Graduates ’shouldn’t have any trouble getting credit’ despite economic turmoil

Despite tighter lending conditions created by the global credit crunch, graduates should not have any trouble in getting credit, one financial expert has claimed.

Moneyfacts said that lenders consider different factors when dealing with graduates as they are viewed as customers worth attracting despite the debt they will have taken on at university.

Because of this, graduates typically enjoy low rates and high borrowing on their loans, which is unlikely to change this year, she advised.

Samantha Owens, head of credit cards and loans at Moneyfacts, said: “We don’t see any market contraction for graduates, and they shouldn’t be concerned about ridiculously high rates, or trouble getting any credit.”

She added that as a graduate is seen as a “good prospect in the long run”, these accounts are to remain static.

According to debt charity Credit Action, average graduate debt in the UK has dropped for the first time in six years.

Graduates who leave university with debt now owe on average £12,363, a decrease of £889 (six per cent) on 2006.

Tags: average graduate debt, prospect, cent, university, action

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: buy-for-uni mortgage, specific buy-for-uni mortgage, Mortgage loan, Darren, housing, Mr Cook, buy

Students urged to cover contents

A significant number of the UK’s students could be starting the year’s learning with inadequate home contents insurance, putting them at risk of financial loss.

That is according to new research from Abbey, which found that around 30 per cent of undergraduates will probably start the academic year without protecting their belongings.

Despite the fact that 95 per cent own a computer, some 14 per cent of students have not thought about insuring their possessions or think they are not of a high enough value to warrant cover.

Some seven per cent said they would not afford the cost, while nine per cent didn’t get around to arranging it or spent the money for it on something else.

“Over 60,000 students believe the value of their belongings does not justify buying insurance, but we find many people are shocked with how much their belongings are actually worth,” said Abbey’s head of insurance marketing, Prasad Shastri.

The study also found that students will take around £3,300 on average worth of items with them to university this year.

A separate report from Cornhill Direct encouraged parents recently to check their own home insurance policies to ensure they cover student offspring’s belongings.

Tags: risk, student, university, Business and Economy, home, home insurance, belongings

Students given warning on credit cards

As thoughts begin to turn towards the new academic year, British students were advised by experts at Barclaycard yesterday that, while credit cards can be a good way of managing finances if used wisely, they can also drive up debt.

Students’ attention was also drawn to the relatively high rates of repayment demanded by card lenders in the UK.

The lender gave the advice at its new student website, which advises customers to shop around for the cheapest credit deal.

Barclaycard’s managing director of UK cards, Amer Sajed, said of the site launch: “Cards can be a lifeline for students managing a tight budget. They can help make the most of your time at university and establish a credit record for the future, but only if they are used sensibly.

“Our new site includes some blunt advice to help our customers make the most of the benefits and avoid the pitfalls.”

Tags: managing director of UK cards, education, cheapest credit deal, british students, future, good way, Credit Cards, university

Danger of only investing in your home

We are being warned that we could be setting ourselves up for a fall by investing almost all of our money into a single property.

That is according to a report which states that almost two-thirds of us are running the risk of financial ruin by investing too heavily in a single asset.

Researchers at Durham University have discovered that as many as 62 per cent of us invest the majority of our money in a house and could face real difficulties if a housing market drop, like that seen in the late 1980s, were to take place.

“This study really draws attention to the precarious position of the majority of English homeowners’ savings,” said Susan Smith from the university.

“While many would think it strange to invest everything they have into one particular company, to all intents and purposes more than seven million people in England are doing just this by ‘banking on housing’.

“In fact, they are investing almost everything they have into just one building, in one neighbourhood, in one town, in one region, despite the hindsight of a recent housing market collapse,” she added.

The research found that 30 per cent of people take out a mortgage but do not see their home as a way of storing and accumulating wealth.

This apparent lack of vision when it comes to the housing market is even more alarming when you realise that 59 per cent have no other savings or investments to fall back on.

Homeowners are being advised to ensure that they have some secondary savings.

Tags: collapse, realise, home insurance, fact, property, asset, university, Susan Smith