Financial Decisions Split Between Parents

Men and women tend to have a fairly equal say in how money is spent within the family home, a new study indicates.

Research released by the Norwich & Peterborough (N&P) Building Society shows that in the 16 subjects studied families tend to make decisions about money together, with 13 areas reported to be addressed this way. However, in the three topics where spending is not agreed upon by both parents, females were revealed to be dominant. The study indicated that women decide how much is splashed out on supermarket shopping in 59 per cent of households, with the same proportion also in charge for expenditure during festive periods. In addition, just under three-quarters (71 per cent) of women are in control of food shopping.

Meanwhile, the building society claimed that men and women often work out spending on "major outlays" as partners. It was revealed that 85 per cent of Britons make a joint decision when moving home, with 78 per cent deciding together on where to go on holiday. More than half (56 per cent) report that expenditure for household bills is managed between them.

It was also revealed that just under half of parents make use of a joint account for their household spending. Research from the financial services firm also revealed 44 per cent of mums and dads take decisions about saving money together, with two-thirds of those questioned setting cash aside every month. The study also indicated that just under a fifth (17 per cent) of respondents claim that they have never put money into a savings account for their families.

For those consumers who are struggling to save for the future, it is possible that they may encounter difficulties in meeting demands for payment on areas such as personal loans and utility bills in later life.

Commenting on the figures, Gary Lacey, group product manager for N&P, said: "Although men are generally the main income earners in a family, it is fascinating to see that most financial decisions are actually made jointly by both the mother and the father. Indeed, this puts the myth of the father as the financial head of the family to rest. In addition, while men rarely appear to have the final say so in matters of finance, women often step up to make the day-to-day decisions with regards to spending on their homes and children. This may be due to the fact that they are the main caregivers or - possibly - because mother often knows best."

For those households which are looking to supplement their finances as the year progresses, taking out a cheap loan could be advisable. In doing so it is possible that consumers can meet costs for areas such as property repairs, electrical goods, holidays and moving home. A loan may prove to be of particular assistance to parents after a recent Engage Mutual study showed that more than half of mums and dads believe they will have to cut back on expenditure for their children due to the impact of rising living costs. It was also suggested that about one in three of those who previously believe they were living comfortably now think they have to reduce their spending.

Abbi Rouse writes for All About Loans where visitors can apply online for tenant loans. We also specialise in homeowner loans, and self certification loans for the self employed.

The Benefits Of Renting Versus Owning

Because of current housing conditions that are currently taking place many people believe that no one should buy a home, at least not soon. That is simply not true. There are some issues that home buyers should watch out for, but those issues, such as sub-prime loans, can be avoided by many working people who have good credit histories.

Another truth is that owning a home today can be just as affordable as renting in many areas of the nation. With falling home prices, the time to buy could never be better.

Here are some things to think about when you are considering buying a home.

Buying a home allows you to begin building equity in the home. As you pay off the mortgage you begin to increase your wealth in the home. This is never true with renting.

You will be allowed to take advantage of tax deductions that renters do not have access to. Mortgage interest is tax deductible per the current IRS code.

Monthly mortgage payments under a fixed rate loan are fairly steady, while a landlord can easily increase your rent.

Homeownership allows you to put down roots in a community and become a part of that community. It lets you buy into the American dream.

There are some drawbacks to homeownership as well.

Maintenance costs will be your responsibility. These costs will have to come out of your pocket and the work will have to be done by you or someone you hire.

During the first years of owning the home it may difficult to sell if you find yourself needing to do so. This can tie up your cash significantly. Also, it is not nearly as easy to simply pack up and move on, as some people like to do.

Your property can increase or decrease in value because of conditions that you have no control over. For example, if foreclosures take place near to your home, your home loses value. Not fair, but that is the way it is.

Building equity is usually considered one of the main reasons to own a home. In fact, for many American, homeownership is the only way they can build substantial wealth. Equity is easy to understand. As time passes and you pay your monthly mortgage an increasing amount of that money goes toward paying down the principle. This means that over time you have more of a share in the home in real dollar value. Later on, you can borrow from this equity if you wish to do so. This borrowing power can be a huge benefit for those who pay their bills on time and find they need credit in the future.

Owning a home also allows you to deduct mortgage interest and property taxes from your federal income taxes and some state income taxes. This is not small change for most people. These deductions can mean big tax savings, especially in the early years of the loan when interest makes up most of the payment. In fact, you may find that with the tax deductions it is actually cheaper to buy a home than it is to rent. You can find current tax law on homeownership at various online sources or through a qualified tax advisor.

Lastly, having a home also allows you to feel more secure in knowing that your family will have a place to live. When you rent from someone else, you may not always be able to renew your lease.

Peter Kenny is a writer for The Thrifty Scot, please visit us at http://www.thriftyscot.co.uk/mortgage/ and http://www.thriftymortgages.co.uk/remortgages http://www.thriftyscot.co.uk/Loans/022008/making-the-most-of-your-equity-1.html

Non-Refundable Mortgage Fees

Mortgage lenders in the UK are beginning to introduce non-refundable application fees as a way to bolster their revenue. By applying a non-refundable fee to a mortgage application, the lender will ensure that they receive some form of revenue regardless of the outcome of the mortgage application.

Historically, mortgage applicants in the UK have been refunded the fees they pay to the lender if the application is unsuccessful. This leads to a situation in which the applicant is not left out-of-pocket if they fail to secure the mortgage. Conversely, the mortgage lender will not receive an income from the applicant and will effectively lose money due to the time their staff spent assessing the application.

There is a growing trend in the current mortgage market to rectify this situation and ensure that the lenders are indemnified for costs incurred on assessing unsuccessful applications.

Several UK mortgage lenders have now introduced non-refundable fees as a revenue collecting exercise. This comes in the wake of the crackdown on exorbitant mortgage exit fees that are typically charged to borrowers when they remortgage.

The Financial Services Authority has deemed the exit fees excessive and forced the lenders to bring them in line with the estimated expenses they incur during the remortgage. This means that mortgage lenders no longer have this cash bonanza to look forward to when their customers leave them. The solution appears to be to charge more fees at the outset.

For the customers, the new fee regime means that they are practically gambling when applying for a mortgage. If a customer's application is rejected, they may lose hundreds of pounds and have nothing to show for it. If their application is successful, however, they have nothing to be concerned about as they will not be forced to hand over more money for another mortgage application.

For the lenders, the new fee structure means that they have achieved what all astute investors aim for, which is to protect the downside. If the mortgage application is successful the lender will pocket the application fee in addition to making a profit on the interest and charges typically applied the mortgage throughout its term. If the application is unsuccessful, the lender will miss out on many years of interest and fee income, but will keep the application fee to cover costs.

It is obvious that borrowers will need to be on the lookout for non-refundable fees in the future and make sure they do not apply for mortgage products they have little chance of obtaining. Some lenders have products that do not require borrower's to pay fees upon application. Home owners and first-time-buyers should therefore research the market carefully to ensure they are not hit with application fees that they may not need to pay.

Alternatively, applicants should seek advice from an independent mortgage broker who can scan the entire home loan market for a suitable product. Mortgage brokers have software which can evaluate every mortgage product that is available in the UK at any point in time. Furthermore, they can search for products based on criteria such as whether or not they have non-refundable application fees.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

Off-Set Mortgages Overview

Offset mortgages are a type of flexible home loan product that allow borrowers to reduce the interest charged on their loan balance by offsetting the balance of any savings they have accumulated in a specified deposit account.

For example, an offset mortgage that has a balance of £350,000 could be offset against a deposit account that has a positive balance of £80,000. The interest that will be charged to the borrower will be calculated on the net balance of £270,000 instead of the full balance of £350,000.

This type of home loan product first rose to prominence in Australia and are sometimes referred to as Australian mortgages in the UK. The original aim of offset products was to help home owners pay off their mortgage sooner than they could with traditional products and to simplify their banking by rolling several different products into one.

There are several different types of offset mortgages. Although most offset products are basically the same, in that the balance of savings in a deposit account is offset against the balance of the home loan, some lenders structure their offset products in different ways.

One such way in which they are structured is to separate the various financial products included in the package. These products may include any combination of the home loan itself, current accounts, savings accounts, credit cards, and loans.

A different way in which they are structured is to combine the products into a single facility. These offset products are commonly referred to as a current account mortgages.

While the specific features of various offset mortgages differ, some of the common features include: the ability to offset the balance of the home loan and the balance of the deposit account; overpayments and underpayments; additional borrowing to an agreed upper limit; payment holidays; daily interest calculations; the ability to transfer the mortgage to another property; a choice between capital and interest or interest-only repayment types; a flexible term of the home loan – usually between 5 and 25 years.

Interest is not usually earned on the balance of the deposit account. Instead, it is offset against the mortgage balance in order to save interest. This can help reduce the income tax liability of the borrower because tax is normally charges on interest earned from a deposit account.

Despite all the benefits of offset mortgages, there are several disadvantages that must be considered. One such disadvantage is that a higher rate of interest is normally charged on this type of home loan than for standard mortgage products.

Another risk is that the borrower is not disciplined enough to continue reducing their loan balance and instead draw down on it whenever they wish to. Because equity can be drawn upon with little interference from the lender there is a risk that undisciplined borrowers may not pay off their mortgage early as intended. Borrowers should therefore be careful to not use the equity in their home as a bottomless savings account.

Borrowers should therefore carefully assess whether this type of product is right for them before applying. Unbiased advice should be sought from an independent broker if there is any doubt.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

A Guide To Stepped Mortgages

With interest rates on the rise property owners are searching for ways to save money on their mortgages. Monthly repayments have been steadily growing due to a gradual increase in the Bank of England base rate and those on variable rate mortgages are feeling the pinch.

With regards to interest rates, there are two types of mortgages - variable rate and fixed rate. The interest rate attached to variable rate mortgages, and therefore the repayments due each month, fluctuates with increases and decreases in the base rate. The interest rate attached to fixed rate mortgages, however, remains stagnant for a set period of time.

The trade off when fixing interest rates on mortgages, and therefore reducing risk, is that the fixed rate is generally higher than the current variable rate offered on the same products. Mortgage applicants must therefore choose between the two options based on whether they wish to take on the risk or pay a potentially higher interest rate that will not budge.

In the wake of increasing interest rates, fixed rate mortgage have become popular amongst UK home owners who live in fear of further rises. For many, this may seem like the only option they have to potentially save money on their mortgages.

There is, however, another option, in the form of stepped mortgages.

Stepped mortgages are a hybrid between variable and fixed rate products. The offer the borrower a low interest rate to being with and have future rate agreed to at the outset.

For example, stepped mortgages may offer a borrower a 5% interest rate for the first year rising to 6% for the second year and 7% for the third year. The interest rates are agreed upon at the beginning of the term of the loan and the changes will occur regardless of what the base rate is doing.

This has the effect of reducing the borrower's monthly repayments on the stepped mortgages during the first year, and ensures that future rises in the interest rate do not come as a surprise and can therefore be budgeted for.

Despite this, borrowers should be aware that stepped mortgages usually come with tie-in periods and hefty early repayment charges. The borrowers will therefore be locked into paying the higher interest rates several years into the term of the loan or face the prospect of paying a large fee if they choose to remortgage to another product.

However if the borrower remains disciplined and takes advantage of the lower interest rates during the first few years of the mortgage term they might be able to pay off some of the balance of their home loan. This would provide a reduction to the amount of interest payable on the mortgage. When the higher interest rates take effect the actual amount of interest payable each month will not increase as much as it would have if no payments were previously made to the balance of the loan.

Stepped mortgages are therefore a product which can help home buyers to pay off their home loan sooner.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk/

Tips On Avoiding Mortgage Problems

When times are good, times are very good. When times are bad, homes are repossessed. It is safe to say that the good times are over for home owners who have a mortgage to pay off and like clockwork the repossession industry is shifting up a gear.

The ability to sustain repayments on a mortgage can change rapidly. There are many home owners who have secured properties during the past few years who are now facing the prospect of losing their homes because they can't keep up with their monthly mortgage repayments.

Property affordability has dropped considerably in the last few months as interest rates rise and lending criteria tightens. While it is easy to use hindsight to see that many home owners who are facing the prospect of losing their home should not have leapt onto the property ladder in the first place, it is more sensible to focus on the issues that they should have considered before applying for a large mortgage.

When assessing whether or not to buy a property, a prospective borrower should first look at whether or not the mortgage they wish to apply for is simply too big. It sounds so simple - and that's because it is. Mortgage lenders offer products with income multipliers of more than five times an applicant's salary these days which is more than twice as much as it used to be.

This raises the question - why the increase? Twenty years ago lenders assessed that borrowers could only afford a mortgage of about two to three times their annual wage. Why are they now suggesting that borrowers can sustain a mortgage of five times their salary?

Even if a borrower secures a mortgage that they can afford at present, potential future changes in the terms and conditions attached to the mortgage and potential changes to the household budget should be accounted for.

The most obvious factor that can, and probably will, change is the mortgage's interest rate. When interest rates increase, monthly repayments on variable rate mortgages also increase. When fixed interest rate periods expire, the interest rate payable on a fixed rate mortgage may also increase. Both of these scenarios will result in an increase in the monthly repayment amount due on the mortgage and will therefore lower its affordability.

Finally, borrowers should factor in the possibility that their income may reduce. Any reduction in a household's income will naturally lead to the mortgage, as well as other bills, becoming less affordable. There are various insurances available to mitigate reductions in income and borrowers should research this carefully when applying for a mortgage.

Borrowers who plan ahead and factor in potential changes in the variables detailed above will have a much better chance of funding their mortgage through the bad times and therefore holding on to their home.

Before buying a home or remortgaging to a new home loan it is wise to speak to an independent financial adviser or mortgage broker to ensure that the most appropriate financial products are obtained. Financial information should be sought from an independent adviser to ensure the best advice possible is received.

About the Author:
Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

Federal Reserve Interest Rate Reduction Benefits You

The interest rate reduction announced yesterday by the Federal Reserve is like music to my ears! Four years of steadily rising interest rates took their toll on my finances, with interest rate increases on both my adjustable mortgage and revolving credit accounts.

The federal fund interest rate reduction should benefit us all in various ways.

If you have an adjustable rate mortgage, it should adjust down. If you are looking to refinance your mortgage, the rate should be lower. Credit card rates should drop also, even if the effect is minimal. Any savings in interest expense is good for the individual. IF the interest savings is used wisely!

Probably the main motivation for dropping interest rates is to increase consumer spending, and ease credit concerns in the housing market. The fed is hoping we will out go out and increase our credit balances by purchasing new housing and other consumer items. That would be excellent for business and the economy!

Personally, I will use the lower interest rates to eliminate more debt. I plan to pay down as many credit accounts as possible. I want to be debt and interest FREE!

Do you ever wonder how people get rich? I do... One thing I believe strongly, is that I will never get rich by paying exorbitant interest charges to billion dollar finance companies!

If you are looking to reduce your interest charges and pay down your debt also, you might want to try our Personal Finance Analyzer. If this tool is used properly, it can provide you with serious long term financial relief, and provide you with real money savings every month!

Now is the time to seize one huge benefit of the Federal Reserve interest rate reduction. Take the savings in interest expense, and use that savings to pay down all your existing debt!

In the long term, this can be the greatest benefit of all!