The payment date you chose for mortgages and loans is important

Will my Mortgage payment date affect my credit rating?

I have experienced more and more of my clients being affected by having a payment date at the end of the month rather than near the start of the month, for their mortgage and loans. This is because of the credit rating system we use in the UK.

Credit Bureaus such as Experian, Equifax and Credit Call to name a few, take vast amounts of data from our Banks, Building societies and credit providers and add them to our personal credit files.

This allows institutions to search your credit worthiness to see if they wish to lend you money or offer you services. This systemic approach to finance is now the norm.

In regards to this approach, you would expect your bank or building society produce data returns for the credit bureaus in the same manor, following prescribed rules to ensure a fair system for all. Well this is not quite what is happening. In the UK we currently have the information commissioner and the FSA that could prescribe a set process in regards to credit reporting.

However when I delved into it further the Banks & Building Societies follow a voluntary code and not one would/could provide me with the details of the code.

So where does your payment date come into this?

Most Banks/Building Societies report your data at the end of the month. If your payment is due on the last day of the month but you miss a payment by one day this will show as a missed/late payment and therefore is a negative for your credit file and future scoring when credit referenced or credit scored.

Now if your payment day was the first of the month you could pay 27 days later on the 28th and this would not show as a missed payment. A bit unfair and inaccurate right!


Matthew Duncan
Independent Financial Adviser,
Bsc, CeMap, DipFA, CeFA, MIFS, CeLTCI
First Floor Office,
1 Kelston Road
Worle,
Weston-Super-Mare
BS22 7FD
Tel 01934 310653 Tel:- 01173 310653
Registered office Tel:- 01823 353970
Fax 01823 339726 Mob 07793130342
www.I-Financialadviser.com

Interest only mortgages , where have they gone?

Thursday, 9 August 2012

Interest only?

In the last year or so Interest only mortgages have become harder and harder to acquire as lenders require un-realistic proof or just will not consider this option. So why has this come about?
The UK financial regulator has been consulting on mortgages in light of the worlds financial melt down that was originally attributed to the sub-prime mortgage market and the impact this has had on the UK Market. The outcome of this consultation is something called the Mortgage Market Review (MMR) which is changing the goal posts for lenders and mortgage facilitators alike.

Rather than having prescriptive rules to follow the FSA create guidance that the providers of Mortgages have to interpret. Now if their interpretations are wrong then the FSA has the power to fine the Banks/lending providers.

This ultimately has left the financial institutions involved running scared. Instead of objective, sensible decisions each has followed the others lead taking Interest only off the menu or making it very hard to obtain. Only a few providers will consider interest only now and typically this is at a low loan to value (low mortgage compared to the value of your house).

So why do we care? Well personally I believe flexibility in the mortgage market is imperative. I personally left University and bought a house immediately with my parents help. This was taken on an interest only basis as I was on a graduate scheme and my starting salary was low. As I earned more I turn my mortgage to a capital & Interest mortgage (Repayment) and eventually reduced the term.
If I was in this exact position today I would still be living with my parents or renting as at the time I couldn't afford the payment on a capital & Interest basis. The impact of this would be another house is not sold in the already stagnant mortgage market. Another little bit of growth missed! NO sale = NO VAT (estate agents, Valuers & Solicitors) and stamp duty would not have been paid! Revenue needed by our indebted government.

So lets look at both sides? What if somebody has an interest only mortgage and at the end of the term has not repaid the money?

Well the first this to so is yes this will happen to some who either through circumstance or lack of planning owe money at the end of their interest only term, and yes this is not ideal.
It is however, my opinion we don't need a nanny state and if these people have not addressed their mortgage requirements then they will have to sell and rent.

Life has consequences and this is one the key thing I am currently teaching my 3 year old daughter. The fact is these people had the opportunity to own their property (which currently is considerably cheaper than renting) which may not happen in the future if we keep using a sledgehammer to crack a nut.

Matthew Duncan
Independent Financial Adviser

www.i-financialadviser.com
01934 310653.
01173 701730

Which Survey on Bank Customer Service

BANK CUSTOMER SERVICE

A "which" customer service survey has put First Direct at the top of the customer service tree whilst Santander languishes at the bottom. With Santander offering enticing rates, does customer service play a part in decision making anymore? Are we happy with how our banks treat their customers?

Customer satisfaction for savings
Provider	Internet	Telephone	Customer Score
First Direct			77%
Co-operative Bank			67%
Aldermore Bank	n/a	n/a	65%
Leeds BS	n/a	n/a	65%
Coventry BS			64%
Principality BS		n/a	62%
Barnsley BS		n/a	62%
Yorkshire BS			61%
Newcastle BS		n/a	61%
National Savings & Investments (NS&I)			61%
Nationwide BS			61%
Saga			59%
Skipton BS		n/a	59%
Dunfermline BS	n/a	n/a	58%
BM Savings (Birmingham Midshires)			57%
Intelligent Finance			57%
Yorkshire Bank	n/a	n/a	56%
AA		n/a	56%
ING Direct			55%
Virgin Money			55%
Marks & Spencer Money			54%
Sainsbury's Finance			54%
Britannia	n/a	n/a	53%
Tesco Bank			53%
Derbyshire BS		n/a	53%
Krbs (Kent Reliance BS)		n/a	53%
Cheltenham & Gloucester	n/a		52%
Post Office		n/a	52%
Chelsea BS	n/a	n/a	52%
HSBC			52%
Clydesdale Bank		n/a	51%
Northern Rock			50%
Cahoot		n/a	50%
ICICI Bank UK		n/a	50%
West Bromwich BS	n/a	n/a	50%
NatWest			50%
Scottish Widows Bank			50%
Lloyds TSB			48%
Standard Life Bank			48%
Egg			47%
Barclays			47%
Bank of Scotland			46%
Halifax			45%
Royal Bank of Scotland			44%
Santander			41%