Saturday, 28 July 2012

WHAT'S NEW?! Heart Energy Launch!

After almost 2 years, and successful approach to Finance Brokerage, Heart Finance have invested in a new product: Heart Energy
Heart Energy is a market leading Business Utility Broker, Specialising in the commercial Electricity and Gas markets we search for the best deal but charge you absolutely nothing. We work for you, not the suppliers. We take your utility business to several providers and use our buying power to make sure you get the best price available.

How does it work?

We are so confident of our service that, unlike many other brokers, we do not ask you to enter into an agreement with Heart Energy. If we don’t deliver you are free to use whoever you wish to source your energy requirements.
Heart Energy search for your supply against supplier matrix pricing to identify the best price for your business, once this is complete we then negotiate directly with the top three suppliers to see if we can drive down the price further. The results from this are delivered to you to make your decision on which supplier you prefer.
Sounds simple and to us it is as we go through this process every day, on behalf of our clients. Most businesses carry out the same exercise with a selection of suppliers we do it with all of our suppliers so you can be confident the prices offered are the best from the greatest range.

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Heart Energy is part of Heart Finance 

Lenders in tug-of-war for new mortgage business

The mortgage-rate price war is well under way and lenders are finally competing for your business.

Smith (in spectacles) during tug-of-war training on the Isle of Wight, 1943
Lenders are engaged in a tug of war for your mortgage 
Several lenders made significant cuts to their rates, although borrowers still need substantial equity in their homes to qualify for the best deals. Some of the rate reductions would save home owners about £30 a month on a typical mortgage.
Nationwide Building Society has cut rates by as much as 0.4 of a percentage point. The cost of its five-year fixed-rate cut deal for those with a deposit of at least 30pc is falling from 3.79pc to 3.39pc, although the fee is rising to £999 from £549. The rate on its two-year fix, for deposits of 40pc or more, is falling by 0.3 of a percentage point to 2.99pc, with a £999 fee.
Barclays, meanwhile, is dropping the cost of its five-year fixed rate for 30pc equity by 0.3 percentage points to 3.99pc, and the two-year rate for 40pc equity by 0.2 percentage points to 3.09pc. These deals come with a £999 application fee.
The bank is also offering a market-leading two-year fixed mortgage at 3.29pc with no application fee, although customers will need a 30pc deposit to take it up.

Rachel Springall of Moneyfacts, the comparison website, said: "The new two-year fixed deal from Barclays at 3.29pc is the lowest rate on the market at 70pc loan-to-value."
Halifax also joined in, with some rates being cut by as much as a fifth of a percentage point, while Chelsea Building Society has tweaked some rates downwards.
"The mortgage rate war is well under way," said Mark Harris, the head of SPF Private Clients, the mortgage broker.
Michael Ossei of said the battle for customers was "really starting to kick off" among longer-term fixed-rate deals. "There is a great deal of appetite for longer-term fixed-rate deals," he added. "Lenders are starting to wise up to what borrowers are looking for and are finally giving them what they want."
The moves follow HSBC's launch earlier this month of a five-year fix at a record-low rate of 2.99pc, for 40pc deposits and with a £1,499 fee. Santander responded last week with a similar deal for existing customers.
"The move by HSBC a couple of weeks ago has sparked others to reconsider their fixed-rate mortgages," said David Hollingworth of London & Country, another broker.
Lenders are able to cut fixed rates because costs on the wholesale market have also been falling.
There are hopes that lenders' new appetite to compete for business, and a new government scheme called Funding for Lending to provide low-cost funds to banks, will put some life into the property market, which has been bumping along the bottom for some time. Figures from the British Bankers' Association this week showed that mortgage approvals for house purchases were at their lowest level since January 2009 and a fifth lower than a year ago.
Rates could fall further still. Mr Hollingworth said: "The trend looks set for fixed rates to drift down further." But there is a limit to how low they will go. Mr Harris added: "There is a natural floor below which fixes won't fall – assuming Bank Rate stays at 0.5pc, fixes are unlikely to fall much below 2.5pc."
If they did, he explained, they would start looking cheaper than variable rates, whereas "the whole idea of a fix is that you pay a premium for the security that a fixed-rate offers".
With many economists expecting Bank Rate to remain at 0.5pc for the foreseeable future, is there any point fixing your rate at all? Mr Hollingworth said: "Of course, one of the reasons for the fall in fixed rates is that the markets expect Bank Rate to remain static, which of course means that a tracker rate could look like a very attractive option.
"However, I think many borrowers still feel that they wish to guard against all the uncertainty in light of the continuing recession. The more attractive fixed rates become, the more likely they are to be attracted to the safety-first approach."
Adrian Anderson of broker Anderson Harris warned against fixing your rate for too long, however. "While these falling fixed rates are great news for borrowers looking for extended security, make sure you don't fix for longer than you are absolutely sure about," he said.
"Otherwise you'll be hit with hefty early repayment charges when you try to exit, particularly as porting a mortgage [taking it with you when you move] is so much more difficult these days.'
First-time buyers still face an uphill struggle, despite the spate of rate cuts. If you have a deposit of 5pc, you will pay hundreds of pounds a month more than borrowers with more substantial equity.
"If you have only a 5pc deposit, for example, you will pay an extra 3 percentage points on a five-year fixed-rate mortgage compared with someone with 40pc," Mr Harris said, comparing a 5.99pc deal from Leeds Building Society with HSBC's 2.99pc offer.
On a £150,000 mortgage, this works out at an extra £375 per month, as the HSBC costs £374 per month compared with £749 a month with Leeds, he calculated. "Over the five years of the fixed rate, you would pay an extra £22,500 for having a smaller deposit – practically double what the home owner with the bigger down payment would pay."
He said there were some signs of hope for first-timers, however. "Although it is still too early to say for sure, the Funding for Lending scheme should have a positive impact on the availability and pricing of low-deposit deals.
Increased levels of lending to those with modest deposits would boost the market, and the early
signs are encouraging, with RBS reducing its five-year fixed rate to 4.79pc for those with just a 10pc deposit."
But he added: "It is important not to get carried away. While rates might ease, lenders still have constraints on their capital and liquidity, so those expecting rock-bottom rates and a plethora of low-deposit deals are likely to be disappointed."

Friday, 4 May 2012

House prices fall for third consecutive month

House prices have now fallen 11.8pc since they reached their peak in October 2007.

Nationwide expects house prices to stagnate in the next twelve months

The figures show that house prices dipped 0.2pc in April, leaving them down 0.9pc on last year, and the building society said that it expected housing market activity to "remain subdued" with prices showing little growth or a small dip over the next twelve months.
Robert Gardner, Nationwide's chief economist, said that recent softness in housing market figures has been affected by the expiry of the Government's stamp duty holiday for first-time buyers in late March. This provided an artificial boost to house prices in early 2012 as buyers brought forward purchases, meaning that the last few months have been softer by comparison.
The average price of a UK home is now £164,134, compared with £165,609 a year ago, and £167,802 in April 2010.
But according to non-seasonally adjusted data, the average house price on the Nationwide measure peaked at £186,044 in October 2007 and then fell back as low as £147,746 in February 2009. It then recovered to a peak of £170,111 in June 2010 and stood at £164,134 in April 2012.
"Consequently, house prices in April were 3.5pc below their June 2010 peak and 11.8pc below their October 2007 record high," said Howard Archer, chief UK economist at IHS Global Insight.
"At Heart Finance  we search the entire market in order to help you find the best deal you possibly can.
We are committed to offering our customers the highest possible 
standards of service
We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspects of our dealings with you
Only recommend a mortgage or financial services product that we consider suitable for you and that you can afford – Our lenders charge the lowest fees of all - and always the most suitable from the available options " 

He added that the Nationwide report "fully ties in with our long-held suspicion that house prices are likely to trend gradually lower over the coming months. Specifically we expect house prices to fall by around 3pc by the end of 2012."
"Housing market activity is very low compared to long-term norms. And the economic fundamentals currently look worrying overall for the housing market with unemployment high and likely to rise further, earnings growth muted, and the outlook uncertain. This is countering extended low interest rates."
Nicholas Ayres, from buying agents Home Fusion, said that house prices were being dragged down by the "full weight of consumer caution and economic uncertainty". It is also becoming more difficult for consumers to get a mortgage, with the Co-op being the latest lender to pull out of offering interest-only mortgages this week, and others tightening their criteria for handing out loans.
"The Nationwide are there or thereabouts when they say prices will stagnate over the course of the next year," he said. "My feeling is that this is the most positive scenario".

From the Telegraph

Friday, 27 April 2012

Payday loan bosses hit back at MPs

Payday loan providers have claimed they have been unfairly branded as bad value for money by politicians.


Payday lenders claimed today that they are being unfairly tarnished by politicians who have "misunderstood" the service they provide.
Trade body the Consumer Finance Association (CFA) argued that while politicians tend to hold negative views towards payday lenders, most people who actually take out such loans believe they are getting good value for money.
It made the claims as it published a study, carried out by YouGov, which questioned 300 customers of payday lender the Money Shop, as well as 300 politicians, including MPs, House of Lords peers and councillors.
More than nine out of 10 customers believe payday lenders treat customers with respect, compared with just one in 20 of the politicians surveyed.
Some 89pc of consumers questioned said payday lenders explain their charges and fees clearly, but only 12pc of the politicians in the study hold this view.
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John Lamidey, chief executive of the CFA, said: "Payday loans can be misunderstood by politicians concerned for the welfare of their constituents in tough economic times.
"This research clearly shows that the people who actually use payday loans are extremely satisfied with them at every level."
Three quarters of payday loan customers said they were satisfied that they had received a fair deal representing good value, although a significant minority of 15pc were dissatisfied.
Payday lenders will face tougher scrutiny under a new financial regulator, with beefed up powers to impose unlimited fines on firms which breach the rules.
They will find it harder to enter the market and will also have to undergo more rigorous checks when the Financial Conduct Authority (FCA) takes control of overseeing the consumer credit market.
Last month, the Business, Innovation and Skills (BIS) Committee called for tougher action on "opaque and poorly regulated" commercial debt management companies and high interest-charging payday lenders.
The abuse of customers who are "over-indebted, vulnerable and desperate for help" has caused people to lose their home in some of the worst cases, MPs said.
The Office of Fair Trading (OFT) is also carrying out spot checks on 50 major payday lenders amid the concerns that people are being given loans without proper checks being carried out.
The CFA argued that most customers use short-term loans simply to "smooth out the peaks and troughs of their finances" rather than relying on them every month.
Half of customers surveyed use payday loans once a year or less and just 6pc use them monthly, according to the study.

By the Telegraph

Wednesday, 18 April 2012

The ticking interest-only mortgage timebomb: Millions of owners at risk of not being able to afford their home

Borrowers with no plan to repay cut-price interest-only loans, or whose investments have fallen short, risk being forced to sell when their mortgage expires. Some like Walter Harper will have to leave homes they have loved for decades.
Walter Harper has lived in his beloved home for two decades — but last July he was forced to put it on the market. He shared the Luton bungalow with his wife and, after she passed away, his partner, and has watched his grandchildren play there. 
But he is being forced to move because he owes £110,000 on an interest-only mortgage that he can’t afford to repay. Instead of spending his last days in the house he loves, he will be forced to rent elsewhere. 
Forced to sell: Walter Harper plans to rent near his daughters and their children as he can't afford to repay his mortgage
Forced to sell: Walter Harper plans to rent near his daughters and their children as he can't afford to repay his mortgage
Like so many others caught in the interest-only trap, Mr Harper is being forced to leave his family home because of an investment that performed far worse than predicted.
‘I had hoped to own my home by now. This wasn’t what I planned for my retirement at all,’ he says. When Mr Harper took out his mortgage, he was also saving into a with-profits pension. 

    In 1997 he was told this would eventually be worth £276,000, allowing him to take £69,000 as a cash lump sum to pay off most of what he owed. But when he retired in 2008, his pension was worth half this amount, leaving him £78,500 short. 
    He plans to rent near his daughters, Lesley and Tracy, and their children. He’ll use what is left from the house sale to supplement his pension income. 

    How the interest-only timebomb started ticking

    Mr Harper’s tale is far from unusual. There are almost four million homebuyers in Britain with interest-only mortgages. With these mortgages, borrowers pay only the interest on the loan, but don’t have to pay back any of the capital on the property. This happens when the loan matures, usually at the end of 25 years.
    Interest-only deals became popular in the Seventies when people were attracted to them because they looked cheap in comparison to loans where you repaid the capital as well. 
    Homebuyers planned to pay off their capital by using money from an endowment — a type of savings plan linked to the stockmarket. 
    In the Eighties and Nineties, interest-only loans boomed, driven by commission-hungry bank salesmen who promised huge profits on the endowments.
    People were sold a dream that taking one out would not only pay for the mortgage, but also provide them with a handsome lump sum, which they could spend on the holiday of a lifetime and a car. Now thousands, like Mr Harper, who believed this sales pitch have been caught out.

    And how the property boom made it much worse

    In the housing boom of the late Nineties, a different problem emerged. Homebuyers took interest-only deals as they were the only way of stretching wages to buy a house. Many of these desperate homebuyers now find themselves trapped. 
    This is what has snared National Trust recruiter Dee Wadham. She took an interest-only mortgage in 2004, just as the property bubble was about to peak. She bought a one-bedroom cottage in the Cornish village of Par for £120,000 with her partner. 
    Trapped: Dee Wadham is not sure how she will repay the £68,000 she will owe when the mortgage term ends in 2021
    Trapped: Dee Wadham is not sure how she will repay the £68,000 she will owe when the mortgage term ends in 2021
    After they separated, she bought him out and took an interest-only loan so she could afford the mortgage on her £17,000 a year salary. 
    As house prices rose, she took on a bigger mortgage in order to renovate the house. Her monthly repayments on the £68,000 loan are £185, but this wipes out a huge chunk of her take-home pay. 
    Dee is not sure how she will repay the £68,000 she will owe when the mortgage term ends in 2021. Her hope is she will be able to extend the mortgage term, but she will be 64 when it matures and banks are reluctant to lend to older customers these days.
    Another option is to pay off chunks of capital as and when she can. ‘At no point did anybody say to me: “There is no way you can afford to pay back that amount of money.” I am sickened and worried about the future,’ says Ms Wadham. 

    Just how bad is the trap?

    City watchdog, the Financial Services Authority, has warned of an interest-only timebomb for 1.3million people whose mortgages mature within the next eight years. 
    But industry trade body the Council of Mortgage Lenders is playing down the concerns. It says most of those caught in the interest-only trap have benefited from years of house price growth and so can use this equity as a way of paying off their loan.They also believe many will have savings to pay it off. 
    It’s true that many borrowers have large chunks of equity. 
    Despite recent falls in some parts of the country, since 1987 average property prices are up 279 per cent. This should give the average homeowner at least 75 per cent equity. But even the banks have wised up to the risks of homeowners banking on property price increases to pay off their loans. 
    New rules make it difficult for customers to use this as a way of trading up the ladder. This threatens to affect millions of younger homeowners who bought before these restrictions came in to place. 
    The major problem hitting now is that lenders are bringing in increasingly stringent rules on who can have an interest-only mortgage. Those who do not meet them can keep their interest-only deals but will be forced off them if they need to move home or remortgage.
    For someone with a £150,000 mortgage over 25 years at four per cent, moving from interest-only to repayment will send payments up by £300 a month, from £500 to £800.

    "At Heart Finance  we search the entire market in order to help you find the best deal you possibly can.
    We are committed to offering our customers the highest possible 
    standards of service
    We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspects of our dealings with you
    Only recommend a mortgage or financial services product that we consider suitable for you and that you can afford – Our lenders charge the lowest fees of all - and always the most suitable from the available options " 

    A rise in my home's value will let me repay it

    Chloe Halstead, 26, took an interest-only deal in 2009 when she bought a three-bedroom semi in Ewloe, North Wales. A repossessed property, it cost a knock-down £80,000 — and while house prices in the region have been falling since then, hers is now worth £110,000.
    Optimist: Chloe Halstead plans to sell soon to buy a bigger house
    Optimist: Chloe Halstead plans to sell soon to buy a bigger house
    She chose an interest-only loan, like many first-time buyers, because it dramatically reduced her monthly payments.She plans to sell soon to buy a bigger house. Though experts say Ms Halstead may find herself trapped by the new mortgage rules, she is confident about the future. 
    ‘I’m not worried about paying the capital because I know I’ll be able to sell at a profit,’ she says. ‘Interest-only is very handy for people looking to invest in property and I hope the banks don’t take away these loans completely.’ 
    Her optimism is typical of many youngsters who sign up for interest-only loans. 
    Mortgage brokers still believe these are an excellent way for those on low incomes to take their first steps on the property ladder — as long as they start to make capital repayments, or savings, after a few years. 
    The problem is many don’t. And years later they are forced to turn to friends and family, or the banks for help. Many rely on an inheritance to pay off their mortgage.
    In 1990, Allan Keith Dixon, 58, and his wife Maureen, 62, took out a £100,000 interest-only loan for their bungalow in Tyne & Wear. They also took out an endowment policy, but this failed dismally. Their house is now worth £325,000, but they don’t want to sell. Instead they will extend their mortgage term until they receive a windfall from a relative.
    ‘We will just keep paying our mortgage until we receive our inheritance,’ says Mr Dixon, a retired teacher who became a mortgage adviser.

    How a cheap deal became a financial disaster

    Why did people take out interest-only deals? 
    From the Seventies until the turn of the century, interest-only mortgages were the most popular type of loan. Most people were attracted to them because they looked cheap by comparison to capital repayment deals. 
    At a rate of 4 per cent, interest-only payments are £500 a month on a typical £150,000 loan, compared with £792 a month for someone on a capital repayment mortgage. The difference is that interest-only borrowers need to pay off the capital part of their loan when their mortgage term ends — typically after 25 years. 
    Largely, homebuyers planned to pay off their capital by using money from an endowment — a type of savings plan linked to the stockmarket. In 1988 alone, more than one million homebuyers took interest-only loans. In 1992 three out of every four mortgages taken by homebuyers were interest-only.
    Though the popularity of endowments began to decline after the year 2000 a new trend began to emerge — a rise in the number of homebuyers taking interest-only loans who had no idea how the capital would be repaid.
    As house price increases raced ahead of average wage rises, first-time buyers saw interest-only deals as a way of getting a foot on the property ladder. Many had small deposits, but interest-only deals allowed them to cut their repayments and borrow more. In some years, as many as one in five of all first-time buyers used this arrangement. 
    What’s the problem? 
    City watchdog the Financial Services Authority (FSA) has warned 1.3million borrowers whose interest-only loans mature between now and 2020 that they face a ‘ticking timebomb’ — they have no way to repay the loan. Its data suggests there are 320,000 interest-only borrowers who have missed or were late with at least one mortgage payment. Its fear is that if homeowners can’t even afford the interest on their loan they will never be able to repay the capital. 
    On average, homeowners with loans maturing in the next 12 years will have to pay off £59,000, according to trade body the Council of Mortgage Lenders (CML). More than 2.5million households will see their interest-only mortgage mature after 2020, with an average debt of £155,000 to pay off. Many of those with loans maturing may have never put savings in place to pay them off. 
    Others may have started with good intentions and put money aside, but ended up using this for childcare, school fees or other living costs. Thousands more have seen their savings plans, typically an endowment, deliver far less than expected. 
    The vast majority of endowments sold alongside mortgages were with-profits policies. Many whose policies mature this year were told to expect upwards of £100,000 from their plans — based on a £50-a-month saving by a man who took out a policy nearing his 30th birthday. But returns have nosedived by as much as 44 per cent in recent years. 
    Weren’t people warned? 
    Many were. Those relying on endowment policies to pay off their mortgage receive a projection letter from their insurer every two years. These are colour-coded — red if a shortfall is expected, amber if a shortfall is likely, and green if the policy is on track to pay off the mortgage. 
    Despite this disappointment, some took action and put aside alternative savings. But this was not possible for those on already-stretched budgets.
    Many consumers won redress for being mis-sold an endowment, on the grounds that the risks were not properly explained to them. This cash was supposed to be used to help them pay off their mortgage — but many simply saw it as a windfall and spent it. 
    Many borrowers missed the deadline to claim redress, and others never got the chance because of complicated regulations governing who sold them the loan. Recently banks have been writing to interest-only customers reminding them to make plans to pay off their capital.

    From the Mail Online 

    £14,000 of debt considered 'normal'

    Despite the worsening economy, consumers still comfortable with large debts and most only consider themselves in serious financial difficulties once they owe more than £14,416.

    man holding bills in his hand

    However consumer attitudes to personal debt are changing. This annual "financial safety net" report shows that there is an increased awareness about the difficulty of servicing such debt, should personal circumstances change.
    The report, by the insurance company Bright Grey, found that 12 months ago people were more "debt tolerant" and did not consider themselves in serious financial difficulty until they owed almost £16,000.
    The survey also found that people were becoming increasingly concerned about rising unemployment. Two in five (40pc) said that factor most likely to affect their standard of living would be losing their job. The next biggest threat to living standards was serious illness – cited by 39pc of respondents. Surprisingly people said rising inflation would have a more drastic affect on their living standards than rising interest rates.
    Roger Edwards, proposition director at Bright Grey: "Over the past 12 months, Britons are sitting up and taking greater notice of the wider economic environment. People are more wary about getting themselves into serious levels of personal debt, but over £14,000 is still clearly a cause for concern.
    As a result, Britons need to keep control of their finances and have contingency plans in place to be able to continue to pay for their essential monthly outgoings."

    Heart Finance, through the debt advisor,  are dedicated to offering you sensible advice on debt issues and advising you of the most appropriate solution which will help bring relief from debt.
    According to a  survey, not many people are familiar with Debt Management Plan, 
    Debt ManagementPlan (DMP) throughHeart finance is an informal agreement between you and your creditors that enables you to restructure your debt in a way you can realistically afford to repay.

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    But despite increased concerns about maintaining living standards, most consumers take not steps to protect their income, via various insurance products. While life insurance remains commonplace, few people have either income protection or a critical illness plan in place. The former protects a proportion of your income if you are made redundant or are signed off work sick, while the later provides a lump-sum payment – usually to pay off a mortgage – if you are diagnosed with a serious life-threatening illness, such as cancer or heart disease.
    The main reason cited for not having a protection product was the cost; 46% of people suggested that protection products were too expensive compared to 39pc last year. One in five people (19pc) said the products were unnecessary as they could rely on savings, while over one in ten (11pc) said they would prefer to spend the money on other things.
    Mr Edwards added: "People are becoming increasingly aware of the impact of high debt yet are still failing take out adequate protection. Britons need to make financial provisions for their future and not live under the hope that state benefits or bail outs from family and friends will allow them to maintain their standard of living. Protection products are cheaper than ever and it is crucial that people recognise the significance of putting an appropriate financial safety net in place."

    From The Telegraph