The First Time Buyer, Debt & 2008

10% Drop in House Prices

A third successive month of falling house prices brings the average UK house price to £230,428. Whilst this is not good news for those on tight budgets who may be hoping to release equity from their homes as a means to consolidate debt, it will help those looking to buy, especially for the first time home-buyer.

Miles Shipside of Rightmove said:

Some properties have had their prices dropped by 10% or more and are now within reach, satisfying some of the pent-up demand from previously disenfranchised buyers.

UK Recession?

Although a recession is thought to be an exaggeration of the current economic climate, there is a widely predicted UK economic slowdown for 2008, which may further help first-time buyers being able to afford their first home. A slowdown would lead to a re-adjustment of economic growth following several years of continually rising house prices and increased consumer spending, funded largely by credit cards, personal and secured loans and re-mortgaging to release increased equity levels in property.

Further Interest Rate Cuts?

Further cuts in interest rates will also help first-time buyers, as well as those coming off their current mortgage deals who are at potential exposure to ‘Mortgage Shock’ (where payments increase dramatically at the end of a current fixed year deal). A recently released Ernst & Young ITEM Club report states interest rate cuts would be helpful:

We have been living well beyond our means, lured by the offers of cheap no-questions-asked credit. The reversal in the credit markets in 2007 could lead to a sharp fall in economic growth, but we believe there is room for interest rates to be cut to cushion this.

Free Debt and Mortgage Advice

For those who are unable to find a better mortgage deal, unable to re-mortgage to help pay their debts or who are simply struggling to meet their commitments on credit cards or personal loans, Payplan can offer free financial and debt advice.

Call Payplan free on 0800 280 2816 or submit you debt details online for a response within 24 hours.

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Trouble Trying to Find Cheap Mortgage Deals?

Sub-Prime Credit Crunch Overview

The sub-prime sector represents around 9% of the total mortgage market. Over the last few years, as new lenders have entered the market and competition has increased, operators have relaxed their lending criteria and taken on bigger risks in order to win their share of the business.

Northern Rock Crisis

This was sustainable and profitable while interest rates were still low. However, recent events in the US and interest rate rises here in the UK have changed all that and made it much tougher for lenders to fund their businesses. This has been no better illustrated than the crisis at Northern Rock.

High Risk Lenders Lose Value

The high risk model operated by sub-prime lenders makes them most vulnerable to the ‘credit crunch’ and Paragon, the buy-to-let mortgage lender, appears to be the latest casualty after a 40% collapse in their share price in November. The increased cost of borrowing and lower levels of market confidence have lead to credit card and store card providers rejecting more and more applications with some are turning down around half of all new applications at the moment. There are problems too in the personal loans market where higher risk loans are being withdrawn by lenders across the board as they become more and more cautious.

Higher Mortgage Rates & Lower LTV

Virtually all mortgage lenders have changed their Loan-to-Value ratios (the amount they will lend in proportion to the property value), increased their mortgage rates and reduced the amount they are prepared to lend Many people will have fixed rate mortgage deals that are shortly coming to an end They will face a particularly shocking rise in their monthly payments, because their lender’s standard rate will have risen so much during that time, and will find it increasingly difficult to access a more competitive alternative.

Payplan

For immediate and free debt advice please call Payplan free on 0800 280 2816 or use our Debt Calculator to submit your financial situation online.

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Beware IVA Debt Advice from TV Adverts

Unscrupulous IVA Advice

As the ‘credit crunch’ begins to bite and traditional avenues to additional credit are closing off or becoming cost-prohibitive to many, unscrupulous up front fee charging IVA providers are circling to make sure they get their share of the fresh ‘cash-strapped’ catch.

Lying in wait for the post-Christmas credit card and bank statements to land on the doormat, many IVA providers are continuing to make unsubstantiated promises of huge debt write-offs (up to 95%), and restrictions on creditor harassment in exchange for large up-front fees. This activity has lead to some heavy criticism of IVAs recently and the current stand-off between creditors and the more aggressive IVA advertisers is limiting access to the solution for many genuine cases.

Payplan Puts the Record Straight on IVAs

IVAs were introduced in 1986 as a genuine alternative to bankruptcy. In the right circumstances, and used as the legislation intended, they provide the best solution for debtor and creditor alike. Implemented in the right circumstances and administered properly, they enable a debtor to commit to manageable monthly payments and benefit from some debt write-off while providing the creditor with a satisfactory return compared to alternatives such as declaring themselves bankrupt, which may mean a client loses their home or employment.

IVA TV Advertisers

Most advertisers on TV present IVAs as a quick-fix to clear debts, promising huge debt write-offs in a tone that suggests debtors can ‘get one over’ their creditors. Naturally, creditors take exception to this. They resent the idea that IVAs are marketed as a means of by-passing financial obligations and have hardened their terms, demanding more dividend and lower fees for a positive vote in favour of the client.

While the creditors reaction may be understandable, the real price is being paid by genuine candidates for IVAs who would benefit greatly from this debt solution.

Payplan Works for Clients’ Best Interests

Payplan believe IVAs should take their right and proper place as part of a full range of debt solutions. Unlike the one-size-fits-all IVA companies, Payplan will only recommend an IVA when it is in a client’s best interest. This represents a minority of people who contact Payplan.

Payplan’s Insolvency Practitioner says:

‘There is always going to be a place for IVAs. Some people are prevented from going bankrupt due to the nature of their work whilst others wish to avoid the stigma. But we only ever suggest an IVA if we consider it to be in their best interests.

Call Payplan free on 0800 280 2816 for free debt advice and for further information about the best debt solution for you, or submit details of your debts to receive immediate financial assistance online.

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Thrifty Money Saving Advice – Allotments

A Healthy and Thrifty New Year

If your New Year’s Resolution involves eating and maintaining a healthy diet and doing more exercise, as well as being thrifty with your money and achieving healthier finances, then taking an allotment may be the answer.

Payplan recognises that this is an excellent way to help people enjoy the benefits of fresh air, keeping fit and having a supply of fresh fruit and vegetables produced economically. It is especially beneficial for those living in city centres that have little or no garden of their own. One can even keep hens for a regular supply of free-range eggs (check with your local authority).

Allotment Budgeting Advice and Cost

Prices and facilities vary, but the cost is not excessive and is tempting for those on a budget or who are struggling with debt. Expect to pay in the region of £30 for the year (58p per week), which often includes initial rotovation of the land and access to water (sometimes a water surcharge is payable; again, your local authority will be able to give you further details). Whilst some will have more success than others producing their harvest, any savings should soon be made from your weekly shopping bill.

The following websites give useful guidance and links for beginners as well as recommendations for gardening tips and how best to make thrifty use of the land to help maximise your New Year budget:

www.nsalg.org.uk

www.bbc.co.uk/gardening

If your need to be thrifty is as a result of your increasing debts, speak to a sympathetic debt and money adviser about your finances by contacting Payplan on freephone 0800 280 2816, or by submitting your details online to get immediate debt help.

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