Finding a good remortgage

Finding a good remortgage is a question of finding a new mortgage that suits you better than your existing mortgage. This might be a question of a desire for greater flexibility in the way you manage your mortgage, it might follow moving home, it might be needed because an existing mortgage repayment term is coming to an end, or – for many homeowners – will be a question of optimising the cost of the mortgage repayments each month.

The one big problem – as anyone with even half an eye on the financial pages of the press can tell you – is the dire shortage of funds available to the mortgage market these days. Combined with the rapid slowing down of the housing market generally, this has made life for first-time buyers especially difficult. Indeed, the Council of Mortgage Lenders reported – in the Daily Telegraph newspaper on the 15th of January 2009, for example – that only 12,400 loans were advanced to first-time buyers during the whole of the month of November, the lowest total since the Council began assembling such figures in 2002, and 57% down on the same month the previous year.

Relatively speaking, those more interested in finding a good remortgage are rather better off. The Council of Mortgage Lenders also reported that 52,000 remortgages – worth a total of £7 billion – were advanced to borrowers during November 2008, although this was admittedly 25% less in terms of both volume and value than in October.

The overall shortage of funds available for mortgage lending may in fact be favouring applicants for remortgages since these borrowers represent a known risk to the lender. There is a history of regular repayments, made on time, and, in the case of those who have owned their property for a number of years, likely to be a relatively comfortable equity stake in the property. Remortgages, therefore, offer a relatively good risk for the nervous and cautious lending market.

Borrowers like these, in the market for finding a good remortgage, have a number of options. If they are coming to the end of a fixed rate term, their mortgage is likely to revert to the lender’s standard variable rate by default. Following the recent drastic reductions in the Bank of England base rate – to it’s lowest ever of just 1.5% – standard variable rates of even the cash-strapped mortgage lenders have had to reflect at least some of this reduction. Standard variable rates, therefore, might actually represent a more attractive move now than in the past for some borrowers.

Yet others, who have witnessed successive reductions in the base lending rate and who anticipate the possibility of still further reductions might prefer a tracker mortgage, with an interest rate fluctuating in line with the base rate itself. When looking for a tracker mortgage, however, borrowers should be aware that some will have written into them a “collar” which effectively prevents the mortgage interest rate falling below a certain minimum. In this event, the borrower might not get to enjoy the full benefits of a reduction in base rates below a certain minimum rate.

Finding a good remortgage for some borrowers might also be seen as an opportunity to swap a relatively inflexible mortgage for one that offers the chance of varying the monthly repayments – by increasing the repayments made or reducing them at other times – within certain limits, according to fluctuating personal circumstances. For such borrowers, a flexible mortgage could prove attractive.

Best credit cards

The best credit cards are those that charge you nothing for using them! However much it might seem like wishful thinking, it is still in fact possible to find a whole range of credit card providers who are prepared to do just that – charge no interest on outstanding balances or on purchases you make with the card.

Surprising as it may seem in the current climate of recession and otherwise restricted credit facilities, competition between credit card providers remains so keen that many are prepared to lure new customers with offers of what is effectively free credit. Such free credit takes one of two forms and some providers will offer both in order to attract new customers. The most common is the offer of a zero rate of interest on outstanding balances transferred to the new card from another, existing credit card account. For an introductory period – which can be any period up to about a year, depending on the new credit card chosen – no interest is charged on the outstanding debt.

The availability of free credit in this way can provide an excellent opportunity for repaying existing credit card debts, without the debt increasing each month through the addition of further interest. All good things come to an end, however, and at the end of any such introductory period, the provider’s normal rates of interest will apply. With the best credit cards, of course, this rate will still compare favourable with the rates charged by other cards.

But it is not necessary to have accumulated a debit balance elsewhere in order to secure free credit on its transfers. Many card providers have an introductory offer that provides free credit for purchases made in the first six months or so of its issue. Once again, however, it would be important not to be lulled into a false sense of ever-lasting interest-free credit. The offer will come to an end at some stage and the card-holder will then be as concerned as ever about the interest rate that applies. Once again, the best credit cards will charge a competitive rate and not a rate designed to recoup the interest “lost” during the zero-interest offer period.

If you are one of the fortunate few who manage to repay the whole of your credit card balance each month and have no outstanding balance to transfer to a new card on a zero-percent interest offer, then interest rates will, of course, have less interest. In these circumstances, the best credit cards are likely to be those that are issued free of charge, have no monthly subscription, management or administration fee and, in the best of all worlds, nevertheless offer “rewards” or cash back on the use of the card.

With no interest to worry about, you might choose to take advantage of these reward or cash-back credit cards which allocate points according to purchases made and which can be redeemed for specific goods or services or even the equivalent cash back. The best credit cards, therefore, really are those that have the capacity of offering “something for nothing”, in terms of free credit, rewards or cash back. Beware, though, that all good things are likely to come to an end at some stage.

Debt consolidation loans

With many people struggling to make ends meet during the current economic recession, personal debt can too easily get out of hand. Debt consolidation loans are designed for people beginning to find their debts slipping out of control and restore an easier and cheaper repayment regime in order to manage their debts once again.

Credit cards, in particular, can quite easily see an escalating amount outstanding, especially if you can only afford to make the minimum repayment each month. Not only does this extend the period over which you will be repaying the credit, but still more interest is added to that outstanding balance each month. To make matters still worse, the rate of interest applied to credit card balances represents one of the most expensive ways of borrowing money, with rates even higher than those on any unsecured personal loans you might also have.

Debt consolidation loans allow the borrower to roll up all such outstanding debt by providing one loan large enough to clear the various loans and credit that are attracting high rates of interest. Not only will the new loan aim to offer a more realistic rate of interest, but it can be spread over a longer repayment period, thus reducing the total monthly commitment. This can make the repayment of all the borrowing and credit considerably more easy and there is only the single repayment to be made each month, rather than having to remember the various repayment dates for the previous collection of assorted loans and credit.

Just what the rate of interest is offered on debt consolidation loans will of course depend on your personal circumstances, how much you can afford to pay each month (and therefore the repayment term), the size of the consolidation loan needed and – crucially – whether or not you are in a position to offer any security against the loan. Homeowners, for example, will be in an especially strong position to negotiate an attractive rate of interest, since the equity in their home can be used to secure the new loan over anything from one to 25 years. As with any borrowing, your credit rating and history will be scrutinised by the lender, with the most attractive rates of interest being granted to those with the best credit score.

Debt consolidation loans, therefore, can extend an extremely useful helping hand to those who are beginning to experience difficulties in managing their debts thanks to the immediate reduction in the total monthly repayments that are likely to be needed. Nevertheless, it should be remembered that one of the principal ways in which the level of repayments were reduced was probably by extending the repayment period. Over the full course of the consolidation loan, therefore, it is possible that the borrower will have ended up actually paying more interest. Some people might find this a small price to pay, however, for the benefit of taking control over their personal finances once again and the alternative of hopelessly escalating debt.

Where debt consolidation loans have been secured against the borrower’s own home, of course, it is vital to appreciate that defaulting on the loan repayments could put the home itself at risk.

Over 50’s life insurance

Is there something magical about the number that makes over 50’s life insurance special? In principle, there is nothing so very different about buying life insurance at any stage in life, either before or after the age of 50. In other words, the principle of life insurance remains the same – you pay a regular premium and, in return, the insurer pays out to named beneficiaries an assured sum in the event of your death either within the agreed term of the insurance (term life insurance) or upon your death (whole life insurance).

Whether it is term or whole life insurance and whether you are over 50 or younger than that, life insurance is clearly an invaluable way of providing a benefit for surviving family or loved ones in the event of your death. The purpose of such a financial provision could be to clear any outstanding mortgage or debts or to cover the expenses of your funeral (which these days are estimated to cost an average of £6,000 or more).

The introduction of such cover specifically for the over 50’s, however, is a recognition of the fact that arranging life insurance becomes progressively more difficult – and expensive – the older we get. The risks taken on by the insurer are greater and the closer interest you would therefore expect the insurer to take in your state of health. The key attraction of most over 50’s life insurance, therefore, is that, generally, no medical is required and acceptance for the cover is guaranteed. Naturally, this can be a welcome feature of the insurance proposal process for anyone over the age of 50.

Because the insurer is assuming a greater risk, however, and because less is known about your medical history, the premiums may be slightly higher than those for a “standard” term or whole life policy. Nevertheless, most insurers offering over 50’s policies will do so with the guarantee that premiums will not increase.

The majority of over 50’s life insurance policies are for the whole of life – that is to say, cover continues until your death, whenever that is and there is no fixed term. Cover remains in place provided the premiums continue to be paid, although most policies require no further payment of premiums after the age of 90, but continue cover until your death.

Although standard term life insurance policies can be enhanced so that they pay out an increasing or index-linked benefit, so that it is possible to keep pace with the effects of inflation, over 50’s life insurance is generally restricted to an assured sum that is fixed at the outset. However, some insurers have introduced a feature that increases the assured sum by a given percentage (10%, for example) after a given number of years (typically five years) that the policy has been in place whilst the premiums you need to pay stay the same.

The actual price of the premiums will, of course, depend on the amount of life cover sought. Typically, the maximum levels of cover offered by this kind of life insurance are between £20,000 and £30,000. It is important to remember, however, that – as with standard life insurance – there is no “cash in” value of the over 50’s life insurance policy at any time.

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