Friday, May 1, 2009
Category:
Consolidation
As many Brits choose to spend the Easter break at home, as opposed to going abroad and losing out on the pound to Euro conversion, it may pose the ideal opportunity to conduct a financial review.
Chartered financial planner at Fairinvestment.co.uk, Sharon Bratley, commented: "There are so many benefits to a financial spring clean, and starting now could really save people some money by the end of the year."
According to Fairinvestment.co.uk’s recent research into UK saving and spending patterns, 31 percent of Brits have been forced to alter their usual habits since the onset of the recession. 14 percent of these individuals have had to reduce the amount that they save, or have indeed had to stop saving altogether. It would seem that just 5 percent have investigated alternative savings options in an attempt to attain a better rate. Commenting on this, Mrs Bratley said: "The fact that just five per cent of Brits have shopped around for a better savings account rate is surprising. Despite interest rates being cut to record lows, there are some savings accounts still paying decent returns for those take the time to look around." Offering further advice, Mrs Bratley continued: “Other savings tips include setting up a monthly direct debit for what you can afford. Direct debits make saving easy as you don't have to think about it. However, it is important to decide on a realistic amount to save, so speaking to an independent financial adviser (IFA) could help with that."
On the mortgage front, rates have been gradually falling, which should be proving beneficial to the 16 percent of respondents on tracker rates. Where overpayments are being made, these particular homeowners will be enjoying chipping away at their outstanding loan amount. Mrs Bratley remarked: "Some people have been lucky enough to see their tracker mortgage rate fall by the full base rate cut of 4.5 per cent since last September. If they kept their mortgage repayments at the level they were at before their rate was cut, they could now be making significant overpayments."
Where pensions are concerned, Fairinvestment.co.uk found that the difficult economic conditions have resulted in 20 percent of Brits either reducing their pension contributions or completely halting them. This suggests that a pension review could be a sensible move for those whose finances are tight. In light of this, Mrs Bratley commented: "A pension review with an independent financial adviser (IFA) could help people who are struggling to juggle all their finances at the moment. Pension contributions are important, but obviously if someone has just lost their job they should be focusing on things like mortgage repayments."
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Homeowners who have reviewed their finances over Easter and who would like to finance a big project or to consolidate debt, could consider the option of taking out a secured loan. A secured loan could be used to finance home improvements that have perhaps been put on the back burner; to consolidate existing personal debts; or even both. In terms of debt consolidation, the borrower would be left with just one, potentially lower, monthly repayment. Therefore, not only is the hassle and stress of juggling multiple monthly repayments eliminated, but some funds could be freed up each month to put into other projects. When consolidating debts it should be remembered however, that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
