Tuesday, May 22, 2007
Category:
Secured Loans
As a result of the base rate rise, uSwitch.com has found that consumers could offset the entire base rate rise by switching energy providers.
Research has found that a monthly payment on a £150,000 repayment mortgage is set to rise by £22 per month. By switching energy providers, homeowners could save up to £27 per month. Therefore, a homeowner could enjoy an annual saving of £325 just by switching energy providers, taking into account that at least 16% of customers who switched gas and electricity with uSwitch.com in 2006 saved at least £325 a year.
Following the recent 0.25% base rate rise, Ann Robinson, Director of Consumer Policy at uSwitch.com, the independent online comparison and switching service, says:
“Today’s hike in the base rate will see millions of homeowners tightening their belts to alleviate the squeeze on their wallets. One of the easiest ways they can do this is by reducing the basic cost of running their homes. Energy bills are the third biggest household expense after mortgages and council tax. A homeowner who has never switched energy providers before has got the potential to unlock ‘wasted’ cash, save up to £325 per annum or £27 a month and offset all of the latest interest rate rise. A base rate rise and the impact on mortgage payments are entirely out of people’s control, however, simple changes to save money on energy bills are not. Quick wins such as paying by direct debit, switching to dual fuel and taking up an online tariff could chip substantial amounts off the average energy bill. For those affected by today’s rate rise this could be the difference between seeing a dent or a hole in their household budget.”
An example of a scenario that uSwitch.com created following the 0.25% rise was that if a homeowner with a repayment mortgage of £150,000 repaid over a term of 25 years at 5.25% they would be paying an extra £222 each month after the rate rises by 0.25%. By switching energy providers and ensuring they are on the most competitive tariff, they could see a saving of up to £27 per month that is a net gain of £5.
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If after changing energy providers, homeowners are still finding it difficult to make payments on their monthly outgoings including multiple credit card repayments as a result of the base rate rise, they could look at a
secured loan as one of the many options available to consolidate existing debt. A secured loan could allow homeowners to pay off existing debt, freeing up a little more of their expendable income to cover other financial commitments including utility bills and mortgages. Made payable over a term to suit the borrower from 5 to 25 years, a personal secured loan could potentially reduce multiple monthly payments on credit cards with high APRs. By consolidating existing debt into one straightforward payment, a secured loan could allow homeowners to plan ahead, knowing when and how much their repayments will be each month. Homeowners should remember that repaying over a longer term will increase overall interest charges.
