Child Trust Funds Blossom

There's been many happy returns for three million kids born since September 2002 because of their Child Trust Funds.

Three years ago the government sent out the first of their tax-free Fund vouchers and now they are growing well.

Parents received at least £250 to invest in a savings account until their child's 18th birthday. Poorer families got £500.

They will receive a second £250 when their child reaches seven.

The vouchers can be invested in cash accounts with banks or building societies or in stocks and shares.

And, as our tables show, they are already showing handsome returns. Each £250 invested in cash funds has grown to £294 on average - a yearly return of 5.6 per cent.

But those invested in "stakeholder" shares funds have done even better with average returns, despite the recent stock market setback, more than seven per cent.

These figures confirm our view that over a long period - such as 18 years - your child should benefit far more by having their money invested in shares.

To provide added security these "stakeholder" funds are invested in shares initially and lock in gains by switching into cash as their 18th birthday approaches.

Parents and relations can add up to £100 a month - £1,200 a year - to a child's fund.

David White, chief executive of Child Trust Fund provider Children's Mutual, says that more than half of parents make monthly top-ups averaging over £23.

If they keep this up their child can expect to receive £9,500. And families who chip in the maximum £1,200 a year could see their children collecting as much as £37,000 by their 18th birthday.

Among those likely to benefit are five-year-old Lola Walker, her two-year-old sister Isabel and their six-month-old baby brother Max.

Their parents, Elaine, 38, and Jon, 37, and both sets of grandparents are, between them, chipping in £100 a month to the two girls' Children's Mutual Trust Funds and are about to start doing the same for Max.

Elaine, 37, a company director from Easingwold, North Yorks, says: "They face a much tougher start in life than we had.

"We want them to use the money in whatever way they wish - for a home, college fees or just to travel."

The sooner you invest in your child's Trust Fund voucher the more it will earn. Find out more at www.childtrustfund.gov.uk or call 0845 302 1470.

Source: Mirror.co.uk

More homeowners depend on debt management

In the last 12 months, the number of homeowners joining Gregory Pennington's debt management plan has jumped dramatically. The message is clear: in today's stormy economic climate, more and more homeowners are seeing debt management as the best way to tackle rising mortgage payments and rising debt payments at the same time.

As mortgages become more expensive, homeowners throughout the UK are finding their finances stretched to breaking-point. However, the decline in house prices could signify an end to the decade-long equity growth which many of them had come to count on as a way to raise cash or consolidate their debts.

More worrying still, any drop in prices raises the prospect of negative equity: being stuck paying off a mortgage that's higher than the value of the house.

"Many of today's homeowners are carrying record levels of debt," says a spokesperson for debt management specialist Gregory Pennington, which also provides free debt advice and online resources such as Debt and You, and a 'Help for Homeowners' guide on the forthcoming Think Money site.

"On top of this, rising mortgage costs and falling house prices are aggravating their debt problems and limiting their access to debt solutions such as remortgages or secured debt consolidation loans."

In their search for alternative debt solutions, thousands of homeowners are discovering that today's economic troubles make debt management a particularly appealing solution. As a result, they're turning to debt management companies which actively negotiate on their behalf, asking creditors to accept lower payments, freeze interest and waive charges. "By reducing the monthly cost of their unsecured debts, debt management frees up money they need to keep up with their mortgage payments and start clearing any arrears that may have accrued."

"At Gregory Pennington, our debt management plan also provides simplicity: we handle all letters and phone calls, and distribute payments among a client's unsecured creditors. Rather than dealing with multiple creditors, they simply make one (lower) monthly payment and leave the rest to us."

Founded in 1993, Gregory Pennington is a founding member of DEMSA, the Debt Managers Standards Association. "With 15 years of debt management expertise, we have the experience – and the industry contacts – to provide an unsurpassed level of service, which is why over 40,000 people are trusting us to manage their debts, and that number's growing all the time."

"Many of them come to us not knowing what solution they need. They tend to be pleasantly surprised when they realise they have a choice of debt solutions. This really emphasises the added value of belonging to the Think Money Group – as part of the Group, we can provide a comprehensive range of solutions, from debt management and IVAs to debt consolidation loans, remortgages and managed bank accounts."

Borrowers Warned Bout Becoming Complacent

Paymentcare is warning borrowers against becoming complacent about potential rate cuts by lenders.

The payment protection insurance website says any cut could provide only short-term relief, as recent analysis forecasts up to 11,000 job losses in financial services.

The Centre for Economic and Business Research has forecasted that up to 11,000 financial services jobs could be lost during the next two years.

Shane Craig, managing director of Paymentcare.co.uk, says: "With thousands of jobs predicted to go this year as businesses tighten their belts in response to the credit crunch, any savings made from reduced mortgage repayments will be irrelevant to those who find themselves out of work."

Craig says rate cuts are being regarded by borrowers as a cause for celebration.

But he warns that with the cost of everyday necessities having soared – petrol, food, gas and electricity – it would be foolhardy to interpret the latest rate cut as an excuse to relax.

For those who have no other way of meeting mortgage repayments if they lose their income, Craig says the sensible response to today's rate cut would be to use the saving to pay for some form of mortgage protection.

Craig adds: "When times are lean and blowing cash on non-essentials seems to be out of the question, it's tempting to use a rate cut as an excuse to splash out on a treat, but considering the cost could be about the same, taking out a mortgage payment protection insurance policy is clearly a better use of the money."

Source: MortgageStrategy

Credit Card Companies Feel the Strain

Since last November, credit card companies have slashed the amount of direct mail they send out, according to figures released by Mintel, a market research firm. Mintel found that fewer pieces had gone out in February, the last month for which figures were available, than in any month since April 2004. Mintel extrapolated the figures from a panel of 9,700 households, recruited afresh every month.
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There is day-to-day news that we're bordering on recession, said Lisa Hronek, an analyst at Mintel. "They may be scaling back in response to their target audience just not being there any more, or not as willing to take on new debt."

The cutbacks affected mail sent both to current customers and potential ones. Mail to existing customers, which accounted for just under a quarter of the total, had the sharpest drop.

One company, however, has been unaffected: Chase sent more than twice as much mail last year as Bank of America, at No. 2. Synovate, which also tracks such mailings, said Chase had ramped up to fill the void.

Source: NewYorkTimes

Graduate Mortgages

Graduate Mortgages
Graduate mortgages are a relatively new product on the mortgage market.

They are typically available to people who have been employed for over a year and who have graduated within the last seven years. Often, the loans include lending to cover costs associated with taking out a mortgage and buying a house, such as legal fees and stamp duty.

Most lenders that promote graduate mortgages offer interest only, discounted rate and tracker options. Interest only mortgages are particularly attractive to recent graduates because monthly repayments are considerably lower than for other types of mortgages.

Income multiples can be up to four times the borrower's salary, although some mortgage lenders will even go above this. For those graduates who qualify as professional, mortgages from some suppliers such as Natwest will offer enhanced income multiples.

Discounted rates are very useful for recent graduates as this will often mean that a lower rate is offered for a set period, for example, 2 to 5 years. During this time, there are normally penalties if the mortgage is redeemed during the discount period.

For a good overview of the current mortgage products available on the market it's worth working out what you can afford properly. Take a look at Alliance and Leicester's mortgage calculator to work out your mortgage accurately.

Source: MoneyHighStreet

Self Certification Mortgages

Self Certification Mortgages
These are designed mainly for those who have a sizeable deposit but are unable to show their true earnings, in most cases the self-employed or any person who has an irregular income. For example, people with seasonal jobs like tourism or those whose income is largely commission based.

When applying for a mortgage one is normally asked to declare your earning and to provide three years' accounts. Lenders will want to see net profits however often accounts are produced to save tax. This contradiction has lead over the last ten years to the introduction of self-certified mortgages.

Lenders will often require a large deposit in excess of 70 per cent of the value of the property, although these figures do vary. Interest rates are slightly higher to represent the risk posed by the loan.

Source: MoneyHighStreet

Cashback Mortgages

Cashback Mortgages
Buying a home, especially for first-time buyers can be financially pressurised. Extra cash, when you need it most, can be a particularly useful advantage of cash back mortgages for example to cover a mortgage valuation or contribute to legal costs.

As an incentive, lenders offer a lump sum of cash either once a mortgage has been taken out or upon the completion of the mortgage. Amounts vary depending upon lenders, schemes and the size of the loan from a flat fee to a percentage of the loan.

Cashback is normally offered as a package of benefits e.g. linked with a discount, but pure cashback products are not uncommon, sometimes stretching to 5 or even 6% of the loan value.

Other forms of cash back mortgage include the product being offered alongside another type of loan such as a fixed-rate mortgage or a discount rate mortgage where it's likely to be substantially smaller.

Like most loans of this nature, early repayment penalties can be expensive, and may apply for a long period (5 to 7 years where a sizeable cashback has been paid). Cash back mortgages also tend to attract higher application fees and higher interest rates

Source: MoneyHighStreet