Mortgage life cover

No one wants to think about death. This is especially true when you are going through the process of buying a new home or moving into your new home. The reality of effective financial planning, though, is that it forces you to protect you and your family against the unfavorable “what if” scenarios. What if you buy a home and take on a large mortgage for your family. Life is great as long as your family has your monthly income to keep up with the repayment of the mortgage loan each month. However, if something was to happen and you were no longer around, your family would be stuck. The home would likely be repossessed at some point if a new source of funding is not established. Your solution to this problem? Mortgage life cover (as opposed to MPPI).

Mortgage life cover, often referred to as mortgage life assurance, or more specifically, mortgage decreasing term life assurance (MDTLA), pays a lump sum balance on your mortgage if you die during the specified term of the insurance plan. The lump sum is typically paid to your family, though some plans specify that the payout is used to repay the actual mortgage balance. Either way, this financial security means a great deal to your family. You also have the peace of mind to know that your family is protected if something unfortunate occurs.

Mortgage life cover is not to be confused with mortgage payment protection insurance (MPPI). MPPI is part of the payment protection sector that pays monthly benefit payouts to assist in making monthly repayments on your mortgage. This protection is used to help you through periods of unemployment from involuntary redundancy, prolonged illness, or accidents. In other words, it is more of a short-term protection to sustain you, as opposed to a death benefit as is the case with mortgage life assurance.

The benefits of mortgage life protection are fairly obvious. However, it is important to understand your options in the marketplace. Many lenders like to pressure or trick people into buying their expensive mortgage life assurance policies while taking on a new mortgage. Do not be pressured. You are not obligated to buy this protection in order to obtain a loan. Your best value and most affordable MDTLA solutions are usually bought from independent brokers who offer top products at much lower premium costs.

As is the case with many protection products, mortgage life cover offers benefits that are ideally never realized by the covered person. Hopefully, you will far outlive the policy term and you will be able to repay the mortgage on your home with your income. However, the security is certainly worthwhile given the modest costs to buy protection through a reputable provider. Here are a few key things to remember about mortgage life cover:

• It is not mortgage payment protection insurance
• Your mortgage balance can be repaid with the lump sum benefit payout
• You do not have to buy cover from your lender - Look to independent brokers

Debt consolidation loans

Having an abundance of debt and owing many creditors is extremely stressful. The long-term expense of making interest payments on high interest rate credit card and loan balances is also not the best approach to a successful financial future. As average credit card balances have soared and as consumers are faced with the reality of managing growing interest payment, the benefit of debt consolidation loans has become clearer.

Debt consolidation loans are loans that offer consumers the ability to reduce the number of creditors owed, cut the amount of interest in loan repayments, and make the debt repayment process more efficient. The consolidation loans often take the form of second charges on a home or a personal loan. By securing a loan with the leverage of your home as security, you can generally get a better credit rate from the bank. Having collateral property secured by debt gives the lender recourse in the event of non-repayment of debt. This makes the lender more flexible in rates and terms.

The result of a debt consolidation through a secured or non-secured loan is that one loan of a larger amount is used to pay off some, most, or all of your creditors that you have higher interest arrangements with. Ideally, this significantly brings down the average interest rate you pay on the balance owed. Lowering your interest rate can reduce your monthly loan payments and increase the amount of payments allocated toward principle repayment. This leads to more easily managed monthly budgets, or perhaps a more efficient repayment of debt.

Debt consolidation loans are usually spread out over the course of years, depending on the type of loan, the lender, and the balance. The more spread out the loan repayment, the less is required for each monthly payment. However, if the goal of a debt consolidation is to lower interest payments and make the loan repayment more efficient, you may opt for a shorter repayment timeframe with a faster repayment of your principle balances.

As mentioned, there is a lot of stress involved when people owe money to many creditors. It is harder to work with creditors for specialized situations when there are several to deal with. Plus, keeping up with all of your monthly payments and getting the payments in on time is difficult if you have several banks and credit card companies that you owe money to.

It is important to consider the up front costs of obtaining debt consolidation loans. There are usually loan application and other fees charged for the acquisition of a new loan. Second charges against your home may also come with other loan fees. To consider the benefits of getting a new loan, you must figure out how long it takes to make back the money invested in acquiring the new loan. The higher your debt and the more creditors you owe, the more sensible a new consolidation loan becomes. Do keep in mind that the loan balance does not disappear; it just takes on a new form. Debt consolidation is not a substitute for proper money management and credit responsibility.

How Being Married Equals Lower Car Insurance Costs

The thinking in the insurance industry is that if you are married you are likely to be more responsible than you were when you were single.

This means married people are considered less of a risk – and from that follows the car insurer’s conclusion that you deserve a lower premium.

Somehow, this all goes wrong when you live with someone.

If you and a partner live together as a normal, loving couple with all the benefits of marriage without the actual status, then you are still single, so you are insured as a single driver in a higher risk category.

Stop a minute before you rush out and buy a ring and propose – yes single and married people do have a cost differential on their car insurance premiums, but sometimes it’s only a few pounds and not a drastic reduction.

If you get married, be sure to call both your insurance companies if you and your partner are drivers and ask for a requote on your policy. Not all insurance companies will alter your premium, but it’s worth the try.
You and your spouse have other car insurance benefits once you are married:

• If you have a maximum no claims discount and decide to stop driving, you can switch the bonus to your spouse so they can benefit.
• If you have business use on your policy and cannot drive the car, then your spouse can have the cover as well
• You may also benefit from increased death and injury cover with some insurers

Don’t forget if you do marry, this could change your risk address as well, which is a change in circumstances you should notify your insurance company about.

The ‘risk address’ is the place where your car is parked overnight for most of the year. If you marry, it may well be that if you have not lived with your partner that one of you is changing your risk address.

The postcode of this address is one of the main factors in calculating your premium, because the crime rate for theft and vandalism in that area weigh high on the factors an insurance company considers when working out what you should pay.

Often when you marry, as a couple you will have two cars. You need to consider arranging the cheapest insurance for both of you – whether this is through one company or separate policies.

You can compare car insurance premiums, policy features and benefits by using a car insurance comparison service.

Wedded bliss doesn’t always reduce your insurance premium.

If you or your new partner had poor driving histories prior to the day you tied the knot, the fact you are married will not bring down your insurance costs overnight.

However, if you both start driving more responsibly and don’t add any more penalty points to your licences or claims, over time you will build a better driving history and a no claims discount that could help cut the costs of your car insurance.

Five Tips to Help You Find That Mortgage Deposit

Saving up for anything in these credit-crunch days can be a bit of a strain, but when the item in question is as big – and as important – as a mortgage deposit, the pressures involved can be enormous. How do you get started?

If you’ve been reduced to scrabbling down the back of the sofa for loose change, don’t panic. Here are five tips to help you on your way to sorting out your mortgage deposit.

1. Start early.
It sounds obvious, but it’s true. If you can approach your mortgage deposit with several months (or, better yet, years) of savings behind you, you’re going to be in a much stronger financial position, and many of the worries typically associated with scrimping and saving at the last minute will be greatly reduced. If you’re thinking of trying to get your foot on the property ladder in the not-too-distant future, start saving for your deposit now.

2. Start a budget.
When you’re saving for anything, it’s crucial to know how much you can afford to put away every week or month to reach your goal. Even if it’s only ten pounds a week, that’s still over five hundred pounds in a year – and it soon adds up. Knowing what you can afford to save gives you a target you can realistically stick to, and before long you’ll have enough to meet your needs.

3. Make savings.
Saving is, by definition, not spending money when you don’t have to. Look at your daily expenditure, and see if there are places you can cut down. Do you really need to keep that high-priced gym membership? Would it be cheaper to take a thermos into work, rather than shelling out £2.50 on a coffee house latte every morning? Is your pack-a-day habit costing you more than just your health? Tightening your belt a little can make a big difference, even if you only choose to make it a temporary solution. However, more permanent savings can also be made by taking the opportunity to scout for savings on your car tax, gas and electricity bills, or internet service provider. Better yet, if you do manage to find a saving here, the extra money can go right into your deposit without affecting your way of life one bit.

4. Use the services your bank offers.
If you’ve got a substantial amount of money saved up, stick it in a high interest savings account or a tax-free ISA to make sure your money is working for you, rather than just sitting in a standard current account.

5. Join up with friends.
First-time mortgage buyers who are in a couple typically have a major advantage in trying to save up for a deposit: dual incomes. However, singletons shouldn’t despair. Many lenders are starting to allow joint mortgage deals, letting up to four individuals share at a mortgage – a big help to those who are already looking to buy with friends. It’s certainly worth asking around, as four incomes can make the house-buying process a lot easier.

Travel Insurance Basics

The vast majority of holidays go off without a hitch with most holidaymakers experiencing nothing worse than a bit too much exposure to the sun. However in the tiny minority of cases where things do go wrong it can be a great source of comfort to know that you will be well taken care of and that you will be able to cover the huge costs often associated with emergencies abroad. This is exactly where travel insurance comes in. The purpose of travel insurance is to offer cover against some of the most common mishaps (ranging from the irritating to the life threatening) that people experience while they are on holiday or travelling for business.

The first important distinction that travellers have to make when buying travel insurance is how long they want their policies to run for. It is possible to buy a ‘single trip’ policy that will only cover you for a specified amount of time. The other alternative would be an ‘annual multi trip policy’. This will almost certainly work out cheaper than getting a series of single trip policies if you are a frequent traveller. The fact that you are insured year round also means that you can save yourself the hassle of having to arrange insurance before every single trip.

In evaluating travel insurance policies it is important to verify that they have excellent cover in all of the following areas:

Medical Cover: Emergency medical expenses in a foreign country can be extremely high and excellent medical cover should therefore form the cornerstone of any travel insurance policy. Some of the things that are generally covered are:

• Emergency treatment and hospitalisation
• Evacuation and/or repatriation if necessary
• After care (e.g. payment for physiotherapy after an injury)

United Kingdom citizens travelling in the Europe Union enjoy the privilege of free or reduced fee medical treatment. Getting a ‘Europe Only’ travel insurance policy can therefore sometimes be significantly cheaper than a worldwide one. You can prove your entitlement to free or reduced medical care in Europe by applying for and always carrying an “European Health Insurance Card” (EHIC) with you.*

Cancellation/Postponement Cover: This part of your policy will cover you against unforeseen events like a flight being delayed for a long time (your policy will help to cover costs incurred, e.g. hotel bills, in such cases) or cancelled altogether. It will also normally cover you if you have to cancel a holiday or flight from your side due to unforeseen circumstances.

Possessions Cover: Knowing that your property is insured against loss, theft or damage can be very reassuring when travelling.

Personal Accident Cover: Most travel insurance policies will pay out a lump sum upon your death or permanent disability.

Legal Expenses: Being sued in a foreign country can be a daunting experience. Many travel insurance policies cover legal expenses related to personal liability arising from accidents and other incidents.

When choosing a travel insurance policy it is important to make sure that it fits in perfectly with your particular circumstances and destination. In some cases you will, for example, have to pay an extra premium if you participate in any activity considered high risk (e.g. bungee jumping, snowboarding etc.). Checking whether there is not a Foreign and Commonwealth Office (FCO) warning against all travel to a destination in place is also a good idea since some insurance companies clearly state that their policies will not be valid if you ignore FCO advice^.

Summary:

• Travel Insurance can be a great way to experience a bit of peace of mind while travelling
• Policies are generally for a single trip or for multiple trips over a year.
• The areas that are normally covered by travel insurance policies are: Medical, Possessions, Cancellation and postponement, Legal and Personal Accident
• It is important to check whether you are adequately covered, especially in the light of exclusions related to hazardous activities and FCO warnings

* More information about the European Health Insurance Card can be found at: http://www.nhs.uk/EHIC/Pages/About.aspx
^ The full details of FCO travel advice for different countries can be found at:
http://www.fco.gov.uk/en/travelling-and-living-overseas/travel-advice-by-country

The benefits of payment protection insurance

Thanks to improvements in the marketplace, the benefits of payment protection insurance are becoming more obvious to many consumers. Payment protection insurance, or PPI, is an umbrella of insurance products that provide replacement for lost income for employees faced with involuntary redundancy, and sometimes accident and illness. The portfolio of protection plans includes three basic cover types. Income payment protection, mortgage payment protection, and loan payment protection are the three typical insurances that make up the PPI sector.

Though there are some subtle differences in design and intention, the benefits of payment protection insurance are similar. Providers have some difference in products but terms and conditions are fairly consistent. Most policies run for either 12 months or 24 months. Benefits typically begin either 30 days or 90 days after the insured event. Some plans offer backdated protection to the first day of claim.

The real benefit of payment protection insurance is the financial security it provides people when they are faced with unemployment. Many families are faced with budget restraints and rely on consistent monthly income to meet loan and bill obligations and to put food on the table. The maximum allowable protection under most plans is 1500 Pounds or half of your normal monthly income, though this can vary among providers. This may not sound like enough to keep you going without your monthly job income, but these benefit payments are non-taxed. This means the actual net pay is significant.

Payment protection insurance does not have to cost an arm and a leg. For years, many consumers were duped into believing that they had to buy PPI from large financial institutions. In fact, many borrowers either unknowingly, or based on pressure, purchased expensive payment cover from lenders at the point of receiving a loan. Some high street banks notoriously pressured borrowers into taking on the payment insurance as part of package with the loan product. Many even deceptively built the premium costs into the loan repayment in order to hide the true expense of the premiums.

Fortunately, today, the benefits of payment protection insurance are affordable. Following an investigation by the Office of Fair Trading (OFT) and one by the Financial Services Authority (FSA), fines were issued against some high street companies in 2007, and new resolutions have been put into place by the Competition Commission. For instance, loan payment and mortgage payment protection can now only be sold after a 7 day waiting period by lenders who want to sell to new borrowers. This restricts their ability to sell PPI through pressure tactics or deception.

Following the investigations, consumer awareness has dramatically increased. Now, more and more, people are learning that independent insurance brokers offer the best valued products that provide the benefits of payment protection insurance. Brokers sell plans that are 40 to 80 per cent less expensive than those available from financial institutions, depending on the product. These specialists also have a better service offering and maintain a better reputation for fair selling practices and support. Comparing PPI plans is efficient through a broker’s online website.

Finding the Best Way to Purchase Your Next Vehicle

Stepping into a motor dealership can sometimes feel like entering a parallel universe. First there is the amazing array of technical terms describing automotive specifications to deal with. It does not stop there however. Choosing the right way to finance a new car can be just as confusing. There are so many products, each with a different set of pros and cons to consider, that it is easy to feel overwhelmed by the whole experience. This need not be the case however as having just a basic understanding of the different ways in which to finance a vehicle purchase will go a long way towards helping you to make the right decision. The purpose of this short article is to highlight some of your options:

1. Hire Purchase: Under this option you will pay a monthly instalment over a fixed contract period (usually around 42 – 60 months). During the contract period you will have full use of the vehicle but it will still technically be the property of the finance company (or in some cases the dealership) through whom finance was arranged. At the end of the contract period full ownership will revert to you. The main benefits of hire purchase is that it is relatively easy to arrange (it can the done in the dealership in most cases) and the fact that the interest rates are generally quite competitive.

2. Remortgaging: If you have sufficient equity in your house you mortgage provider will, under certain circumstances, allow you to remortgage in order to fund major purchases. The main benefit of this approach is that you will get a very good interest rate when compared to other options. The main disadvantage is that you will spend a very long time paying off your vehicle.

3. Interest-free Finance: Some car dealerships offer interest free finance on brand new vehicles. This is obviously a very attractive option that can save you a great deal of money over the contract period. The main disadvantage of this approach is that it is very difficult to get a discount on the purchase price if you opt for it. It is therefore to ‘crunch the numbers’ to work out whether negotiating a discount and then making use of another finance option would not be more beneficial.

4. Personal Contract Purchase: This is a kind of lease agreement where you make monthly payments allowing you full use of a vehicle over a set period. At the end of the agreement you can hand the vehicle back or make a final payment to purchase the vehicle outright

5. Personal Loan: It is sometimes possible to negotiate a substantial discount if you pay cash for a vehicle. It is possible to make use of this while still financing your car. This can be done through taking out a personal loan through a bank or building society and using the funds to purchase the vehicle. Since the vehicle purchase and the financing are arranged separately it will to all intents and purposes be treated as a cash transaction by the vehicle dealership.

6. Car Loan: Some financial institutions offer products that are specifically aimed at those purchasing vehicles. While essentially a personal loan this kind of product will include certain motoring related benefits (e.g. pre purchase inspection, membership of a breakdown service etc.) to make it more attractive to those buying vehicles.

It should be clear from the above that the options open to those wishing to purchase a new vehicle are varied and aimed at different needs. You should therefore be able, after you’ve done a bit of homework, to find a product that is just right for you in your particular circumstances.

Summary:

There are many different finance option open to those wishing to purchase a new vehicle. These include:

• Hire Purchase
• Remortgaging
• Interest-free Finance
• Personal contract purchase
• Personal Loan
• Car Loan

Six Tips for First Time Mortgage Buyers

Getting onto the property ladder for the first time can be a daunting experience – not least due to the massive amount of information out there when it comes to mortgages. How do you know which one to choose? What if you make a mistake? After all, this is a very big decision.

However, help is at hand. Below are six tips on how best to approach the mortgage question if you’re a first time buyer.

1. Think about what you need from a mortgage.
Believe it or not, mortgages are not just a one-way street: you need to find a system of repayments that works for you. If you don’t, you may find yourself struggling to keep up financially, which can cause unnecessary stress and worry. Similarly, if you get a mortgage that doesn’t provide what you need, you may find yourself settling for a property that isn’t right for you, which can cause problems further down the line. The key is balance – a little forethought goes a long way.

2. Don’t overreach yourself.
If you’re a first-time buyer who’s previously been living at home with your parents, you’ll need to take into account additional expenses (bills, rates, council tax, etc) when you’re budgeting how much you can afford to repay on your mortgage. Similarly, you’ll need to make sure you can afford the repayments even if interest rates rise. If you forget this, you could find yourself in a serious financial pickle later on.

3. Don’t be afraid to ask for help.
The mortgage market is confusing, especially if you’ve never done it before. Most providers offer the services of a mortgage advisor, who’s specially trained to help you work out exactly what service would best fit your circumstances.

4. Don’t just go for the first mortgage that comes along.
It can be tempting to settle for the first mortgage that seems to meet your criteria, but this is rarely the right one for you. Of the hundreds of mortgage packages out there, what are the odds that the first one you settle on is going to be a perfect fit? Pretty slim. Take a little bit more time to scout around the markets and see what’s out there. You could save yourself a substantial amount of money, and even if you don’t, you’ll have the satisfaction of knowing that you have the best possible package for you.

5. Read the small print.
No one likes doing it, but it’s important to know exactly what you’re getting yourself into – after all, a mortgage is likely to be one of the biggest set of repayments you ever find yourself making.

6. Try not to worry.
Moving house is stressful enough as it is. There’s enough support out there to make sure you don’t have to struggle unnecessarily with the question of your mortgage, and (while it definitely needs to get sorted) it doesn’t have to be the minefield that many people make it. Congratulate yourself for getting on the property ladder, and don’t forget to enjoy your new home.

0% Interest Credit Cards

Most people are always on the lookout for good deals, bargains and ways to reduce their monthly outgoings. As part of this, it may be worth examining the costs of those monthly credit card bills.

If a credit card is used and the amount not paid off in full at month end, a balance will be left. The credit card issuer will usually charge interest on this balance and that for the most part is where their profit comes from.

Purchasing by credit card may offer huge advantages – particularly if the balance is paid off in full at the end of each month. However, it is a fact of life that many find this difficult to achieve at times and as a result, fairly hefty interest charges may be levied each month on any outstanding balance that’s more than 1 month old.

The interest rate charged by card issuers varies and it is a good idea to shop around to ensure that the rate being charged is competitive against other card issuers. That’s because it is usually easy to transfer the outstanding balance from an existing card to a new card issued by another company and in the process, possibly save a lot of money.

Credit card issuers are generally looking to capture business from their rivals and typically they will make some attractive offers to try and tempt customers to transfer their balances from an existing card to their card products.

One of the ways many do this is to look for 0% Interest Rate offers. These are often qualified afterwards with the phrase ‘on balance transfers’ or ‘on balance transfers for a period of 6/9/12 months’.

If a card provider advertises a deal of this nature, it means that if the outstanding balance on the card of another provider is transferred to them, then they will not charge any interest on that balance for a given period of some months.

Under some circumstances, this can be very advantageous. As an example, if a balance is transferred under a ‘0% Interest Rate For 6 Months’ offer and paid off in full during that period, the cardholder will have saved 6 month’s worth of interest payments. Even if the balance is not paid off in full, the cardholder will have had the benefit of a 6-month interest payment ‘holiday’ during this period.

It should be noted though that these deals typically offer 0% interest rate only on transferred balances. If the card is used for new purchases during that period then typically those new balances will incur interest at the new card provider’s standard rate.

The new card provider’s normal interest rate charges will usually commence one month after the expiry of the 0% interest period on any balances not paid off. It is worth checking to ensure that these are competitive compared to those of the old card provider before making the transfer.

If a decision is made to transfer a balance so as to take advantage of a deal of this nature, the process is usually simple and quick. An application is made to the new card provider who may perform some background credit reference checks. If they complete satisfactorily the new provider will contact the old provider to pay off or transfer the outstanding balances. It’s done!

• 0% offers on credit cards usually apply to transferred balances
• They may typically be limited to a specified period of some months after transfer
• This can offer significant cost savings to a cardholder
• The rate of interest that commences after the expiry of the 0% period needs to be checked carefully for competitiveness.

How much does car insurance cost?

Car insurance prices vary from person to person and from provider to provider. This is one reason for the huge growth in comparison websites. Providing a user with the ability to search multiple insurance companies has given the customer the ability to make an informed decision.

That said, it is also useful to understand what factors are used to assess the risk and therefore determine the cost of car insurance.

What decides car insurance costs?

There are several factors used by insurance companies in determining your car insurance premiums. It should also be said that each insurer has its own formula and applies these factors in different ways. Hence you will often get a higher quote from a one insurance company against another.

These factors include:

• Your age, gender and location;
• Your driving history;
• The replacement cost of the car;
• How much driving you do each year;
• If the car is parked off road or in a garage;
• Whether the car has security devices fitted;
• If the car has been modified.

How can I influence these factors and reduce costs?

There are certain things that you can do to reduce your car insurance premiums. These include:

• Having an alarm or immobiliser fitted;
• If possible, parking the car off road or in a garage;
• Providing the correct replacement value of the car – This will reduce each year so make sure this is reflected when you get your quotes.

Summary

There are several factors that are used to decide what your insurance premium is. Some you will have influence over, others you will not. By trying to reduce the risk your pose to an insurer, the less you will pay for your insurance.

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