Everything Finance

You’ve heard it all before - there’s a credit crunch going on. The world economy is in danger of catching a cold, and America’s already looking quite ill. It’s an untimely reminder that after years of sustained growth and low inflation, things can always go back to being not quite as good. It’s a particularly dangerous climate to be in for homeowners, with the house price boom stalling and credit becoming less readily available. In December of last year accountancy firm PwC published a worrying report stating that insolvency levels could rise to record levels as 1.4 million come off their fixed rate mortgage deals. Things might be looking gloomy for homeowners, but there are certainly ways to avoid the onset of problems. Here’s a guide to avoiding the problems.

Think About Remortgaging

If you’re one of the homeowners coming off your fixed rate then you should really think about refinancing sooner rather than later. PwC anticipated that the average household will be stung by an extra £140 on their monthly repayments when they come of the low fixed rate deals, the majority of which were agreed during periods of low interest rates in 2003. If you can secure another low rate deal from another provider then you could potentially cutting off a large extra bill. Take a look at Alliance and Leicester’s mortgage calculator to see what you can afford and what you could get.

And the rest...

It’s got to be said that merely remortgaging isn’t the only thing you should consider if your monthly repayments are going down to the wire. Websites such as uSwitch are all about empowering the consumer into getting the best deals, and they’re much easier to find than you might think. How about changing your insurance premiums, for instance? ASDA Finance have found that nine out of ten customers save money when switching to their life insurance, and if your quote is beaten, they state on their emails that they want to know where it’s come from so they can match it.

When your debt is getting worse, not better

Being in some debt and paying for it is close to inevitable when you’ve got a house and a family, but things can go from uncomfortable to terrible if you take a liberal attitude towards debts. Failing to repay your overdraft and exceeding the limit regularly is a sign of credit distress, as is taking on new credit without clearing the old. Some of the best ways to clear costly debt at the moment is Virgin Money’s credit card, which has 0% on balance transfers for 15 months (2.98% fee) and you can transfer to your current account. Additionally, if you’re paying for an overdraft facility, then you should probably consider one of Alliance and Leicester’s premier current accounts. They offer an interest free overdraft of up to £2500 for the first 12 months, and once you’re in credit you’ll receive 8.5% AER per year.

Rates quoted in this article are correct at the date of writing (11/03/08) and may be subject to change at the lender’s discretion.