Homeowners Down on Payments – Planning is Key

According to many real estate and financial experts, the current real estate climate in Australia is remarkably similar to that in the U.S. just before its own housing bubble burst. One of the strongest indications of this phenomenon is the fact that many homeowners around the country are down on their mortgage payments. While some of this is attributable to the lackluster economy and faltering job market, a lot of it can be traced back to homeowners who bit off more than they could chew when acquiring their home loans and failed to obtain the correct broker information.

Down Payment for New Home

Easy Terms Spell Trouble for Aussie Homeowners

Back in May, the Australian Prudential Regulation Authority warned of a sharp increase in the issuance of high-risk mortgages, including interest-only loans and financing for rental properties. Lenders are giving people mortgages that they may eventually struggle to repay. A huge contributing factor to this problem is the fact that many Aussies assume that lenders will only approve them for loans they can afford to repay. That’s not the case. Rather, lenders only look at certain factors. It’s up to homeowners to sit down, crunch the numbers and determine whether or not a particular loan is practical.

Outstanding Mortgages Skyrocket

Although first home buyers continue to struggle to get the loans they need, the number of outstanding mortgages in Australia has continued to rise precipitously. According to the Reserve Bank of Australia, the number of outstanding mortgages in the country rose by 6.5 percent from July 2013 to July 2014, which represents the fastest pace since February 2011. Currently, about 85 percent of all owner-occupied home loans were of the variable-rate variety. When rates rise, which they’re expected to do over the next 18 months, mortgages that were once affordable may become anything but. In fact, a two-percent increase in the mortgage interest rate would create serious financial woes for about one-quarter of all Aussie homeowners.

Contributing Factors

High-risk mortgages play a huge part in many Australians’ inability to stay current on their mortgages, but other factors are contributing to the issue too. The 6.1-percent jobless rate isn’t helping. Also, according to a government inquiry, Australians owe about 1.8 times their pre-tax disposable incomes in home loans. Those with interest-only loans often start struggling to repay them when they start having to pay the principal balance. Planning is crucial when it comes to avoiding these issues. If you’re in the market for a new home, then, take your time, consider all the variables and make sure you will be able to repay your mortgage even if things change.

The Cheque Centre exits the payday loan market?

The familiar blue logo of the Cheque Centre will now be forever different as it is no longer to offer payday loans. The reason? It has decided to stop trading in this market following advice and scrutiny from the new Financial Conduct Authority. This blog will look at the reasons the Cheque Centre has decided to close its doors on the relatively up and coming UK payday loan industry, and will highlight both sides of the arguments surrounding whether their decision is a good thing or a bad thing?

The Cheque Centre – reasons why stopping payday loans was a good thing

The Cheque Centre has had a controversial status for a while. With 451 branches across the UK, it was one of the mightiest contenders in the UK payday lending market (the second largest provider of payday loans in the UK, according to some measures). However, following the establishment of the Financial Conduct Authority, the business, along with established payday lenders like Wonga came under a lot of pressure to change their practices relating to payday lending, particularly those surrounding the treatment of individuals who were in debt. Following consultation with the Financial Conduct Authority, they decided to exit the market for payday lending.

Loan Screen Shot

Supporters of the pressure placed on the Cheque Centre will argue that this raises standards across the industry and sends out a message to payday lenders all over the UK that if poor, or unethical practices are pursued, there are commercial consequences for the lender in the form of regulation and possible sanctions that the regulator has powers to impose. It will no doubt also be arguing that the Cheque Centre was profiteering from poor people who have nowhere else to turn to for a loan and was adding insult to injury by following poor practices in terms of retrieval of debt.

The Cheque Centre – reasons why stopping payday loans may not have been the best option

On the other hand, there are also strong, credible reasons why the Cheque Centre should not have been forced to exit the market for payday loans.

Competition – despite all of the disadvantages you might think of as applying to the case of the Cheque Centre and their decision to exit the payday lending market, it is indisputable that the Cheque Centre created a more competitive payday lending industry, with more options for consumers of payday lending products, enabling them to shop around more. A strong line on their recovery of debt made it easier for the business to create cheaper financial products for the consumers they serve (and who will now be served by other lenders). As such you can argue that the regulation of the industry is a blow to competition, which filters down and may hit unsuspecting customers in the pocket – indeed the very same customers the measures are designed to protect. The regulation of the industry to the point where the Cheque Centre has opted to exit the market speaks volumes about how effective market regulation in this area really is and whether this is an effective way to fix the problem of poor industry practices surrounding debt recovery.

Services – like it or loath it, the Cheque Centre did offer a service within the payday lending industry and with over 450 branches, UK wide closing their doors to payday lending consumers, there will be many people forced to go looking for new finance options. Let’s hope they don’t end up at the door of the local loan shark.

Unfair as industry offers employment – the decision of the Cheque Centre to exit the market for payday loans impacts on the numbers of people employed in payday lending services, and the impact is that jobs will be lost up and down the country. So, a measure designed to protect others is actually creating a fresh cycle of debt for many other people, and hundreds, maybe thousands of people who may now need to reach out for payday loans, or even worse – loan sharks. Placed under scrutiny, therefore the decision of the FCA to place so much pressure on the Cheque Centre is arguably counter-productive, and a better outcome would have been a compromise, following consultation between the FCA and the Cheque Centre (which did not happen).

Why not get involved in this discussion? Post your view

Travel tips if you don’t like flying

Not everyone likes to travel by plane.  It might sound at odds with the growing number of destinations you can now get to by air, but if you dread the idea of being on a plane, rest assure you are not alone.

In fact, flying is one of the most common fears people have, and as many as 1 in 5 people in the UK will not travel on a plane because of their fear.

What if You dont Like Flying

Although there are many potential causes for this phobia, one of the most frequently cited is concern for safety.  Statistics don’t provide much comfort in this regard.  There were 138 plane crashes in 2013 and 155 the year before.

But even if you are not worried about air safety, you might avoid air travel anyway for cost reasons or for more comfort.  Let’s face it – having to pay extra to check in bags or change reservations is a pain.  What’s worse is that you might not get much value for your money, especially if you are sat near inconsiderate passengers.

So, let’s look at the advantages of avoiding air travel – for example, you are more likely to have phone reception, which means you can stay in touch with loved ones and have an endless source of entertainment. You’re not totally cut off from the world, like you would be on a plane.  You can also look up local restaurants and attractions from wherever you are.  However, just bear in mind that you may incur hefty charges if you exceed your monthly data allowance from your network provider, or if you are transmitting data outside the UK. A quick tip for low cost internet access is to use a mobile broadband package from a provider like Mobi data.  Click here to apply for Mobi-Data.co.uk’s free sim card. It  can be used in 40 countries across the globe.  As well as offering 100MB of complementary data, Mobi-Data are running a double data deal to reward customers who sign up for a three month contract.

With all that said, how can you plan your holiday, so that you minimise or avoid air travel?  Here are some options you might like to consider:

Cruise ship holidays provide luxury and comfort.  You can explore the ship and take part in quizzes, competitions, games and pool sports as well as other activities whilst on board.   You can see many beautiful countries without jumping on a plane!

Boating holidays are suitable for those who just want to relax.  Not just a popular European pursuit, it is enjoyed in exotic destinations such as India, Laos, Australia, New Zealand and Antarctica. You can often design your own itinerary – unlike on cruise ships, and many people enjoy this type of holiday around the globe.

Eurostar journeys will get you to European destinations quickly and comfortably.  It takes just 2.5 hours to travel from London to Paris. Who needs aeroplanes when you have the eurostar?

Caravan holidays are great for those who wish to travel by land and are not in a hurry.  You can stop as often as you like and explore towns along the way.

Trains and Coaches provide a low cost way to travel around the UK, as long as you don’t have too much luggage with you.  They can be a great way to see the country and you might even choose to travel in first class for added luxury and space.

You don’t need to get on a plane to have a good holiday.  Do some research on the above options and you might just find yourself a plane-free adventure this summer!

 

Spending abroad: What’s the best payment method?

When it comes to spending money abroad, it can be difficult knowing which method is best. So many fees get added onto foreign transactions. By the time you get home you could have a huge bill in fees alone. If you’re looking to save money, it helps to understand the different payment options available.

Spending Money Traveling Abroad

Credit and debit cards: A convenient option?

Credit and debit cards remain one of the most popular payment methods abroad. Safer than carrying cash around, they provide you with instant access to your funds no matter where you are. However, they also tend to come with some pretty high foreign transaction fees. This is particularly true in the case of debit cards.

One way to minimise the fees is to apply for a good overseas credit card. Many companies offer cards that have reasonable foreign transaction fees. In fact, there are even some available that don’t charge anything to access your money abroad. It can be worth shopping around to find these deals as it could save you a lot of money. Just remember to pay off the balance in full to avoid high interest payments.

Pre-paid cards: Avoid getting into debt while you’re away

Credit cards can be great for overseas spending, but they can also be dangerous for your finances. If you don’t trust yourself with a credit card, or if you’re having difficulties getting accepted for one, a pre-paid card could be the ideal solution. There are some great worldwide pre-paid cards that won’t charge you additional fees for using them abroad. They can also help to control your spending if you place a set amount on to last you the whole trip.

Cash: Don’t get stung by high exchange rates

For many people, cash still remains the most popular way to spend abroad. Providing you exchange your money as far in advance as possible, you can save on high exchange rates. Some online companies require you to spend a set amount of money in order to benefit from free delivery. Always read through the terms and conditions regarding fees before you choose an exchange service. It’s recommended you research the different rates available at least a couple of weeks before you travel.

What to do if you run out of money

If you run out of money abroad, don’t panic. There are ways to get your hands on emergency cash. Payday loans could be an ideal option. Companies such as www.wonga.co.za can provide you with cash in your account typically within an hour of getting accepted. Remember that the balance has to be paid off on your next payday if you want to avoid really high interest fees.

It’s easy to save on fees if you do plenty of research and shop around for the best deals. Money.co.uk offers plenty of tips for making the most of each overseas spending method. Remember, if you’re planning on carrying cash around with you; be sure to keep it in a safe place. It can be risky carrying cash around in a foreign country.

Sources:

http://www.thisismoney.co.uk/money/cardsloans/article-1721010/Best-cheapest-ways-spend-abroad.html

http://www.telegraph.co.uk/finance/personalfinance/consumertips/10201408/Martin-Lewis-A-peek-inside-my-overseas-wallet.html

Times Are Changing: How the Internet Changed the Financial Industry

A few years ago before writing became my full time career, I spent my days working at a bank on a college campus, doling out money to young adults that couldn’t have balanced a check register to save their lives. The students rarely came to get cash out of their accounts, preferring to swipe their debit cards to their heart’s content and I watched as the students stared in confusion at the deposit slips, wondering how anybody had ever survived without direct deposit.

Finance and Internet

It made me realize that the banking industry was changing pretty fast, and in the few years since I’ve left that banking job I’ve realized that it’s only grown exponentially. The Internet opened up doors to money that were never considered possible and the things we’re able to do now, well, they’re pretty great!

•    Get Your Money Anywhere, Anytime. With everything becoming increasingly digital these days, your money has gone the same way. It was astounding when Automatic Teller Machines (ATMs) were first brought to life, making it possible for users to withdraw cash without having to stop by the bank. But the ATMs of today make those machines look like child’s play. Many ATMs allow you to not only withdraw cash, but make transfers between accounts, deposit cash and checks, pay your bills and heck, even buy stamps. Hold times on checks have shortened as banks are able to confirm funds in other accounts at a fraction of the time they used to. You can even apply for loans through online providers like Wonga.com without having to leave your home. Choose the amount of money that you need and after a quick application it gets sent straight to your account. No more do you have to dress up in your Sunday’s best to go talk to a banker – you can do it in your pajamas!

•    Forget Your Wallet. ‘I don’t have cash’ used to be the best excuse in the world. It doesn’t pack quite the same punch anymore, however, now that you can do almost anything online or with your debit card. Many smaller businesses have taken to using mobile credit card processing, allowing them to accept credit and debit cards through a swipe on their iPhone. Visa is accepted nearly universally, offering a safe and secure alternative to carrying wads of money around all day in the back pocket of your trousers.

•    Send Money Anywhere, Anytime. Probably one of the coolest and most convenient thing that the Internet has changed (for everyone, but especially for the financial industry) is connecting people from hundreds of thousands of miles apart. Individuals are far more likely than ever before in history to uproot themselves and move somewhere new, leaving a web of relationships spanning the globe. Before it would have been impossible to send your family money when you find yourself in the States. But electronic money transferring has made that problem irrelevant. Now you can transfer money to just about anywhere you can think of, provided you can pay the fee. Sending a check in the mail is so last century because now you can do it all from the blink of your laptop screen. If you’re wanting to send or receive money, do your research to find out the easiest and most efficient way to do so without breaking the bank.

What does the future hold for those with a bank account? Only time will tell, but it most certainly means big changes for people all around the world.