The UK’s financial regulator, the Financial Services Authority, has been stating for some time that it wants stringent restrictions placed on certain types of lending by the UK’s banks, and one of the mortgage loan types that has been targeted by the FSA is the self certification mortgage. With these mortgages, which are granted to those that are self employed, there are concerns because the income that the borrower earns is difficult to predict.

These mortgages are also sometimes referred to as ‘liar loans’ and this is because officials believe that because the income of the borrower is more difficult to determine the borrower is able to over-exaggerate earnings in order to boost the amount that they borrow. However, the concerns of the FSA include the higher risk of these borrowers over-burdening themselves and ending up with a mortgage loan that they cannot possibly afford to repay. This is why the regulator has been seeking a ban on these loans.

However, according to recent reports the banking industry is seeking to fight against a ban on these mortgages, with some bank officials claiming that it penalises self employed people and make it impossible for them to get a mortgage in order to buy a property. Whilst the FSA has received some praise for its overhaul of standard in the banking sector this is a proposal that has been met with mixed reactions and could have a profound negative impact on those that are self employed.

One industry report stated: “Respondents were concerned that the proposal would impact negatively on the self employed, trigger an increased use of fraudulent income documentation and increase lenders administrative costs. Some respondents also believed the market has already adjusted by withdrawing self-certified products and, therefore, regulation is no longer required.”

It has been suggested by some lawyers that the interest rates being charges by some credit card providers in the UK may not actually be legal because of little known clauses in the Consumer Credit Act. Read the rest of this entry

The government has been accused of continuing to show a lack of understanding of the current mortgage market in the UK following outlines that were announced by the Chancellor of the Exchequer, Alistair Darling, in his recent pre-election budget speech.

In the budget Darling announced a number of measures, including suspension of stamp duty for first time buyers on properties up to £250,000, and an improved income verification system for use by lenders, which would be established by HM Revenue & Customs.

However, a number of industry officials have hit out at the proposals stating that they show a clear and continued lack of understanding of the mortgage market in the UK by the government. One analyst from the company John Charcol slated the approach on stamp duty, stating that it was unfair because it gave first time buyers an unfair advantage over other buyers, and that it should have been extended to all buyers not just first time buyers.

He said: “It would have been much more sensible to increase it for everybody. What will now happen is that first-time buyers will actually have an advantage over non-first-time buyers for properties between £125,000 to £250,000. A lot of people might say that is fine but I don’t think it is as simple as that. What about second-time buyers who will be in a worse position?”

Another industry official said that the HMRC income verification check was a flawed idea, because the income details that the Revenue Service kept were around nine months out of date. This would mean that someone that applied for a mortgage and had been recently made redundant could still end up getting a positive verification. He also said that the checks and verifications on income would take far too long.

It has been reported that the transactions limits on the increasingly popular contactless credit cards that are hitting the UK are to be increased, which means that consumers using these cards will enjoy far greater flexibility and freedom with regards to the type and value of purchases that they can make on their cards. Read the rest of this entry

Following the announcement that the stamp duty exemption for first time buyers is to be increased from £125,000 to £250,000 in terms of the value of the property it has been revealed that around seven out of ten homes will now fall under the stamp duty exemption threshold for first time buyers. Data from the property website Right Move shows that there are now 70 percent of properties that will be eligible for stamp duty exemption for first time buyers, whereas previously, when the exemption limit was £125,000 this percentage of exempt properties was only 25 percent.

The Chancellor of the Exchequer, Alistair Darling, recently announced in the pre-election budget speech that first time buyers would now be able to avoid paying stamp duty on properties up to the value of £250,000, which is double the standard exemption value of £125,000, which applies to other buyers. Darling also announced that in order to fund this new measure wealthier people that were buying homes worth £1 million or more would have to pay increased stamp duty of 5 percent, which would mean a minimum stamp duty of £50,000.

The Right Move research showed that out of the homes on the market at present only 2 percent fell under the price category of £1 million or above, so only a small percentage of buyers would be affected by the increased stamp duty rate whereas many first time buyers would benefit from the increased threshold for stamp duty exemption.

An official from Right Move stated: “This welcome initiative removes the majority of properties for sale from the clutches of a somewhat restrictive tax for the UK property market, giving a welcome boost to the important spring market. A massive 70% of properties for sale are now tax-free for first time buyers. However, sellers may feel they have to negotiate less with a buyer who is now a couple of thousand pounds better off, which could blunt the benefits of this stamp duty holiday.”

New proposals have been brought in to try and provide greater protection and flexibility to credit card users in the UK, according to recent reports. Read the rest of this entry

High Street banking giant Barclay’s has caused outrage recently by announcing that it is splitting its customers services depending on how well off the customer is. Read the rest of this entry

A report is being put together detailing types of high cost credit but according to recent reports bank charges will not be included in this report. Read the rest of this entry

It has been announced that Cheshire East Council has launched a scheme that will enable vulnerable residents in the Macclesfield area to enjoy the independence and convenience of being able to use a payment card to pay for services. Read the rest of this entry

Whilst most of us would love to be free of debt many of us have had little choice but to borrow money for various things other than our mortgages. Credit cards, loans, store cards, overdrafts, and catalogues have all become a part of life for most people, and many people get themselves into a spiralling level of debt getting to the point where they can barely manage to keep up with their repayments.

Whilst getting into debt is unavoidable for most of us it is possible for those that are struggling with their debts to take action to try and ease the situation. The measures and options that are available to you will depend on a number of things, such as your personal situation and circumstances to the level and type of debt that you have. It is a good idea to look at the various options that are open to you, as some resolutions will work more effectively than others.

Over the past couple of years in particular many people may have found themselves deeper and deeper in debt, with financial problems having affected their finances to the point where they have been living on credit. Being in debt so deeply can really drag you down, and this is why it is so vital to take action as early as possible in order to get things sorted out with your finances and ease the stress that debt can cause. Some of the many solutions available are outlined below:

Consolidation: Consolidating your debts can prove to be one effective option for those that want to try and reduce their monthly repayments and make their debts more manageable.

This is an effective solution for those that have a range of different unsecured debts such as credit cards, loans, overdrafts, etc. In order to get a good rate on a consolidation loan you will need to have a pretty good credit rating, but if you are able to get this type of loan you can wrap up all of your other debts into one, cut the number of creditors that you are dealing with, and reduce the amount that you are paying out each month.

Debt management plans: If you are in a situation where your debt repayments are taking up a large chunk of your income, leaving you short of money for other essential payments, it is worth considering a debt management plan. There are various debt charities and agencies that can help to set these up, and you should find one that does not charge a fee.

Under a debt management plan you could reduce the amount that you are paying to each creditor by a significant amount and simply pay over a longer term until it is paid off. The interest on your debts is often frozen under these plans, and you usually make one payment to the debt management company which will then distribute the payments to your creditors.

IVA: If you are really struggling with your debts, you have over £15,000 in unsecured debts, you or your partner is working, and you meet the necessary criteria you may be eligible for an IVA.

This is known as a softer alternative to bankruptcy, and is not something that should be taken lightly to escape debt. However, for some people that have no other option it can be an effective solution, and in most cases you will pay a reduced monthly payment to be distributed amongst your creditors for five years, after which time the remainder of your debt will be written off.