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

ISAs up at Hargreaves Lansdown

Sales of Hargreaves Lansdown's independent savings accounts (Isas) have increased despite the prevailing economic conditions.

Figures from the Bristol-based investment manager show that the volume of Isas sold grew by two per cent in the year to April to hit £430 million.

Meanwhile, investments in self invested personal pension schemes (Sipps) were also up, rising by 53 per cent to £1.16 billion.

Chief executive Peter Hargreaves said: "It is pleasing to report that despite the market creating poor trading conditions for the tax year ended 5th April 2008, we have taken more into our Isa and our Sipp than in the previous year.

"The full benefit of assets gathered this year will be reflected in the 2009 financial year, in the form of a full year of revenue."

He added: "Our results continue to demonstrate the resilience of the Hargreaves Lansdown business model."

The firm, which listed on the stock exchange in May last year, is expected to return a full-year profit of £57 million.

Source: LondonStockExchange

Mortgage Slump - Biggest in 16 Years

The number of home buyers taking out mortgages for house purchase slumped to a 16 year low last month, it has been revealed.

Figures from the Council of Mortgage Lenders (CML) show that just 49,000 home loans were approved during February - down 3.5 per cent compared with February.

The fall is the fourth noted in consecutive months and means that the number of home loans approved in the period has fallen 33 per cent year on year.

Michael Coogan, director general of the CML, attributed the decline to the credit crunch, which has meant that banks are turning away increasing numbers of applicants.

He commented: "The February figures relate to completions of transactions started several months ago.

"More recently, there has been consistent evidence of tightening in lending criteria which will lead to shrinking pipelines of new business as the recent Bank of England's credit condition survey made clear."

RBS Installs Anti Fraud Banking System

The Royal Bank of Scotland is installing a direct debit and debit card anti-fraud system from Experian that, amongst other things, checks the address of both parties before allowing the transaction to progress.

The system - known as Banking Wizard Absolute - is designed to prevent fraud, as well as transaction mistakes that cost banks and businesses a lot of money every year.

It's intriguing that the RBS is deploying this technology on its debit card rather than credit card transaction system, as I've always been under the impression that banks are, shall we say, less protective of customer's money than their own.

Having said that, the RBS has a history of innovation on its plastic payments services. It was the first bank to implement photo IDs on it debit cards and the first to implement neural networking anti-fraud technology on its card transaction systems in the 1990s.

Jane Barber, head of product development at RBS, said the bank is looking to reduce the number of failed transactions - aha, so there's an ulterior motive -Ed - as well as cutting down on fraud.

Source: SecurityProPortal

Charging Orders Are Security For Your Creditors

As a nation, we owe over £1.4 trillion. For some people, their share of that total is simply too much – and when borrowers worry about debt, so do lenders.

From unsecured debt...
Almost £230 billion of the UK's personal debt is unsecured: there's no property backing it up, so if borrowers don't make their payments, lenders have to go to the courts for help.

It's important to understand that courts aren't there to punish people; they're there to resolve disputes. If the court feels it's the best way of helping the borrower repay a debt at a rate they can afford, it can issue a County Court Judgment (CCJ), laying down a new payment plan which they must follow. If this doesn't work out, the lender can then ask the court to take enforcement actions. If the court thinks it's necessary, it can issue a Warrant of Execution (and send the bailiffs to the borrower's home), an Attachment of Earnings (and take money directly from the borrower's salary), or a Charging Order (see below).

...to secured debt
A Charging Order is only an option if the borrower is a homeowner.

Basically, a Charging Order turns an unsecured debt into a secured debt by securing it against the borrower's property. If the borrower doesn't then keep up payments on the newly-secured debt, the lender has the option of asking the court to issue an Order for Sale (forcing a sale of the property), although this tends to be a last resort – they know they'll receive the balance of the debt when the property is sold.

Between 2000 and 2006, the number of applications for Charging Orders grew from around 16,000 to almost 93,000. But there's no guarantee the court will grant either a Charging Order or an Order for Sale. After all, the borrower entered into the debt on the grounds that it wouldn't be secured against property, so the court would need to be convinced that a Charging Order is the best way to make sure the debt is repaid.

Staying out of court...
In most cases, there's no need to end up with a Charging Order – or even to end up in court. When someone can't keep up with their payments, there's a wide range of debt solutions that could help them. They could reduce their monthly payments by consolidating their debts, or join a debt management plan and ask debt professionals to negotiate with their lenders on their behalf. People with larger debts could consider an IVA (Individual Voluntary Arrangement).

And most creditors would rather come to an agreement (see our Ten Golden Rules for talking to non-priority creditors) than take legal action – although they're not likely to accept lower payments, waive charges or freeze interest unless they see the borrower doing their best to pay off their debts.

Source: DebtAdvisersDirect.co.uk

Managing Debt - Can you do it yourself?

Many of us these days are trying to cope with high levels of debt, and for some of us managing our monthly budget can become extremely difficult simply because of the level of debt involved.

An increasing number of people have found themselves deep in debt over recent years, hence the concern over the level of personal consumer debt in the UK.

In fact due to the high debt levels and financial issues that consumers have to deal with, a number of resources and solutions have been put into place over recent years to help those in high levels of debt.

There are a number of different solutions that have been put into place to help those in debt, and consumers that feel that they could benefit from professional and expert assistance or advice in relation to their finances can look into the different options available in order to find the best one for their needs and circumstances.

You will find a wide range of agencies, firms, and industry professionals that will be able to offer sound advice, assistance, and put forward solutions to help you with your debt problems, but it is important that you research your options carefully in order to ensure that you choose the right route.

Amongst the different solutions that are in place for those in high levels of debt are bankruptcy, which is for the most severe cases of unmanageable debt; Individual Voluntary Arrangements, which are known as a softer alternative to bankruptcy; and debt management plans, where the consumer pays a set monthly amount to a debt management firm, who then distribute this sum between the creditors.

There are also a number of other solutions, and this includes simply seeking debt management advice from a professional or going to debt management counselling.

However, there are many people who would prefer to deal with their debt problems themselves rather than go through an outside agency or person. This is not to say that you should bury your head in the sand and pretend that you do not have debt problems that are causing you a problem – this is the worst thing that you can do, and could result in making the situation far worse, and it can quickly get out of control.

However, there are some sensible solutions that you could look at putting into place yourself, which can help to ease your debt problems and reduce your monthly outgoings.

Consolidation: Consolidating your existing debts is one way of reducing the financial burden without having to seek outside advice or assistance, other than finding a suitable lender to offer you a consolidation loan.

You will find a wide range of lenders offering this type of loan, and you can get consolidation loans on a secured or an unsecured basis, depending on your needs and circumstances.

The idea behind these loans is that you use the money to pay off your existing, more expensive debts, such as higher interest loans, credit cards, store cards, catalogues, etc. and this will leave you with just one debt to deal with each month rather than a variety of debts to juggle.

By finding a low rate consolidation loan you can also reduce the amount that you have to pay out each month, as the repayment on your consolidation loan may be far less than the combined repayments on your existing debts.

Coming to an arrangement with creditors: If you do not want to go on a debt management plan officially, but you do need to decrease your debt repayments in order to manage your finances then you may be able to come to an arrangement with your creditors individually.

In order to find out whether your creditors could help you out by agreeing to a lower repayment on the debt you should contact them in writing explaining your situation, outlining your income and outgoings, and putting forward a reasonable monthly repayment offer.

Wait a couple of weeks and then contact them by phone to see whether your letter was received, and whether the creditor is prepared to agree to your proposal. In the meantime, whilst you are waiting for a response, make sure that you keep up with repayments on your debts, as otherwise this could go against you.

Check your outgoings and make cutbacks: You may find that you can reduce your monthly outgoings by a significant amount simply by going through your outgoings and making cutbacks wherever possible.

Check through your outgoings carefully and make sure that you are not paying excessive amounts for services and products, such as insurance, mobile, etc.

If you feel you are, take the time to try and switch to a cheaper product of provider, as this could save you a small fortune.

Source: ThriftyScot

Rate Cut Likely

The Bank of England faces its most critical interest rate decision in 11 years this week as a key survey will show business confidence collapsing and bankers warn of a further squeeze on homebuyers.

The British Chambers of Commerce economic survey due this week will highlight rising fears among British firms, while the housing market will face a further battering as more banks are expected to tighten their mortgage terms or scrap loan deals altogether.
Signs that the credit crunch is hitting the wider economy are likely to push the Bank towards a cut in interest rates. But some economists fear this will fan inflation and stoke the threat of a public-sector pay row.

On balance, City economists are betting on a quarter-point cut to 5% from the Bank's Monetary Policy Committee on Thursday as the gloomy quarterly survey from the BCC and the mortgage market turmoil are expected to outweigh inflation fears. But the decision is one of the hardest yet faced by the nine-member rate-setting panel, which was set up in 1997.

This weekend, Halifax joined other lenders in tightening terms. Halifax borrowers who cannot offer a 25% deposit will pay higher rates, though the bank has cut rates for those with a deposit of more than 25%.

This follows moves in the past week by lenders including Barclays, the Co-op and Nationwide either to scrap mortgage products, raise rates or demand bigger deposits. Bankers believe that now Halifax has joined the trend, more lenders will follow suit.

Meanwhile, the BCC survey for the first quarter is expected to show both the manufacturing and service sectors shrouded in gloom as the credit crunch and financial turbulence take their toll. It is likely to show domestic orders slowing, along with investment in both sectors. And manufacturers are expected to report slowing exports.

Were that the whole story, the MPC could cut rates with a clear conscience. But the survey will also show that firms are planning to put up prices, making it harder for the Bank to cut rates without risking higher inflation.

On top of Thursday's likely cut, money markets are betting on at least one more by the end of 2008, with rates then possibly being as low as 4.5%.

'A cut seems likely,' said George Buckley, chief UK economist at Deutsche Bank. 'The credit crisis is likely to produce further weakness in the UK economy. Additional timely rate cuts will be needed.'

But Richard Jeffrey of securities group Ingenious said: 'The MPC should do nothing. A rebalancing of income and spending will not occur if the MPC simply tries to ameliorate current distress.'

 

Source: ThisIsMoney