Reducing your credit card debts

Over recent years the UK has become a nation that has become more and more reliant on using plastic to pay for items. There are many reasons why people turn to credit cards for their purchases. Credit cards are far more convenience and far easier than having to carry cash around or deal with cheques. Credit cards also enable us to make purchases without having to pay up front, and we can even make purchases and spread the repayments, fuelling the buy now and pay later culture that has become so popular in the UK. Read more

Tags: control, appeal, buy, credit card debts, expensive purchase, period, repayments, rise prospect

Younger couples could be better off renting than buying property

Industry experts have stated that younger couples on average incomes could be far better off financially renting a property in England and Wales rather than purchasing.

Although there is no investment element in renting a property it is estimated that the cost of renting an average two or three bed house in England and Wales is around two thirds the cost of a 100% mortgage, making it the more affordable option for those on average incomes.

In the past the cost of renting a home was more or less the same as taking out a mortgage to buy one, and therefore purchasing was the more sensible option. However, due to the rising value of property in England and Wales, which has rocketed over recent years, coupled with rising interest rates, which have been hiked up five times since August 2006, mortgage costs are sky high at present, and many couples and families are now turning to rental properties.

One industry professional involved in the research stated: “Not too long ago, there was little difference between the costs of buying and renting. But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings, and the costs of renting have as a result fallen relative to the costs of buying.”

Research shows that the amount of money that first time buyers now need o be earning in order to get a mortgage is higher than ever, making it increasingly difficult for younger couples and families to get onto the property ladder even with the availability of increased income multiples now offered by many mortgage lenders.

Tom Smith
5th November 2007

Tags: own, payments, lenders, buy, cost, mortgage

Buy-for-uni mortgage has its benefits

Taking out a mortgage for a university residence can be beneficial for students and their parents.

According to Moneyfacts, a so-called buy-for-uni mortgage allows students a mortgage of up to 100 per cent on their property with no deposit.

This can act as a “medium term investment”, according to Darren Cook, head of mortgages, that gives students “independence” and “their own home” while at university.

Mr Cook said: “Obviously it’s going to be seen as a good investment from the parents’ side of things. If you’ve taken a student’s property [for] three or four years or whatever, they can convert it to a … student buy to let scenario and rent out rooms.

“[They can] change the actual funding of that asset or get rid of it a later stage. So it could be a short [to] medium-term investment.”

He added that some parents might not want their children going into communal housing, so aside from an investment another reason for buying might be the social aspect.

Currently, Bath Building Society is the only lender offering a specific buy-for-uni mortgage. It was introduced last April and is given only on properties with four bedrooms or less.

Tags: specific buy-for-uni mortgage, buy-for-uni mortgage, housing, Darren, university, buy

Future demand for buy to let mortgages could fall

According to a recent report the demand for buy to let mortgages could fall in the future, as a slow down in the rise of property values hits, lumbering landlords with higher mortgage repayments but lower house value inflation and rental income.

However, reports have also indicated that at present landlords are doing very well, and in the past year enjoyed returns of around 13%. Reports indicate that landlords saw the property vales rise on average by around 7.3% and saw rental returns of around 5.5% of the property value.

The figures come from a report issued by Birmingham Midshires. The report indicated that although the 13% property value rise seen was up from the previous twelve months of 11.9% rental payments dropped from 5.7% in the previous twelve months to 5.5% last year. Birmingham Midshires warned that the interest rate rises had led to mortgage repayments being higher than rental payments, and that this could have a dampening effect on the popularity and take up of buy to let mortgages.

One economist from the building society stated: ‘While house price growth in the sector is expected to be more subdued near-term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long-term investors. There also remains the potential for healthy long-term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built.’

Along with homeowners buy to let landlords are likely to be hit hard by the interest rate rises that have been applied by the Bank of England over the past year, as it means higher repayments on the mortgage without higher rental income.

Tom Smith
1st August 2007

Tags: cost, let, property, payments, rental, landlords, rates, value, rent

Online Share Dealing Increases In Popularity

Now that some sort of stability has returned to the UK stock markets, and with the London FTSE 100 back over 6100, more and more individual investors are returning to the stock market in the hope of getting their share of the profits to be made.  Unlike previously, however, increasing numbers of individual stock market investors in the UK are electing to cut out the middle-man broker and invest themselves online.

In a report recently published by Saga Share Direct, 73% of all individual respondents declared that they now preferred to manage their own stock portfolio online rather than use the services of a UK stock broker.  This represents an 8% increase on the number of reported individuals using online stock dealing services in January of 2006.

Rather amazingly, however, 57% of all individual stock market investors in the UK felt they were now getting better returns on their investments from having taken control of these investment than they were previously getting using the services of UK brokers.  A trend on which Andrew Goodsell, chief executive of Saga, commented: “With more people returning to the market, demand for a well priced and competitive online share-trading service is high.”

Profit margins alone, however, do not appear to be the ultimate driving factor behind so many Brits moving into online share trading.  Saga’s report also shows that 56% of respondents felt that “maintaining personal control” over their share portfolio was sounded enough reason to prefer online stock trading over using the services of a UK stock broker.

With UK private individual investors having pumped in a £2.6 billion investment in UK stock market equity investments during August and September, the growing trend of Brits electing to invest in the stock market online only looks set to go from strength-to-strength.  Nevertheless, Brits looking to go it alone and make stock trades online should ensure they stay clear of the usual pitfalls associated with online stock market trading.  All of the usual research and analysts will need to be done, and much of this will now be down to the individual themselves as many UK online stock trading services will not offer investment research services without having to pay hefty membership fees.  Moreover, individual UK stock investors will also need to make sure the computer software they have is capable of transacting secure online trades, as well as keeping up-to-date tabs on where the UK stock market is going. 

That said, there are clearly profits to be made from stock dealing in the UK and cutting out the broker middleman’s fees is one sure way to ensure that you maximise those profits – provided, of course, that you know what you are doing and pick the right stock.

Tags: stocks, sell, buy, cost. charges, dealing