Mortgage Rates Explained

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House buying is a complicated business. First of all you’ve got to pick a location. For most, non-exorbitantly wealthy people this will be in an area that is not too expensive and not too crime-ridden (there will probably be some crime, but there is always some crime, unless you live in a wondrous utopia or a lawless dystopia). Once you’ve picked your area, you’ve got to pick your house. Hopefully it won’t be awful. Of course, it’s best to have a few backups in case your bid isn’t accepted, the house is taken off the market or you lose all your money in a complicated pyramid scheme that, at the time, seemed too good to be true and in actual fact turned out to be entirely that.

One of the final steps – along with the bidding process, the signing of contracts, legal wrangling (isn’t wrangling a great word?) and many a bank meeting – is negotiating the tricky world of mortgage rates.

A mortgage rate is essentially the amount you are charged to borrow money. This rate is determined by all kinds of things, many of them economic. One of the big influences on mortgage interest rates is that hoary old economic phrase: supply and demand. It affects everything from the price of a pint of milk to the price of a half pint of milk. And other stuff too. If the property market is booming and a lot of people are looking for mortgages the interest rate will go up. If on the other hand the market is not in peak condition then interest rates will fall to help encourage interest in the property market.

Another, more personal, issue that is going to affect the interest rate you are offered is your credit rating. This lifelong irritant can really screw thing up. Whether you’re looking for a giant mortgage or a phone contract, you got to have yourself a decent credit rating. If you don’t, well you might just be considered high risk and get yourself stuck with a high interest rate. Of course, impeccably credit rating and your interest rate will be low.

Either way, there’s not much you can do to affect either your credit rating (right now at least) or the current demand in the property market. What you can choose is the kind of mortgage you get. There are three principal mortgage types.

Fixed rate mortgages

A fixed rate mortgage allows the property owner to pay the same rate of interest throughout the entire life of the mortgage. Now as you might imagine this is great if you get a low interest rate and the economy suddenly picks up. You wind up saving a fair bit of money. Of course, if interest rates drop you could be stuck paying a lot more than you wanted to. If interest rates stay down for a long period of time you could potentially refinance you current mortgage to take advantage of this.

Variable Rate Mortgages

The alternative to a fixed rate mortgage is, of course, a non-fixed one, or a variable rate mortgage. That means your interest rate is determined by the current interest rate. If the interest rate is low, your interest rate stays low. The interest rate is generally updated every two years or so and if it does go up in that time then you could get laboured with a high interest rate, at least for a couple of years.

Tracker Mortgages

These are sort of like variable rate mortgages (mainly because the interest rate varies) but are not quite the same. Tracker mortgages are generally linked to the Bank of England’s base rate (this is the rate the Bank of England charges banks for secured lending and impacts everything from mortgages to savings). So if the rate falls you’re in luck, if not, hard luck.

Capped Rate Mortgages

Another variant of the variable mortgage with one subtle difference (the clue is in the title). Interest rates are paid at the lender’s standard variable rate. However if it rise above a predetermined threshold it is capped and will rise no further.

Interest Only Mortgages

An alternative is the interest only mortgage that means you only pay the interest on what you’ve borrowed for a certain period of time. This has plenty of advantages in the short term: lower payment rates, spare cash. However you will have to pay the full amount eventually and unless you plan on investing the money you save in the short term it’s probably best to go with option number one or option number two.

Over to you: Take Charge and Win Yourself… £60 worth of Amazon vouchers, by answering the following question:

What is the current base rate of interest as set by the Bank of England?

Email your answer and contact details to Ash at Answers must be in by 6th Feb. Winner will be randomly selected from correct entries, and notified on Friday 7th February via email. Good luck!

America and its issues with Student Debt

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One in ten Americans have student debt. In relation to the country’s population that is equivalent to 37 million people! On average, each student has about $25,000 in debt according to 2010 figures. What’s even more shocking is that this figure overtook credit cards as the largest source of debt in the country.

What can this be attributed to you ask? Well the rise in tuition costs paired with inflation plays a dramatic role. Another factor to consider is Congress’s inability to stop interest rate hikes on undergraduate loans like the Federal Stafford Loan (doubled from 3.4 to 6.8 last year).

Economists predict that student debt will surpass the $1 trillion mark and continue to rise at a rate of 10% from here on out. This is a frightening reality which is causing many young folks to reconsider earning their degree. Don’t falter though because we’ve joined efforts with the debt experts at Consolidated Credit to create a visual timeline which will paint a clearer picture of your options. If you have not done so yet, take a moment to review your loan’s guidelines, explore alternative financing, or enlist the help of a professional to get your books in check.

Making the decision to quit your job

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It’s never easy to reach a big decision, especially when it affects your financial security. Many people want to leave their jobs, but never quite make the leap as they can’t take the risk of leaving behind that financial security blanket that their job gives them.

But life’s not all about financial security; it’s about fulfilment, too. And if your current job only meets half of that equation, then perhaps it’s time to make a change. Of course, you have to have things in a relative amount of order before you hand in that resignation letter.

If you’re moving onto another job that you’ve already secured, then you don’t necessarily need to wait. Similarly, if you’ve decided to retrain and you’ve sorted out finances to support yourself during the length of your training course, then you’ll need to quit and give your boss as much notice as you can. But if you haven’t got to that stage and you just want out, then it’s probably best advised to hang fire on doing anything hasty until you have a clear plan in mind of what you’re going to do next.

Being in a role that you find unchallenging isn’t such a bad place to be in when you’re making plans. It will keep your costs covered and perhaps allow you to start putting some savings to one side for that moment when you make the leap.

When deciding what to do next, talk to lots of different people about what you want to get out of your working life and find out what the people you know find satisfying and rewarding. The more people you talk to, the more ideas you’ll get and the more knowledge you’ll accumulate. As well as talking to people you know, you might consider talking to someone who can help you get a fresh perspective on your situation. Some people who feel they are at a crossroads in life will have a tarot reading at TheCircle to get a more objective view of where they are in life now and to look at where they might life to take them in the future.

Don’t panic when you’re looking to change your life, there is always time to make a change, and the important thing is to be as prepared as possible when you make that big step.

Making the Right Decision When Moving House

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For the majority of people, getting a foot on the property ladder is becoming increasingly difficult, so if you’re in a position to take the plunge it’s important to make the right decision. Buying a property can often take many months and there’s no point rushing into anything simply because you are impatient to move. As with any big financial decision there are certain factors you should take into consideration particularly when buying a new home.

Establish a realistic budget

You may think you have a good deposit saved up but many people don’t realise all the additional costs which come with buying a house. These can have an impact on the type of property you can afford to buy so it’s important to be aware of these costs before you start house hunting. Some of these expenses can include stamp duty, solicitor’s fees, mortgage arrangement fees and the valuation fee. If you are taking out a mortgage, speak to your advisor to see how much you will be able to borrow so that you have a figure in mind for when you start searching for a home.

Research your location

Location is crucial when buying a home. If you are a family you might look for amenities such as schools and parks whereas if you are a professional then good transport links might be a priority. You can also do research into the crime rates in the area or speak to someone who has a good knowledge of the area. For example, if you are buying a property in Mayfair, it would be wise to speak to a Mayfair estate agents who can give you a detailed insight into your chosen location.

Go on lots of viewings

Going on as many viewings as possible will give you a good indication of what’s available in the area in relation to your budget. It also means you won’t rush into a decision by purchasing the first house you see. It’s easy to find yourself caught up in the excitement of house hunting but remember the first house you see may not necessarily be the best.

Be patient

For most people it takes many months to find, purchase and move into their new home. Try to be patient and remember that such a big step will take longer than a few weeks. If the house is right for you then it will be worth the wait.

How to reduce home insurance costs

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We all have plenty of necessities that we have to pay for in life, and home insurance is one of them. Even if you don’t own your own home and therefore don’t need buildings cover, it’s a risk not to have home insurance contents cover in place. If you lost everything in a fire, it would really be a blow to have to replace everything without insurance.

Most homeowners require both buildings and contents cover and many insurers offer a discount for those customers taking out a combined policy. There are other ways that you can save money on the insurance premiums though.

For a start, you should make use of an insurance comparison website like igo4, which will compare a number of home insurance products from different providers and bring up a list of the different results. So all the hard work of calling different insurers is done for you; all you need to do is read the details of what each policy offers and decide which one to choose.

And if the quotes don’t seem as low as you were hoping, there are other ways you can look at reducing the cost of home insurance.

Many insurers add in extra cover that will increase the annual costs of insurance. A great example is home emergency cover. This is where you are covered for home emergencies such as a burst pipe, the boiler breaking down. With home emergency cover, the insurer will send out a service engineer to assess the problem within a very short time period and make repairs up to a ceiling amount (usually around £500). This would be a great boon in times of such a home emergency, but it is an additional option on a home insurance policy that you don’t have to have. By taking home emergency cover off your policy quote, you could save a small amount.

Similarly you don’t need to have personal possessions cover included on your home insurance policy. If you do, it means that portable items you take out of your home – such as your camera, phone or iPOD – are covered if they are stolen away from your home. However, this is another option that will increase the cost of your premiums. You need to weigh up how useful it might be to you and whether it’s worth the increase in the premiums.

Take the time to read through each insurance quote you receive and check you are happy with the level of cover provided before you decide which company to use. A little research today could save you a significant amount on your annual home insurance premiums.

Dealing with PPI Claims the Best Way

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In a previous article we have examined the Payment Protection Insurance scandal and why it is big news, as well as how thousands of people are claiming back all the PPI premiums they have had to pay over the years.  An important issue has emerged however – the misunderstanding of eligibility for a refund or PPI compensation.

Everyone who has taken a PPI policy is not eligible for a payout. If you had taken the policy knowing about all the PPI basics, and the procedure involved is also legal, then there is no cause for a PPI complaint or refund to be awarded to you. You cannot claim the money back as you had bought an insurance product that you wanted and willingly paid for.

Of course, most people were actually mis-sold the product by the lenders from not being told it was optional, and not even being eligible for the policy (due to self-employment etc). In most cases, despite the lenders being often found to reject most claims, the claims are valid and you are entitled to a refund payout.

Making PPI Claims by Yourself

Though there are a few cases where individuals succeed by making the claim directly, this is not a well-advised move. If you are well versed with legal proceedings, you can do the claim yourself. It is worth bearing in mind that the entire procedure will be made difficult as the policy provider or the bank involved will try to dispute the claim to their level best. Paying for every single complaint is not possible and with the multitude of intricacies present, the chance of your winning the claim may be low.

Choosing a Claim Company

By approaching PPI claim agencies, if they are reputable such as the PPI Claims Adviceline, you can be assured of having a strong case put forward on your behalf, by people who are well versed in getting around the banker’s barriers. The claim company will ask for all the relevant details to present your case in a proper manner. The claim company also conducts an audit on the claim to verify that you have the necessary requirements to make the claim. Even if you are thinking of hiring a solicitor, you should first verify with a claim agency to evaluate your case and get the appropriate PPI help. They will assess your eligibility first. You can also determine the estimated amount of money you can get through the claim with an online PPI calculator.  Fees from your refund will only be taken if you win your case so you know that they have a real incentive for you to succeed too.

Save money in spite of energy price rises

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The energy companies may have increased their prices for the winter, but that doesn’t mean you can’t save some money in both the short and long term. One way is to see what fixed deals you can get with the energy companies to help safeguard you against any future price rises. These types of deals usually keep the cost of energy at a fixed rate for a certain amount of time, which could be over a year, with the longest fixed deal being until December 2017 with Npower. A cheaper tariff available now offers an average yearly saving of £183 at £1,170 a year, with others costing an average of £1353 a year.

When looking to save money on energy costs it is also a good idea to compare prices online through comparison websites as this can provide a simple way of seeing what the best price is. Check your last energy bill to see an accurate figure of your energy usage – essential to get the best quote for your household usage.

Aside from this you may want to consider taking measures to help keep heat in your house, this can be home insulation of uncovered pipes to protecting your house from losing heat to draught. If you decide otherwise you may want to simply turn your heating temperature by a few degrees Celsius as 1oC could save you up to £65 per year, or you could decide to wear thicker clothes rather than put the heating on for as long.

Companies who have or are going to put prices up include British Gas by 10.4% for electricity and 8.4% for gas, SSE by 8.2% for gas and electricity and finally Npower who plan to charge 11.1 per cent more for gas and 9.3% more for electricity on the 1st of December. Scottish Power, E.On and EDF Energy are the three other large energy suppliers who haven’t declared a rise as of now.

Another way to save some money on your energy bills is to make sure you are paying the right amount, be sure to frequently submit meter readings to your energy supplier as well as buying gas and electricity from the same company – as often this entails a dual fuel discount. When paying bills you may also want to switch to direct debit and online bills, again as this usually offers a small discount too. With prices like these, every small bit helps.

Check pension pay-out rate variations

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New figures have shown that some of Britain’s largest insurance firms are putting on offer pension schemes which pay-out as much as 23% less than some of the leading pay-out rates which the market has to offer. The Association of British Insurers (ABI) published this anomaly in a new feature on their website. The new tool aims to aid people who are close to their retirement or who are planning for future retirement find the best annual rate which they can get on their pension in order to secure a steady income to support them through their retirement for the remainder of their lives. Moreover, the website appears to provide information on some pension schemes and annuities which provide pensioner with very unfair and poor return on their money.

The Reliance Mutual provides an offer of a payment of £1,099 annually based on a pensioner who has stacked up £18,000 over the years he has been paying installments and is 65 years of age when he beings to rely on the fund. However, £839 is being put on offer by Scottish Widows who are owned by Lloyds Banking Group which is somewhat 23% less than the amount which Reliant Mutual is willing to pay out to its pensioners. David Robbins who is the pensions consultant at Tower Watson recently stated that the 23% difference is significant and can have a great impact on a person’s finance over the period of 25 years.

However, the rates being offered by pension groups are different and will vary based on a person’s individual situation and circumstance. The factors which will influence the rate which will be offered to a person include the postcode which the customer resides as well as his health and the condition he is in. Moreover, whether or not the person looking to save for a pension wishes to make a plan to provide for his partner following his death is also something which will affect the payout rate offered to them.

The online comparison service compiled by ABI compares 27 insurers sample rates which are offered to customers in the United Kingdom. Tom McPhail who is an employee at financial service providers Hargreaves Lansdown believes that looking around for the best value for your money is absolutely crucial and a necessity. He states that savers must consider their options when purchasing an annuity as well as the fact whether they want to purchase one at all.

More information about finances for the over 50s can be found at

How to save money while on holiday

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You may find saving money while on holiday difficult, with these top tips you can reduce your expenditure and make sure that you don’t have any nasty surprises while enjoying your holiday.

If you’re looking to exchange your currency, then the best time to do it is when you are on holiday.  Withdrawing from a cash machine often yields you more currency than if you had exchanged it back home, despite any charges.  It is important to check beforehand what the charge that your bank or building society will be for withdrawing cash abroad. Another option is to exchange your British pounds for the local currency at shops which charge no commission.

On the other hand choosing to use just your debit or credit card may be the best way to go if you want to save money. Cards will often offer a better rate than cash with different cards offering competitive deals between them. Two notable cards, Norwich and Peterborough Building Society’s Gold Light and Gold Classic have no charge while others tend to have an average fee of £2. Similarly to withdrawing cash abroad it is important to first check the charge for using your card abroad as well as making sure that the bank or building society knows that you will be abroad so that you card does not get declined because of fraud prevention.

If you don’t want to use a card but still want the benefits of the best rates then you may want to buy a pre-paid card which holds your chosen currency. Visit a price comparison site to narrow your search down and be sure to read all  the terms and conditions as it may not be easy to retrieve any unspent money on these types of cards.

If you know your luggage is likely to weigh more than the limit and are expecting baggage fees then you should book in advance, this reduces the fees you will have to pay the airline, an example of the saving you could make is the £4 difference per kilo with EasyJet.

All inclusive isn’t always the best choice when booking a holiday package, they often tend to have a very limited range of food and also prevent you from leaving the hotel at dinner unless you want to pay even more money. Think carefully when picking your package and if you do decide to stick with all inclusive make sure that you read all of the terms to ensure that all your meals and drinks are included in the price.

Finally, you should make it your priority to purchase travel insurance, this protects you while abroad from sudden expenses and offers you some peace of mind. However, be sure to read the terms and conditions of insurance packages you are interested ones, as cheaper ones often miss out very important aspects, such as third party liability cover as well as medical cover. Also be certain that the package protects against end supplier failure, this means that you are covered in the event of the supplier going bust. You should still purchase travel insurance even if you have an EHIC card as this only provides you with emergency public hospital care.

Negotiating a Pay Rise or Promotion

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In previous times in the workforce, promotions and pay rises depended on length of service, experience, and (often) connections. With the modern workforce of the 21st century, that is widely no longer the case. Employees can often create or work towards promotions or pay rises. In some industries though, such as academia and the public sector, pay rises and promotions are calculated according to strict pay scales, and promotion patterns that cannot be altered.  However, in most other fields many employees have both the ability and opportunity to create opportunities for advancement and pay rises. Although daunting and often hard work, asking for that promotion or pay rise can be surprisingly successful.  To achieve that, here are a few hints.

Long term goal

Arranging an opportunity to put yourself forward can take a long time. Be prepared for weeks, if not month, of careful, strategic thinking and planning in this matter; it is very much a long term project to be worked on slowly but surely.

Keep a career journal. Essentially, keep a diary or log over a certain period detailing the area you are working in, and when and how you feel that you have made a difference to the company.  In the journal, record things such as ideas for improvement that you proposed, efforts made to improve knowledge or skills base, any new skills acquired that are of benefit to the company, and similar. In essence, anything that you have done to benefit the company, or to increase your ability to perform your job. The evidence in the journal will impress the right people when making your pitch.

It is important to remember that your company might not be able to offer you that promotion or pay rise at that particular time, even if you can demonstrate your aptitude and worth. Find out in advance whether the company is indeed in a position to offer you that pay rise or promotion, to avoid disappointment or an awkward refusal. Choose the right time to make your pitch.

Who to pitch to?

Make sure that you target the right person. Do your research, and find out exactly who it is that you need to approach in the matter of career progression. Obviously, keep your immediate supervisor informed of your intentions- but ultimately you need to pitch to person who can actually say ‘yes’.  Once identified, it could take some time to actually get access to the person concerned. Once you have been able to approach them, make yourself known to them. That does not mean suck up to them, or fetch and carry for them- rather, demonstrate that you are a vital part of the workforce.


Prepare for your pitch as you would for a job interview. Know your audience, and what qualities they are looking for to fill that role, or to grant that pay rise. Ensure that you have done your research, know what to aim for, and can demonstrate that you deserve this promotion, and that it is in the company’s best interests, and not just in furthering your own career.

Think carefully as to how to sell yourself. Demonstrate your previous work accomplishments, and emphasise your future benefit and potential to the company. Show how you would fit in well at the next grade or salary band, and what you would bring to that by virtue of what you have done to prepare for this next step. Further, show your commitment to the company by telling them where you see yourself in the future whilst working for them- and show them how you can help the company in the future.

If you have done your research and groundwork carefully, and are persuasive enough, then you should get a positive reply- and soon be enjoying that promotion or extra money.  If unsuccessful, do not be put off, but try again. Alternatively, consider your position, and where you are now, and where you want to be. It may be that your current role or company does not fit with your plans and ambitions. If so, perhaps it is time to find a new job. Whilst remaining at your current role, do you research, and apply. Look online, see the classifieds in newspapers, use networks, or, if working in a specialist are such as finance, use industry specific or specialist recruitment consultants, such as finance recruitment agency Randstad.