement for you to have to live in it yourself.  The ease with which mortgage money could be obtained up until a couple of years ago flooded the market with amateur landlords who thought there were quick bucks to be made from buying and selling flats up and down the country.

There is still money to be made from the property market if you’re looking to but for rental, but generally only as part of a longer term strategy, and generally still only if you are borrowing to help fund a purchase, and effectively using someone else’s rental to build up your capital.

For those of us with one property that we live in, we should start to enjoy it as such, rather than worrying about how we can ‘maximise our profit’ when we sell!

Moneysucks Monthly Challenge is underway

Zoe Nisbet starts her monthly challenge today. For a whole month she is going to keep a note of everything she spends, and at the end of the month we’ll have a chat about what lessons she has learned about the way she uses her money.

Zoe will be blogging regularly during the month to keep us updated on her progress.

Here is what she says so far:

“So the challenge begins today. I have my little notebook ready where I will record everything I spend. I am excited about this exercise as money is something I tend not to think about. I seldom check my bank balance during the month I guess because I am scared to do so. If I think I have spent a lot of money I will just be careful for the next few weeks until my pay has gone in. I am hoping this challenge will shed light on how much I actually spend during a month placing me in a position to make informed decisions in the future about my money.

A few of my friends have decided to do the challenge with me.

Mary-Louise (ML) who works next to me has decided to do this monthly challenge. She says “I have never really kept much of a tab on my spending. If you asked me how much I spend in a month I would really have no idea!! So I think it’ll be really interesting to find out how much I am spending and on what! At the moment, I’m trying to work my way out of a fairly substantial overdraft and so it would be great to get some tips on how I can be more careful with my spending. It’s the first morning and I’ve already spent £71.50 so I’m doing well!”

Let us know if you want to join in!

Moneysucks Monthly Challenge

Fergus Muirhead visited Pulse FM Radio station in East Renfrewshire to help the team from St Luke’s High School with their Money for Life challenge (read more about the challenge here and their Pounds, Pence and Common Sense campaign.

After the programme he got talking to Zoe Nisbet, who is running the project on behalf of East Renfrewshire Council.

Zoe agreed to take part in this month’s Money Challenge. She, and hopefully a few of her friends, are going to keep a note of everything they spend for a whole month, starting on Monday 20th February. You can read their updates here as they go along and Fergus will be back on Pulse FM after the month is over to find out what they have learned about their spending.

It promises to be a fascinating and fun way of helping to make sure that they are dealing sensibly with their money, but already they are worried about who is going to have to admit to the biggest ‘silly spend’ of the month. Watch this space for details!

Let us know if you want to take part in your own monthly money challenge by leaving a message at the bottom ot this page.

Are we fooling oursleves with interest-only loans?

Over the last ten years or so more and more of us have been switching our home loans to interest-only, where all we do is service the loan every month by paying interest. In some respects we’re renting the property since we are not repaying the money we borrowed to ‘buy’ it and we are effectively gambling on the fact that increasing capital values will give us a bit of equity when we come to sell. And of course the upside in the short term is that our monthly home loan bills are smaller. At a time when money is tight generally this can be a great help.

The facility to repay a mortgage on an interest-only basis has helped tens of thousands get their feet on the first rung of the housing ladder where otherwise it would have been too expensive to do so – and allowed others to trade up during the boom years. Not that this is always a good thing with hindsight since there is no question that this in part fuelled the ridiculous rise in house prices we have seen over the last couple of decades.

Now a new report from the Intermediary Mortgage Lenders Association suggests that this method of repaying a loan – or not repaying the loan as the case may be – could become obsolete if new Financial Services Authority rules are implemented.

The FSA is concerned that people who take on interest-only mortgages are in effect taking on larger mortgages then they can realistically afford to repay and that extra checks on affordability at the point or purchase will make sure that new borrowers will only take on debt that is repayable. Critics of these new rules argue that they will make it more difficult for lenders to justify arranging new loans on an interest-only basis and that by default we will all end up with repayment mortgages going forward – increasing our monthly outgoings but ensuring that we repay our debt as we go along.

The important thing to remember if you are arranging your mortgage on an interest-only basis, or indeed have already done so, is that at some point you will need to convert it to repayment, meaning that your mortgage payment period is likely to be much longer than you originally considered – unless you are able to cope with a big jump in monthly payments when you switch to repayment.

It could be, of course, that you are happy to continue with an interest-only loan because you can show that you have some money coming to you to repay your loan at some point in the future – from other savings or from an inheritance, or perhaps from the sale of an interest you have in a company you run. If that is the case then even if the new rules do come into force it is likely that lenders will continue to offer interest only mortgages in these circumstances

Would you credit it?

Research from MoneySupermarket has shown that over one in six people missed a payment for at least one bill in the last 12 months, potentially putting their credit profiles at risk.

With many consumers expected to apply for a personal loan or credit card this year, the research found that around three million people had missed a credit card bill in the last year. It also suggested that council tax is another bill regularly unpaid, as 1.9 million people missed a council tax payment. Mobile phones, personal loans, broadband, Sky and gas and electricity bills were also high up on the list as payments most missed.

The Scots and Welsh were the biggest culprits for missing a bill payment with 22 per cent neglecting their finances, while people in the East Midlands were the least likely to miss a payment, with almost 9 out of 10 not missing a payment on any major bill within the last 12 months.

These missed payments can have a dramatic effect on your credit rating but can also lead to the loss of promotional rates on the card, which can be a costly mistake, as Kevin Mountford, from MoneySupermarket, points out. “Missing your first payment on a 12 month 0% credit card deal would cost an additional £300 in interest over the 12 months if you moved on to an average credit card rate of 17.29 per cent. Therefore, prioritising your monthly obligations and setting up a direct debit for the most vital bills is a must for those who tend to forget to pay on their deadline.

“Missing a payment could also have a knock-on effect for future applications such as credit cards and mortgages. Those applying for a credit card need to prove they can make regular and stable payments and any black marks against a credit profile would hinder chances of being approved. For those who have missed payments affecting their credit file, MoneySupermarket has a SmartSearch credit profiling tool which matches applicants with the most suitable products based on their individual credit score, but does so without leaving a footprint on the applicant’s file.”

Repayments on credit cards and other financial transactions such as mortgages and use of overdraft facilities are all recorded on your credit file. The majority of household bills and government related fines and payments aren’t recorded but contract mobile phone payments are, so it can be very easy to get caught out by not paying bills on certain products, especially if you are not aware of the consequences of your actions.

If you are worried about what might be on your credit profile then you can very easily check it by getting in touch with www.equifax.co.uk or www.experian.co.uk. It’s a useful exercise ahead of any credit application you are going to make.

Do you know where your money is?

Right, here we go. No long lists of New Year resolutions for 2012. Just one simple message that will help you no end with your money this year.

Get involved!

Don’t let everything happen passively. It’s your money and you need to take control of it all and it starts by taking an interest:

What rate am I paying on my mortgage?

Can I find a better rate?

Is my house insurance competitive?

Should I take back that faulty TV that I just put up with because I don’t really understand my rights?

Are my tax payments up-to-date?

What income will my pension give me and when?

Could I borrow more cheaply than I am at present?

How much am I spending every week? And why?

Can I afford that new car I really want?

I could go on but you get the picture by now. Make 2012 the year you start to take an interest in your money and to make it work a bit harder for you.

That’s all.

The tax clock is loudly ticking

The end of January tax deadline is looming again and self-assessment taxpayers now only have a couple of weeks to return tax forms to HMRC – or face a £100 fine.

As well as filing a return by the end of this month, any tax due for tax year ended 5^th April 2011 needs to be paid along with the first half of this year’s potential tax bill. Failure to make payment of tax that is due by this date will result in interest being charged on the amount due.

Around nine million taxpayers submit a tax return every year and two thirds of these returns are now filed on-line. Many of us leave the filing of our return to the last minute and this caused around one million people to have to pay a fine last year.

If you are new to on-line returns then you need to register first of all and you can do this at www.hmrc.gov.uk. When you have registered you will receive an activation code through the post and this allows you to go on-line and file your return. Given the state of the postal service at the moment due to the weather time is now at a premium and if you have still to register you need to do it now!

If you still prefer the old fashioned method then HMRC need to have received your return by 31^st January.  You can take your return to a tax office up to that date if you don’t trust the postal service but in a neat little twist HMRC won’t issue you with a receipt to prove you delivered it on time if you hand deliver, leaving yourself open to the possibility of a fine.

New Year, New Rules

So that’s it over for another year and all you have to remind you of Christmas 2011 is a hangover, a few extra pounds round the middle and a few pounds missing from your wallet – oh and perhaps a credit card bill that you expect to drop through the letterbox any day now.

Christmas is the biggest spending frenzy of the year and there is an opportunity now that it is over to reflect on your finances for the coming year. New Year resolutions come and go and most of us promise to make better use of our money in the year that is in front of us – as well as promising to make more time for ourselves and lose a bit of weight and exercise more and stop smoking and not drink as much and spend more time with the kids and learn another language and…..

Make this year the year you resolve to be efficient with your money – and resolve to keep that resolution! Make it the year you stop wasting money – and that’s not the same as stopping spending by the way!

By not wasting money you need to make sure that you are paying as little as possible to borrow money, paying as little as you can for the bills you need to pay every month, and making as much as possible from the money that you have invested. Oh, and doing it all tax efficiently into the bargain.

So to start you off here are five things that you can do this year to make sure that your money is well looked after in this New Year. Let’s start with the one that sounds easiest but is likely to be the most difficult.   

 

1. Plan! 

 

Managing your money effectively doesn’t just ‘happen’. You need to have some sort of a plan. What is it that you want to do with your money and your life, and when do you want to do it?  The new house or car or retirement at 50 won’t just appear and the mortgage won’t pay itself every month.

You need to plan for them.

The starting point is to sit down and work out what you’re trying to do, and when. There are no right or wrong answers to this one, and everyone will have different priorities. You might not even know all of the answers yet, it would be surprising if you did. But you need to ask the questions.

We’ll be looking at this area in a lot more detail as the year goes on but for now start the process. Start to think about what it is you want and when you want it.

 

The plan is not a one-off action, but will evolve over time. You won’t sit down one day for half an hour and say “That’s it then, that’s my financial future sorted, thank goodness I won’t have to think about that again for a while!”

There are things that you can do that will make a difference immediately:

 

2. Ditch the expensive debt! 

 

Make 2012 the year that you get sensible with your credit cards. Credit cards are great when used properly – and remember that as well as offering a sensible way to pay they can also offer protection if something goes wrong with the goods or services you are buying.

 Look for a credit card with 0% interest. Once that interest free period ends try to switch any balance to another card that offers the same. Remember that the money you owe the credit card company is the total balance on your account, not the amount you pay them every month so if you are going to use a credit card pay it off as quickly as you can.

 

3. Work out a sensible budget! 

 

Work out how much you need to spend every month on essentials and stick to that budget. For the next month keep an accurate note of everything you spend. Be honest! This is the starting point for your budget. Make sure you include the monthly cost of things that you pay annually like house or car insurance.

Most us get into trouble because we’re faced with unexpected expenses and don’t have any savings. Try to save a little every month – you can only do this once you’ve started the budget above – and keep it in a separate account so that if something turns up that you need to spend money on in a hurry you won’t have to borrow.

 

 

4. Check out your mortgage rat!e

 

If you have had your mortgage for a while it will be worth looking around to see if there is a better rate available. Lots of lenders will pay your costs for you if you move your mortgage to them. Start off by asking your existing lender if they have any other deals as this may be an easier option than moving to a completely different lender. Remember to check to terms of any new deal. There’s no point saving a bit of money now only to find that you’re tied in and can’t move if your circumstances change.

 

5. Bank on the best account!

 

Lots of current accounts pay very little, and many pay no, interest on your savings. Any cash that you have left at the end of the month should be moved to a savings account with a higher rate of interest. And on the subject of savings rates make sure you look around for the best rate you can find for your money. Inflation is creeping up again and you need to have your money in an account that is paying a rate of interest better than the rate of inflation to make sure you are not losing out.

 

 

Broken camera, or broken contract?

Q. I purchased A Canon IXUS 120IS camera from Camerabox in June 2010 with a 2 year’s full warranty and a lesser 5 year one. My camera is now 18 months old has developed a few faults shuts down error 32, stores pictures up-side down and the picture jumps around when focusing. Within 2 years I am supposed to send camera to them for repair and get instructions from their web site not successful yet as I write this. I cannot reach their site directly but do when I put it on a search. I hear they were in administration in June. Is this still the case? My camera still produces good pictures I just have to keep re switching it on and orientate every picture. Should I return it to them at address I received when I bought it? Can you shed any light on their current status, or give me any advice please.
Geoff Whitby

Your question raises a few interesting points. Firstly, as far as I am aware Camerbox is indeed in administration and there is little chance of you getting money back from them. That doesn’t mean all is lost however and there are two options with regard to the payment you made, depending on how you paid for the camera. If you used your credit card then you may be able to make a claim from the credit card company under Section 75 of the Consumer Credit Act. This allows you to claim against the credit card company (and some debit cards) if the contract is broken as it may have been in this case if the camera is indeed faulty. For a claim under Section 75 to be valid the goods need to cost more than £100 and less than £30,000.

If you used a debit card than you may be able to ask your bank to deal with a refund by way of a ‘chargeback’ on the card. This effectively allows the transaction to be reversed. If you want to claim using this method then you should speak to your card provider in the first instance.

As far as the warranty is concerned my first question would be to ask who was providing it I would also want to ask who is providing the 2-year Warranty – Camerabox or Canon? If the former then you are out of luck but if it is Canon then it may be that you could send the camera back to them and ask for their opinion, especially if the fault is not something that you would expect from a camera less than 2 years old.

I hope this helps

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