moneynet in the press

Sunday Express (Financial and Property) – 26th August 2007

BEWARE THE BONUS RATE TRAP

Savers should be notified when their introductory high interest rates are coming to an end, according to building society Nationwide.

Because most providers do not notify the customer when the higher rate is coming to an end, many savers forget their money is no longer benefiting from extra the extra interest.

Richard Brown from Moneynet.co.uk advises the following when choosing a savings account: “A good instant access account will usually pay about 0.50 per cent above bank base rate. The very best rates are usually found with internet accounts that are operated purely online – using a local branch could reduce the rate by about 0.25 per cent.”

Northampton Chronicle & Echo – 24th August 2007

BEWARE OF THE LENDER TRAP

It seems debt worries could put a downer on Freshers’ Week for this year’s crop of new students, with more entrants worried about money than they are about passing exams, according to a new survey. Follow these tips from www.moneynet.co.uk and make the best of the student experience without worrying about your finances.

• Assume you will accumulate debt over your period of study, but don’t unduly worry about it.
• If you can, take a gap year before going to university to work and save money before studying.
• Take a part-time job at university, though don’t let it distract from your course.
• If you have to, borrow. Make sure you always establish the cheapest forms of credit available, such as interest free overdrafts and student loans. Check the contract carefully before signing anything.
• Don’t take out a credit card. You are a student; remember that – keep the luxurious purchases for after you’ve graduated and when you can actually afford them
• Make a budget for food and other expenses and stick to it. Also avoid paying for things with your debit card – it’s much easier to keep track of money if you pay with cash, and check your bank statements regularly – and don’t forget to include the small items in your budget too, coffees and snacks between lectures soon add up.
• If you do hit hardship, investigate what schemes, grants and bursaries your university offers and whether you’re eligible for one.

Financial Advisor – 23rd August 2007

KEEP A CLOSE EYE

Moneynet.co.uk has urged lenders to introduce a regular review of interest –only loans which it warns could be a ticking timebomb for many borrowers. The website suggests a review every three years. According to Moneynet.co.uk over the years circumstances change so much that a regular review could be beneficial to borrowers.

Irish News (Belfast) (Main) – 21st August 2007

DON’T BE A DEBT CASUALTY

A new survey be NatWest shows a fall in levels of student debt but reveals that more sixth-formers than ever are worried about the costs of going to university. We get behind the stats surrounding part-time work, loans and what you can expect when you leave, to present a no-nonsense guide to student finances…

It seems debt worries could put a downer on Freshers’ Week for this year’s crop of new students – with more entrants worried about money than they are about passing exams, according to a new survey.

Follow these tips from www.moneynet.co.uk and make the best of the student experience without worrying about your finances.

• Assume you will accumulate debt over your period of study, but don’t unduly worry about it.
• If you can, take a gap year before going to university to work and save money before studying.
• Take a part-time job at university, though don’t let it distract from your course.
• If you have to, borrow. Make sure you always establish the cheapest forms of credit available, such as interest free overdrafts and student loans. Check the contract carefully before signing anything.
• Don’t take out a credit card. You are a student; remember that – keep the luxurious purchases for after you’ve graduated and when you can actually afford them.
• Make a budget for food and other expenses and stick to it. Also avoid paying for things with your debit card – it’s much easier to keep track of money if you pay with cash, and check your bank statements regularly – and don’t forget to include the small items in your budget too, coffees and snacks between lectures soon add up
• If you do hit hardship, investigate what schemes, grants and bursaries your university offers and whether you’re eligible for one.

Mortgage Introducer (Main) – 18th August 2007

A LIFELINE OR A TIME-BOMB?

By Richard Brown, Chief Executive of Moneynet.co.uk

According to recent statistics from the Council of Mortgage Lenders, interest only mortgages without a known repayment vehicle make up around a quarter of all new mortgages currently taken out. Perhaps this is not surprising when one considers the ever increasing cost of home ownership and the increasing multiples of income that first-time buyers are resorting to just to get a foot on the ladder.

However, fears are being raised that interest only mortgages are a potential time-bomb – many borrowers could come to the end of their mortgage term with the original debt still outstanding and no means for repayment.

Without a doubt, the average borrower’s appetite for risk has grown over recent years, with many seemingly willing to take on more debt, both secured and unsecured. In addition, lenders seem to have an insatiable appetite for borrowers and seem prepared to take ever greater risk in the pursuit of targets and growth. Are the two together a match made in heaven or a recipe for disaster?

There are various scenarios that could lead to potential disaster. Firstly, some borrowers see their homes’ equity as a source of cheap credit and use it to supplement their incomes or pay for expensive holidays or new cars. This will result in having to maintain the debt at a high percentage of the house value. In 25 years’ time these borrowers could have problems clearing the mortgage.

Secondly, borrowers who may be relying on an inheritance to clear the debt could find that their hard-pressed parents have already used equity release schemes to fund their retirement or are forced to sell their homes to pay for long-term care in their old age.

The third problem, perhaps more unlikely in the longer term, is that house prices falter and don’t continue to rise with the same ferocity we have seen over the last 25 years – in order to clear the debt, borrowers with higher debts relative to the property value will find it harder to downsize. Perhaps lenders should re-think how they market interest only mortgages. Certainly, these loans play a vital role in the industry and, if used correctly, can provide a lifeline. However, borrowers should face reality at some point and start making some inroads into the capital repayment.

It’s questionable whether the current requirement for lenders to simply point out to borrowers the implications of this repayment method at annual statement time is sufficient go avert the potential for disaster among those who are simply using this as a cheap form of credit to supplement.

Mortgagestrategy.co.uk – 16th August 2007

MONEYNET URGES LENDERS TO INTRODUCE INTEREST-ONLY REVIEWS

Moneynet.co.uk has urged lenders to introduce a regular review of interest-only loans, which it warns could be a ticking time bomb for many borrowers.

Richard Brown, chief executive at Moneynet.co.uk says: “Borrowers attraction to interest only mortgages isn’t hard to work out a repayment mortgage of 150,000 at 6% over 25 years will cost around £978 a month.”

“On interest-only, however, they won’t have to dig so deep as monthly cost falls to just £750, leaving enough to afford extras that everybody wants.

Moneynet.co.uk says that over the years, circumstances change so a regular review not just a yearly glance at a mortgage statement – could be extremely beneficial to borrowers who may be able to afford a repayment mortgage at a later date.