Archive for Press Releases Category
Interest only mortgages – FCA warn borrowers of shortfalls
2 May 2013
Latest statistics out today show that around half of 2.6million homeowners who have an interest only mortgage, may not be able to pay the capital when the mortgage ends. 48% (some 1.2m customers) of them will be faced with a shortfall – the average in excess of £70,000.
The Financial Conduct Authority (formally the FSA) have issued a warning that customers with interest only mortgages will need to have sufficient savings in place or are advised to switch mortgages before facing a significant shortfall.
The FCA has advised mortgage lenders to contact those who will be affected to discuss options and alternatives.
If you are affected by this news and are unsure of how to proceed with an interest only mortgage (IOM), here are a few things to consider:
• Assess your current position. Can you afford the capital repayment upon completion of the interest only mortgage? With an IOM you will need to pay the full amount you borrowed after paying the interest.
• Start saving. The quicker you start to build savings the more you will have at the end of your mortgage term.
• Can you re-mortgage? Shop around and make enquiries with your current provider.
Switching rates if you can afford it may be a prudent choice.
The Citizens Advice bureau and organisations like the Money Advice Services can give general money/finance advice.
If you are struggling with debt then Payplan can help you to assess your financial situation and deal with any debt problems.
Blue Monday 2013: Payplan reveal Blue Monday call statistics
Payplan reveals the effects of not facing up to your debts.
Payplan, one of the UK’s largest free-to-client debt management companies, claims that despite many people saying their money worries are increasing only one in six can face tackling their debts.
The third Monday in January has been called ‘Blue Monday’ because it is claimed to be one of the most depressing days of the year due to a combination of post-Christmas blues, cold dark nights and the arrival of credit cards bills.
Today (21 Jan) Payplan reveals the increase in the number calls from people struggling with debt on Blue Mondays over the last five years. It is also highlighting its work with psychologist, Mandy Rutter, showing why burying your head in the sand over debt can lead to more serious health problems.
Peter Munro, a debt expert at Payplan, said: “We know that January, particularly Blue Monday, is a time when people traditionally begin to think about their money problems. Credit card bills arrive, Christmas spending begins to take its toll, household bills are increasing and many people also have concerns about job security.
“Over the past five years we have seen an increase in the amount of people contacting Payplan for help – but we know that it is just the tip of the iceberg and that many more people are still not facing up to their debts.
“Since 2008 Payplan has received 10,471 calls during Blue Monday week (third week in January) from people struggling with debt problems. Over 2,000 of these calls have been on Blue Mondays and the average unsecured debt of these clients is just over £28,000. In the East Midlands the calls rose from 39 on Blue Monday in 2008 to 63 in 2012; in the West Midlands the calls rose from 28 on Blue Monday in 2008 to 41 in 2012 and in London during the same period the calls rose from 36 to 52.
“As we know there are many more people suffering in silence with debt we have been working with Mandy Rutter, a psychologist, to look at what effects not taking action can have on a person’s health.”
Mandy Rutter works for the employee assistance and psychological rehabilitation company Validium and refers clients to Payplan if they need help dealing with debt. She explains why: “In our society today, the perception of most people is that the amount of money we have is linked to our value as a person. Hence if we have lots of money we must be successful and important, the down side of this is that when we don’t have money we feel a failure, unimportant, lacking worth and that we should be ashamed of ourselves.
“This view often means that when we get into financial difficulties we don’t go for help quickly enough. We feel we will be judged and criticised and won’t have any reasonable defence. We sometimes feel that we don’t deserve any help. Hence we bury our head in the sand, pretending the problem isn’t there but struggling with it alone whilst it gets worse. The consequences can be that financially it gets worse and psychologically it gets worse.
“The constant worry of the debt growing, the fear of what will happen in the future and personal burden of carrying this stress alone all leads to worsening mental health. Depression, anxiety, obesity and self-harm have all been shown to be more common in people who have problem debt. If you already suffer from these debilitating conditions it won’t take much to tip you over the edge and cause serious psychological concern.”
Mandy’s advice for anyone who has a debt problem is to seek help, either from an employee assistance programme, from Citizens Advice Bureaux or from a free-to-client debt management company like Payplan.
She added: “There are organisations specifically tasked with helping you through these difficulties. Payplan is one of these organisations and they have trained advisors available at the end of the phone, ready to help you with your financial problem. They won’t take the debt away but they will give you short and long term plans to manage the debt. So that the fear, stigma and stress of your debt is in control. You feel in control of your debt, rather than it being in control of you.”
Keeping The Roof Over Your Head In 2013.
by Peter Munro
Research released by homeless charity Shelter last week highlighted that 8 million people in Britain are currently struggling to meet their rent or mortgage payments. The Council of Mortgage Lenders predict that in 2013 35,000 people will have their homes repossessed due to missed payments. To make sure you are not one of those follow our simple guide below.
Step 1 – Create a budget planner to understand what you have coming in each month and what is going out each month
- Create a realistic monthly household budget that details your income and expenditure, if it is not realistic you will not be able to stick to it
- If your income is variable for budgeting purposes just show the minimum income you usually earn.
- Include items of expenditure that you may pay monthly or even annually so that you get a true sense of what the monthly budget looks like.
- Make sure you include everything (e.g. TV licence, car tax, MOT, car repairs etc) and the little things which add up e.g coffee and lunch at work
- Ensure you include any finance commitments you have (for example loan repayments, HP, minimum payments to credit card debt etc)
- Review existing outgoings for any potential savings (e.g car insurance, home insurance, breakdown cover, media package, mobile package, energy supplier)
- See if you can increase income (e.g check benefits you are entitled to, see if any members of the household can contribute more)
- Click here to compete a budget planner online.
Step 2 – Identify which payments in your budget are the most important and should be paid as a priority
- Paying your mortgage or your rent is a priority. Failure to pay could ultimately result in you losing your home. You should always inform your mortgage lender or landlord if you are experiencing payment difficulties as they may be able to help you. Mortgage lenders are regulated by the Financial Services Authority (FSA) and must treat their customers fairly. They will be willing to discuss solutions with you and in some cases may be willing to accept reduced payments for a period of time.
- You do need to be able to feed yourself and your family and pay for your gas and electricity.
- Your council tax is a priority, as there can be serious consequences if you don’t pay
- If you have a Hire Purchase agreement (for example to fund a car) you should try to prioritise those payments as well. In some cases a Hire Purchase company can repossess your car if you do not maintain your payments. Often people believe they have a HP agreement whereas in fact they have a simple unsecured loan – so it is worth checking all loan documentation
- Generally repayments to unsecured debts are not a priority as sanctions for non-payment may be less serious than those highlighted above. This could include bank overdrafts, credit card debt, store cards, catalogue debt, bank loans, payday loans etc.
Step 3 – If you have more going out than coming in speak to Payplan
- Payplan can help you create a realistic and sustainable budget and negotiate reduced payments to your unsecured creditors on your behalf
- By making reduced payments to your unsecured creditors you will have a better chance of keeping your priority payments e.g mortgage up to date
- Resist the temptation to borrow your way out of trouble, it can make things worse as per case study below
A Payplan clients story…
After her husband’s company went into liquidation – leaving him with no redundancy pay – this client explains why they took out payday loans and then quickly regretted it:
“As a couple neither of us has ever been unemployed and initially we were optimistic and believed something would turn up.
“My husband is well qualified and we thought he would be able to find another job. Although he did get interviews there were so many people competing for each post that he eventually had to take a job paying a third of his previous salary.
“We needed money to pay our mortgage and other household bills, really just to survive, and we took out payday loans but it only made things worse.
“Once you have a payday loan it begins to spiral out of control. If you can’t afford to pay the money back it just gets worse every month and you owe more and more money.
“For us payday loans were a bad mistake. To anyone in a similar situation I would say seek help with your debts and take independent financial advice, but don’t turn to payday loans to pay your bills.”
The couple are now in a Debt Management Plan with Payplan and are hoping that 2013 will see their finances improve.
Payplan wins new tender to provide debt advice in Northern Ireland
Payplan, one of the UK’s largest providers of free debt solutions, has been awarded a contract to provide free debt advice in Northern Ireland as part of a consortium with Advice Northern Ireland (Advice NI).
It is the first time the company has competed for this type of tender and it will provide a new way of working. The service will include the delivery of face-to-face, telephone and web based debt advice and will bring together the strength of the two agencies.
Payplan already has a presence in Northern Ireland with over 1,200 clients in Debt Management Plans (DMP) or Individual Voluntary Arrangements (IVA).
Sarah Reeve, Head of Business Development, Voluntary and Corporate Sectors at Payplan, said:
“We are proud to have been awarded this joint tender and to be working with Advice NI. Winning this contract is a significant achievement for Payplan as it confirms our position both within our industry and the wider business community as an expert provider of free debt advice and solutions and a supplier of choice.
“We know that Northern Ireland is a debt hotspot and there is a need for free debt advice. Over the last three years Debt Advice NI has dealt with over 6,700 clients with a total debt of over £121 million. Now, more than ever, there are people struggling with debt and often they do not know where to turn for help. At Payplan we offer confidential, non-judgmental advice and now this service will be easily accessible across Northern Ireland.”
The contract, which is for three years with an option to extend a further year, was awarded by the Department of Enterprise Trade and Investment (DETI).
Advice NI is the leading independent advice agency in Northern Ireland. They provide an advocacy service, through a network of has 19 local agencies, offering advice on debt, benefits, housing, tax, employment and consumer issues. They also have specialist advisers dealing with mental health and disabilities.
Prior to the new tender being awarded the service was divided between Advice NI, Citizens Advice Bureau NI and Action for Employment. It has now been replaced with a ‘one stop shop’ for debt advice.