Money Insider: Put your credit rating back on track with the help of good old-fashioned banking
Saturday 02 October 2010
It seems that barely a day passes without a bank or building society launching a new super-low-rate loan, an interest-free credit card or a cheap overdraft. However tempting this seemingly never-ending supply of low-cost finance may sound, the reality is that unless you have a pristine credit record you'll have little or no chance of being accepted for any of it. Whilst the tightening of lending policy will protect the bottom line for providers, the flip side is that a rapidly increasing number of people are now finding themselves excluded from mainstream credit.
Until now this has driven people to borrow from doorstep lenders, payday loans providers and loan sharks and paying interest of anything between 200 per cent and 2000 per cent-plus APR for the privilege.
Last week however there was at long last a glimmer of light when the Government announced details of a new initiative, aimed at providing an alternative source of affordable credit to people who can no longer borrow from the high street banks.
The scheme, run in association with the National Housing Federation and Royal Bank of Scotland, will start out as a pilot at 10 branches across the West Midlands. It will give people a genuine opportunity to get their finances back on track and repair their credit history in the process.
My Home Finance will not be a soft touch and applicants will have to undertake a 45-minute face-to-face interview to review their financial position in detail and to ascertain whether they have the capability to repay any credit advanced to them.
It is a move back to a time when your local bank's lending officer would sit down with you and discuss your application in depth, long before the days of automated scorecards and an instant computer-generated yes or no. Banks moved away from this individual assessment-style lending approach and have long since adopted automated and centralised functions in order to reduce costs.
The interest rates of 29.9 per cent APR and sometimes higher reflect the high administrative costs due to the in-depth customer appraisal and monitoring weekly repayments, plus it no doubt takes into account the possibility of higher than average defaults and write-offs. However, as this is a not-for-profit lending scheme it can afford to absorb the extra costs rather than having to account to shareholders seeking increased profits.
The My Home Finance initiative is a cheaper and more attractive alternative to payday loans and unregulated loan sharks where the interest costs can prove crippling, particularly for those already operating on tight budgets.
Let's hope this scheme proves to be a success and is rolled out on a wider basis, because the ultra-tight risk policies currently being applied by banks means huge swathes of people are no longer able to borrow from our high street lenders.
Halifax's new ISA
Most of the activity surrounding tax-free savings takes place at the beginning of the tax year, so it came as a bit of a surprise when Halifax launched its latest ISA last week.
This new variable rate ISA pays a market-leading 2.8 per cent plus an extra 0.2 per cent for Halifax current account customers. The account is opened with just £1, offers unlimited penalty-free access and is available online, by phone and unlike many best-buy products, in branch too. You'll need to review your account when the rate drops away after 12 months, but in the meantime this account should be the first port of call for any saver without an ISA. For a basic rate taxpayer to achieve 2.8 per cent net on a standard savings account they would need to find a gross rate of 3.50 per cent and that's simply not possible at present.
In the mortgage sector there has been further best buy action, including better news for first-time buyers. The Coventry Building Society hits the top spot with a new three-year fix priced at 3.59 per cent to 65 per cent LTV with a booking fee of just £199. For first-time buyers, the Co-operative bank and Britannia have trimmed the rate on 10-year fixed rates where you can lock in at 5.09 per cent with a £999 fee or a 5.29 per cent no-fee option, both up to 90 per cent LTV.
The credit card market continues to throw up great deals for those with a tip-top credit rating. This week MBNA launched two new market leaders. Firstly a 16-month 0 per cent balance transfer deal with 2.9 per cent fee, plus a 0 per cent dual offer on both balance transfers and purchases. The latter could prove a winner with Christmas around the corner.
Andrew Hagger is a money analyst at Moneynet.co.uk
- 1 Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
- 2 People all over the world are getting semicolon tattoos to draw attention to mental health
- 3 Van driver who comforted Clark Carlisle and called 999 after suicide attempt dies age 24
- 4 James Blunt was special guest on the highest-rating Top Gear episode ever
- 5 The biggest first date turnoff has been revealed
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
Day In a Page
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.