| 125 per cent mortgage welcomed by consumer website
A leading consumer website has welcomed Alliance & Leicester's decision to launch a 125 per cent mortgage, saying that it will help first-time buyers get on the property ladder.Recently, Alliance & Leicester said that it would offer people a 125 per cent PlusMortgage, which combines a mortgage with an unsecured personal loan.While Citizens Advice Bureau and the National Debtline have criticised the lender for offering people a deal that means that are reduced to negative equity from the start, moneysupermarket.com has welcomed the move."I believe A&L is acting with full responsibility in bringing this product to market," said Louise Cuming, the head of mortgages at the price comparison website."It's not surprising to see another lender join the 100 per cent plus market when first-time buyers continue to find it increasingly tough to get a foot on the housing ladder."Ms Cuming explained that the deal was not encouraging people to take on more debt that was appropriate, as it will "be sold via brokers and therefore borrowers can only access [the mortgage deal] after a stringent advice process."She added: "A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector."A recent report from Nationwide suggested that first-time buyers now have to spend £120 a month more to pay for their mortgage than they did a year ago.
The costs of bad credit
As with any other personal loan, the interest rate you get largely depends on your personal circumstances. However, with this particular type of loan, the single most important factor in determining the rate you get is your credit history. A poor credit rating means that the interest rate you will pay will be markedly higher than with other unsecured personal loans. As most bad credit loans are likely to be variable rate deals, you should be aware that your loan repayments will change in line with interest rates. Click here for more on fixed and variable rates. If you intend to pay your bad credit loan off early then make sure that you know what the early redemption penalties (if any) are. Remember: if you want to repair your credit rating over time then you need to make every payment on any loan you are given.
Personal finances getting 'tighter'
The succession of interest rate rises is pushing people's incomes and what they can afford, according to new figures released from the British Bankers' Association (BBA).The number of mortgage approvals dipped slightly in February, most likely after January's shock interest rate rise helped push many people to the edge of what their finances can afford.If managing your debt is proving a problem then taking a secured loan or homeowner loan could help you cut your monthly payments."[Property] demand appears to be moderating however, as the monthly number of house purchase approvals was lower than a year earlier for the third month running and net lending was below trend in February," said David Dooks, BBA director of statistics."Reflecting tighter conditions for personal disposable income, consumer credit continues to be weak," he added.Credit card lending was also weaker in February, suggesting the higher interest rates are encouraging people to move their debt onto a more affordable secured loan or homeowner loan.© Adfero Ltd .
Why are bank fees so high?
Many Canadians are unhappy with bank fees in general, not just the fees for using another bank's cash machines highlighted by Finance Minister Jim Flaherty. They think service charges are high and increasing all the time, despite the fact that many customers are adopting low-cost electronic banking. They also feel they don't get a break from their banks for being long-time loyal customers. "About 30 years ago, we had no fees," says Caroline Hubberstey, a spokeswoman for the Canadian Bankers Association. "The cost of banking was covered off in the spread between loan rates and deposit rates. Borrowers paid for the banking activities of other clients. "Today, we have lower spreads and we have a user-pay, transparent system." Service fees from retail customers account for only about 5 per cent of bank revenues, according to a CBA publication.
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