I really like writing about money and finance because I know that it is something that lots of people really need a lot of help in. I try to write in a way that should be easy to understand so that those who are not fortunate enough to have had much teaching in this area will be able to benefit. It is something which is really important because if we know more about it, it means that we will make better decisions when we are choosing financial products and also hopefully spend, save and borrow more sensibly in a way that suits us really well.
How to Find the Cheapest Mortgage
When we are looking for a mortgage, we might be on the hunt for the one that is the cheapest. We may wonder whether to start looking.
Establish What you Mean by Cheapest
You need to start by establishing what you mean by cheapest as different people could mean different things. You may mean that you want low repayments and this may not actually give you a cheap mortgage with regards to the costs charged on it over the time that you have it, as it could mean that you will have to make more repayments, the mortgage will last longer and you will have more interest charged on it. You may mean that you want a low interest rate, but you need to be aware that you may also need to pay fees which you will also need to allow for. If you mean the total cost of the loan, then you may need to check with the lender to find out exactly how much this will be although a mortgage calculator may help. You may mean the one that gives you the best value for money and therefore the one that is not necessarily the cheapest but that you feel will give you the most in return for what you are paying oy.
Once you have established what you are actually looking for you will be in a position to compare the different mortgages on offer. Some people will head straight to a comparison website and these are useful but in a limited way. This is because they may only compare mortgages on their interest rates and so will not allow for other costs. If you are interested in value for money, then the cost is only one part of it. You will also find that these sites only have a small selection of lenders included and so you may find that there are others that are better suited to your needs. Lastly, these sites tend to make money from commission paid by the mortgage companies that they recommend and so they may recommend those that pay them the most.
If you want to find out about more mortgages then you may have to go to a search engine and just search for mortgage companies and then compare them. This can take a lot of time and you will need to be very clear in your mind as to what you want from a mortgage so that you can find one that will suit you really well. It will take time to do this and you could find that you will run out of motivation part the way through.
There are other websites that you might be able to look at that might help. Ones the review mortgages or lenders can be quite useful to get some extra information to help you. It is a good idea to remember that these sites might be biased and they may also make commission on recommendations too. They can provide you with some useful information as well.
It can be a good idea to ask an independent financial advisor for help. You will have to pay them but it could be worth it as if they match you to a mortgage that suits you really well, you could end up very quickly saving enough money to easily cover what you paid for them. This will save you doing all of the research yourself and so will save a lot of time and even after working hard you may find that you do not come across the very best mortgage to suit your needs anyway.
It is a good idea to think about your credit score at times and to check that you are doing what you can to make sure that it is good. This is because it is important in certain situations.
When you Want to Borrow Money
This is probably the main one that people think about when they are considering credit checks. It is well known that it is a legal requirement that lenders do a credit check. Most of them will also want to have a look at your status as well to judge whether they feel that you are capable of repaying the loan that you are applying for. It is important to have this borrowing facility available to you because you will want to make sure that you can get money if you need it or want it. For example, if you want to buy a home you will need to have a good credit record and if you need money in an emergency and want to borrow it. Even if you just want a credit card to use to make safe online purchases, then you will need a good credit record to get one. So even if you think that this is not really important to you, because you feel that you will not need a loan as you are doing okay, it is good to be prepared as no one quite knows what the future might bring.
When you Want to Rent a Home
If you are looking for a place to rent, then your potential landlord will do a credit check. They will want to look for evidence that you will be responsible and pay your rent on time. Therefore, they will want to see that you have made regular repayments in the past and that you do not have lots of debt which could indicate that you will struggle to pay rent. It is a good idea to make sure that you are prepared for this sort of credit check. If you are already in a rental, then you never know when your landlord might want to sell up and move you on and you will have to find accommodation elsewhere and will need to be able to pass their credit check. If you are in a home you own, then the risk is lower, that you will need to rent a place, but it is wise to keep up with those mortgage payments to ensure you are not at risk of losing that home as it is unlikely you will pass a credit check to get a rental after that.
When you Sign up for a Mobile Phone Contract
You may find that a credit check will be done if you sign up to a mobile phone contract. This is because you will need to make regular payments and the company will want to check that you are capable of doing this. If you do not pass a credit check it could mean that you will have to find the money to buy a phone yourself and you may struggle to afford the phone that you want like this. You may also have to pay as you go with the phone and that could be expensive if you use your phone a lot.
When you Change Utility Companies
Utility companies may also do a credit check because they will want to make sure that you will be capable of making the regular payments that are required. They want to check whether they can charge you monthly or whether they will need to install a pre payment meter. These can be fitted and you will need to top them up in order to have electricity to use and they tend to be more expensive than paying when you are billed and so you want to avoid these if you can.
There are some people that never have any credit card debt and there are others that have lots of outstanding debt. It can therefore be a bit confusing knowing which might be the best to do.
Why Pay off a Credit Card?
When you do not repay your credit card in full, you will end up paying interest on the money that you owe. This is like all loans where you will have to pay for borrowing the money. However, a credit card is a bit different, in that you get the option of some interest free credit and then to repay what you owe before paying any interest. This is because you will shop with the card and accumulate debt on the card. When the statement comes to you, you will then be told how much you spent and be given the option to repay everything you spent without any additional cost. This is therefore interest free credit. However, if you choose not to repay it all, then you will be charged interest on what is outstanding. This means that if you do not pay the card you will need to pay this interest and it can be quite high. Credit cards tend to be an expensive way to borrow compared with other borrowing options as well and so if you cannot afford to pay it off, then it can be worth looking for a cheaper loan to pay it off with. It is also worth making sure that you only use it to buy things that you can afford to in the future.
Having it paid off will also allow you to have more credit available to you when you do need it. It means if you suddenly need money quickly, you will be able to access it using the credit card. It can give peace of mind knowing that the credit is available and it can also give peace of mind knowing that the debt has been paid off and you do not owe anyone any money. Some people worry more about being in debt than others though. Some feel that the cost is worth it because they are able to buy more things and are happy to pay that cost for it.
Reasons for Not Repaying a Credit Card
It might therefore seem common sense to repay the credit card off and then you will be able to stop paying the interest. Financially it does seem to be the best idea, but there might be a few situations where it could be better to keep the debt unpaid. If you will struggle to repay it and not be able to afford other things, then it is a good idea to not put lots of pressure on yourself to repay it. Obviously, it would be good if you could do it, but if you need the money just to cover your necessities then it is something that you will have to wait to do. Do not let it become a big stressor as this could just make you ill. Repay the minimum and then take a methodical approach by thinking about a plan that you can follow which will help you to pay it off slowly. This should help you to feel that you are doing something to help your situation but without the urgency and stress that could follow. Trying to repay really quickly may just not be possible and you may even find managing more than the minimum is not easily possible and that you would have to get a second job or go without basics if you tried to do that and so delaying repaying the card could be the right thing for you to do in this specific situation.
It is a good idea to have a bit of a think about who different loans are for as then when you need to borrow money, you will have an idea as to which might be the types of loans which will suit you the best. It is really the case that certain loans are for certain situations rather than certain types of people. For example, a mortgage is to buy a home and it does not matter who you are, as that is the only loan that will suit the job. With some loans, such as payday loans, people might have an idea of certain type of person that might use them, but circumstance is more important.
Who Were Payday Loans Designed for?
Payday loans came about because it was noticed that if people with a poor credit record needed to borrow money in an emergency, there was nowhere they could go for help with this. Mainstream lenders will tend to avoid lending to those with a poor credit record because they feel that they cannot be trusted to repay the loan and this means that there are very few other ways that they can borrow money. So, payday lenders saw this gap in the market and developed a loan to fill it. They came up with a short-term loan which was for a relatively small amount of money. They did not want to lend lots of money, because they realised there was a risk that it would not be repaid. They also only lent for a short period of time and therefore the full amount borrowed plus interest and costs needed to be repaid when the borrower next got paid. This was because ethe loan was always intended to be for emergencies and just to help the borrower until they next got paid and were able to then have the money that they needed. So basically, they were designed for people with a poor credit record who needed emergency help.
When Should They be Used?
So these loans should really only be used in emergency situations. When you need money to buy necessities and cannot get it elsewhere and cannot wait until you are next paid. This could be to pay for things like food, rent and utilities in the situation where you have no food or will be evicted or cut off if you do not pay your bills. It is always worth looking at all of the alternatives before you take out any loan. This includes alternative borrowing options as well as alternatives to borrowing. It is only if this is what looks to be the very best options should you consider raking it out. It is worth taking some time to consider the cost of the loan and whether you can manage the repayment before you take it out.
Are They for me?
So if you are thinking about whether you should take out these loans then it is important to consider all of your other options. If you do decide that they are right for you then make sure that you compare all of the different lenders. You will find that there are quite a few different lenders and you need to see what they are all offering in terms of the cost of the loan as well as the repayment terms and things like that. Think about whether you feel that there is a lender there that is offering what will suit you. Make sure that you have in mind what you are looking for and then you will be able to compare them and make sure that you have picked the lender that will suit your needs the very best.
Many people repay their mortgages early and it might be something that you like the idea of doing. It could save you money and reduce the time it takes you to repay which can be great. However, you may not know how to go about repaying it early and it is a good idea to find out.
Check Early Redemption Fees
The first step is to find out whether there is a fee form your lender for repaying early. This is often called an early redemption fee and is often more associated with fixed rate mortgages. However, check anyway as these could be quite significant and might mean that you cannot afford to repay early as they could be many thousands of pounds. Sometimes, they are just a few hundred pounds to cover the admin fees. Whatever the fee is, assuming there is one, you need to think about whether it will still be worth repaying early if you have to pay it. It can be worth trying to calculate how much money you will potentially save by repaying the mortgage early and see whether this would be more than the fee.
Consider Changing Lender/Mortgage
If you do decide to repay early, then it is worth considering whether it is a good idea to switch to a different lender or mortgage. You may need a more flexible mortgage to be able to make overpayments and it is good to discuss this with your lender. Find out whether you can do this with the mortgage you hold or whether they have any others that you can do it with. Also look at other lenders and see what they have on offer as you may find that you can get better value for money if you switch to a different lender. If you are tied in to your lender with a fixed rate, then you may have to wait until the fixed rate period is up before you can change.
Pay a Bit Extra off Each Month
It is a good idea to pay a little extra off each month. Consider how much you might be able to afford and just start doing it as soon as you can. Even small amounts can really add up and so do not worry if it is only an extra tenner a month, it will make a difference. You may find that you will be able to increase that amount as well by making some lifestyle changes. You might be able to compare prices and spend less on what you buy regularly and buy less luxury items and that will make more money available each month to overpay. You may also be able to find some ways to earn a bit more money too.
Drop in Lump Sum Repayments
As well as paying in more than you have to each month, it can be useful to put lump sum payments in when you have them. You will find that at times, you might discover you have a chunk of money in your account that you do not need to spend on anything and this will allow you to be able to pay in a lump sum. Even if it is quite small, it will help. It is worth bearing in mind that the interest on a mortgage is usually calculated daily and so as soon as you pay a bit off, even a small bit, you will be charged less interest. Then, due to the reduction in interest charged, you will have more money to put towards repaying the loan itself. The small payments will really start to pay off.