Posts filed under ‘Advice’
Abbreviations and complex financial terms aren’t just bemusing – they could be costing you £428 a year, writes the Money Advice Service.
Research by the service shows 84 per cent of British adults don’t read the terms and conditions when they buy a financial product. Add in a layer of confusion about what various bits of jargon and abbreviations mean, and it’s costing the average British adult £428 a year. That adds up to a staggering £21bn.
Those surveyed had difficulty with common financial terms such as ‘interest’ and ‘budget’. Abbreviations also confused. They might be industry standards, but many Brits struggled to provide the correct definition.
Commonly misunderstood terms and acronyms included EAR (misunderstood by 61 per cent), compound interest (46 per cent), annuity (44 per cent), interest (32 per cent), budget (32 per cent), APR (30 per cent) and ISA (22 per cent).
Those who had taken out a payday loan struggled the most to choose the correct definition. More than half gave the wrong meaning for ‘loan’, while nearly one in five believed you didn’t have to pay a loan back. For these people, the average cost of misunderstanding increased to a massive £1,405.
Of everyone surveyed, there was more than just a financial loss associated with not reading the T&Cs or understanding the jargon. Repercussions included 6 per cent missing out on a holiday, 4 per cent having to move home to their parents, 4 per cent having to take on an extra job and 10 per cent of those who had taken a payday loan having to turn to loan sharks to pay off debts.
Jane Symonds, money expert at the Money Advice Service, said: “Reading and understanding the terms and conditions of a financial product can seem long and unnecessary, but if you don’t, you may end up incurring unexpected penalties and possibly even impact your credit score.
“There are many ways in which you can lose money by not properly understanding terms and conditions. Early repayment charges on loans and mortgages are a common financial headache, and many people fall foul of penalties for taking savings money out early from long term saving accounts, or incur late repayment charges on credit cards.
“Our financial decisions can be life-changing, and if you misunderstand what you’re signing up to, it could haunt you for many years to come. So take time out to fully understand what you’re agreeing to, and visit the Money Advice Service website where we have plenty of tips to help you get to grips with various terms and conditions.”
Mortgage lending jumped to a six-year high in July as the market remained resilient in the face of regulatory change, figures showed today.
A total of £19.1bn was advanced during the month, 7 per cent more than in June and the highest figure since August 2008, according to the Council of Mortgage Lenders.
The group said mortgage activity appeared to have remained robust, despite the tough new affordability criteria introduced under the Mortgage Market Review earlier this year.
But it cautioned that the eventual impact of the regulatory change remained uncertain.
July was the third consecutive month during which lending levels have increased, following a slight dip in March ahead of the introduction of the MMR.
Caroline Offord, CML market and data analyst, said: “Property transactions in the first half of the year showed a 25 per cent increase compared to the same period a year ago, but we expect that intensifying affordability pressures could start to dampen this upwards trend.”
The figures came as minutes from the Bank of England’s Monetary Policy Committee suggested a hike in interest rates could be closer than previously expected.
The minutes showed that two members of the committee vote to raise the Bank Rate from its current record low of 0.5 per cent to 0.75 per cent in August.
It was the first time that the MPC has been split on what the official cost of borrowing should be since July 2011.
External MPC members Martin Weale and Ian McCafferty argued that although wage growth remained weak, it was a lagging indicator of the amount of slack there was in the economy, and rates should begin rising before that slack had been used up.
News of the vote prompted speculation that interest rates could start rising before the end of the year.
But Samuel Tombs, senior UK economist at Capital Economics, pointed out that data released since the MPC’s meeting showing a fall in inflation to 1.6 per cent in July and slower growth in employment, eased the pressure on the Committee to raise rates quickly.
He said: “We still expect the first hike to come in February 2015.
“But, even if the Committee decides to get on the front foot and raise interest rates before the end of the year, low inflation should ensure that the pace at which they rise is extremely gradual by historical standards.”
A 0.25 per cent increase in interest rates would add just over £20 a month to repayments on a £150,000 variable rate mortgage, which moves up and down in line with changes to the Bank Rate.
Meanwhile, the Bank of England’s Agent’s Summary of Business Conditions, also released today, built on previous indications that the housing market is beginning to slow down.
The report said housing transactions had eased in recent months due to a shortage of homes on the market and the introduction of the MMR, which had lengthened the mortgage application process.
It added that there were also signs of an easing in house price inflation, concentrated in the South, with some prices lower than they had been a year earlier, while there were also fewer cases of sealed bids and offers being made over the asking price.
But recent survey data has pointed to a slowdown in growth as more homes have been put on the market and buyers have started to bulk at high asking prices.
Nationwide Building Society said property values inched ahead by just 0.1 per cent in July, while surveyors questioned by the Royal Institution of Chartered Surveyors predicted prices in London, which has been the driving force of the market recovery, would rise by just 1.9 per cent during the coming 12 months.
Your garden acts like a shop window for your home. Fill it with flowers or a subtle blend of plant structure and you will attract passers-by. This, coupled with your ‘for sale’ board, might be just what you need to clinch a deal this August – or at least entice viewers up your garden path, writes Caroline Knight.
If there are gaps in your garden this August, never fear, you are not alone. Gardeners sometimes refer to this wonderful month as dire for flowers due to spent flowerheads, dryness and harsh light. But this flowering vacuum can easily be filled as there are many August stalwarts that bring a touch of magic to pots and borders.
However, select your colours with caution. Psychologists agree that red is the most emotionally intense colour. It stimulates the breathing and heartbeat, so perhaps this is what you need in order to attract a serious buyer. But this bold colour is comparatively difficult to place in a garden, although of course red roses are traditionally popular and ‘hot borders’ make a daring statement. Pink is far easier to accommodate as it is soothing and romantic and blends well with tranquil blue, which can promote peace and calm. Pastel shades of pink, blue and violet look beautiful in a cottage garden or naturalised border.
The colour yellow tends to provoke a reaction, although people have been shown to lose their tempers more easily in a yellow coloured environment. On the opposite side of the spectrum, purple is the colour of royalty and it can suggest luxury and wealth. It makes a splash of grandeur that is instantly noticed – Verbena bonariensis, for example, is seldom ignored. If you really want to make a statement plant yellow and purple together, they will not go unnoticed.
But even the colour green has immense value when carefully manipulated as it is refreshing and calming. Gardens can be beautiful without flowers if they utilise green in various shades, shapes and forms. Variegated forms of foliage such as Hedera helix ‘Gold Heart, shaped balls of Buxus, tall, pencil-thin conifers, strappy and spikey leaves such as Phormium and Astelia, can all be combined to make a spectacular garden that looks just as good in the winter as in the summer. What’s more, green is said to be the easiest colour on the eye, even being credited with improving vision.
Garden of the month on Zoopla
Why do I like this garden? This semi-detached property in York has an outstanding rear garden that will definitely set it apart from its neighbours. The design has been carefully managed to create an illusion of space within a standard rectangular plot. We love the circular lawns which lead the eye around the site, and the pots at the end of the garden together with a shed – they offer a destination that we would like to explore.
Caroline Knight is a garden designer working at Perfect Plants in East Sussex. This online retailer supplies top quality plants including bedding, perennials, shrubs and trees – many of which are home-grown – together with garden essentials. It has a team of dedicated horticultural experts who endeavour to provide an excellent all-round service to customers.
The majority of parents with children aged between four and 11 expect to spend just under £200, although one in 10 will outlay more than £900, writes the Money Advice Service.
With the new school year looming, it’s time to start thinking about essentials like books, uniforms and stationery that you can bank on having to pay for. Money Advice Service research reveals 21 per cent of parents intend to dip into their savings, while 26 per cent say they’ll rely on some form of credit to cover the costs, such as credit cards or an overdraft.
Many parents will have experienced back-to-school spending in previous years, with mixed results. One in six admitted they had overspent in the past, while more than two in five said they expected to blow their budget again this year.
Find properties for sale near your child’s school on the Zoopla website. Simply type the name of the school into the Zoopla search box.
With 17 per cent of parents having admitting to being worried about what it costs to send their children back to school in the past, it makes sense to take steps to avoid any undue stress. Here are five that could help:
- List all the back-to-school essentials you need to buy, with a cost against each. Involve your child in the process so they can see how much you’re spending. With luck they’ll appreciate what you are spending on them and will take care of the items.
- Use the old school network. You don’t have to buy new, especially when it comes to uniforms your child will soon grow out of. The school may have a parents’ club where you can swap or buy trousers, shoes or jumpers for a fraction of what you’d spend at a major retailer.
- Keep your eyes peeled for special offers, sales and discount vouchers (which may be advertised or included in local newspapers or on junk mail).
- Raid your drawers for items of stationery your child will need when they return to school. There is no point in spending a small fortune on the high street when you have plenty of erasers, pens, pencils and writing pads lurking in cupboards at home.
- Start buying early. You may be able to pick up some items before they are sold out and you’re left paying more via the official school uniform provider. Retailers also tend to increase prices as term time draws near, so it pays to plan ahead.
Beyond the back to school shopping spree, it’s also a good time to check your home insurance policy to see if the contents of your child’s school bag are covered.
Research by the Money Advice Service found the average pupil to be carrying £122 worth of gadgets in their school bag, with smartphones most common but also including music players, tablets and calculators.
Don’t presume your home insurance policy will cover these items as standard – 40 per cent of parents found their child’s gadgets were not covered. If your policy doesn’t, find one that will or ask your current policy provider to quote you for this additional cover.
Elderly homeowners are failing to cash in on house price rises due to misunderstandings about how equity release works, research indicated today.
With many retirees finding themselves asset rich but cash poor, 39 per cent of homeowners aged over 55 admit they can see the potential benefits of releasing equity from their home.
But despite being aware of the advantages equity release schemes offer, just 15 per cent say they would consider using one to tap into their housing wealth, according to insurer Aviva.
The main issue is that despite 82 per cent of older homeowners claiming to have a good understanding of the schemes, there is some confusion about how they actually work.
One in 10 people said they knew equity release involved unlocking money tied up in their property, but they they did not understand the details, while 27 per cent thought they involved people having to sell their home and live in it as a tenant.
But in reality this type of scheme refers to so-called home reversion plans, which now account for less than 1 per cent of the equity release market.
Instead, the majority of people who unlock money from their property do so through a lifetime mortgage, under which they borrow money against the value of their home, but it is not repaid until they die or go into long-term care.
The money is either taken as a lump sum or paid as a regular income.
The ownership of the property does not change and the homeowner remains responsible for all bills and maintenance costs.
Recent industry figures showed that a record £641m was unlocked by older homeowners through lifetime mortgages during the first six months of the year.
The schemes are expected to continue to grow in popularity following the introduction of new pension rules giving people more flexibility over how they use their pension pots.
Industry commentators have speculated that the rule change will lead to increasing numbers of people living off their pension savings during their 60s and 70s, before turning to equity release schemes to fund them in the latter years of their life.
But despite some of the obvious benefits of the schemes, they can be expensive, as interest on the loans is not paid until the property is sold, meaning significant sums can accumulate.
A variation of equity release is to take out a drawdown mortgage. Under these loans, money is ring-fenced for equity release, but homeowners only access it as and when they need it, significantly reducing the interest that builds up on the loan.
Many equity release providers will allow homeowners to protect a percentage of the value of their property to be left to their children, overcoming one of the major objections uncovered in the Aviva research, that people wanted to leave their property as an inheritance to their children.
The majority of providers also offer a negative equity guarantee, meaning people’s families will not be left with a bill from the schemes if the outstanding debt exceeds the value of the property.
Despite, many homeowners expressing reservations about the schemes, Aviva found that as people got older, they were more likely to consider equity release, adding that the average age of people taking out one of its plans was 70.
Clive Bolton, Aviva’s managing director, retirement solutions, said many people started out in retirement thinking they would have enough money to last for the rest of their life, but they under-estimated how long they were likely to live.
He said: “We know from our customers’ experiences that equity release can provide a valuable lifeline in later life, often around 70 years of age, when pensioners’ retirement income may be limited and they need some additional money.”