These are bills you don’t have to pay off quickly

A sudden, steep but highly anticipated recession means we are all desperate to raise money over and over again and whatever we do, we need to pay off that debt as quickly as possible to strengthen our finances for turbulent times ahead. .

For the most part, this is absolutely correct advice. But not always.

Those with serious debt problems should seek advice from charities such as StepChange, which can develop personal plans for amortization or debt relief.

But if you haven’t and managed to manage your bankroll with unexpected cash in Covid, or if the crisis has left you in annoying but largely manageable levels of debt, here are a few strategies you can use.

Repayments: credit cards and overdrafts

We’ve always known credit cards are an expensive way to borrow money, but now, with the new reverse overdraft fee rules that generate a typical interest rate of 40%, overdrafts in particular are very expensive, although they don’t always realize it.

You’re right to pay it off as quickly as possible, and of course that applies to business cards, thresholds, or payroll loans – the most expensive form of mass loan out there.

Although the “snowball” method of paying off the smallest debt for the first time is gaining popularity with its psychological surge, experts urge debtors to focus on paying off the most expensive debt first. This is likely your overdraft. Clean it up and consider canceling setup if possible. It’s not worth it.

With a 0% reduction on old credit card balance transfer transactions, the days back and forth between free credit transactions without ever being paid back are fast fading away.

Millions of people take vacations to pay off debts. What happens when you finish?
Start by putting the balances on all of your cards below half of the total available balance to reduce the impact on your credit score. Then pay it off quickly and firmly.

Maybe you’ll pay it off: mortgage and personal loans

Long-term loans with lower interest rates sometimes don’t even feel like debt, they just sit in our brains under a file called an “Account”, as if we need something constant in life that we can’t escape.

However, paying a few pounds a month on a mortgage or loan can significantly shorten the term and thus the amount of interest you end up paying. But there is a warning.

First, these products often have an early settlement fee (ERC). Mortgages, in particular, are often a burden if you pay more than 10 percent of the amount you owe over a certain period or in the first few years.

Car loans often impose similar fines depending on the type of funding you have arranged to finance. A fixed rate may be required to pay off car financing and may be covered if early settlement is possible.

Second, as soon as you return the money, they leave. So, if you find yourself in the midst of a corrosive economic pandemic, for example, and you need extra cash to filter you out, this is not a flexible product to return some money even if you are a model borrower. By now, you are probably already exercising your vacation options.

Set up an emergency fund of between three and six months for your usual living expenses before embarking on an overpayment journey.

Another question that arises is whether paying off long-term debt at a low interest rate is the best way to use your money. Horrible cash savings today, even with fixed rate offers that block your money for several years, may not be able to pay you back more interest than you saved on a loan.

On the other hand, investing money can outperform our current very low interest rates, especially with such a long investment horizon. Getting the advice of an independent financial advisor is certainly something, although some investment vehicles have ridiculous management fees given today’s volatile stock market.

Don’t pay: student loans

Around 130,000 UK-based alumni made additional voluntary payments worth £ 2,740 each in 2019/20. Another 10,600 returned for an average of £ 4,310 before going into debt.

But it might be a useless exercise.


Student loan companies have been accused of promoting unnecessary payments
Students, starting university this year and receiving full tuition fees and maintenance loans, could owe more than £ 61,500 on departure, Hargreaves Lansdowne estimates. To get it back in full, they will need a salary of £ 53,100 – provided they don’t take career leave or get a raise.

Coming back to the real world, the average annual payout is now under £ 1,000 a year – just £ 120 in the last decade.

Unsurprisingly, the Institute for Tax Research (IFS) found that only 17 percent of graduates will complete their loan in full.

“It’s very worrying to send your kids to college to run into tens of thousands of pounds in debt – and nobody likes the idea that most of it will pay off in their fifties,” said Sarah Coles, a personal finance analyst at Hargreaves. Lansdown.

“However, if we focus on official student loans, we might lose money – and ignore the really problematic commitments students accumulate along the way.

“Most graduates will only pay back their student loans after they are written off. However, many are so worried about taking on debt that they make additional payments.

“For some, this would be a sensible approach based on careful calculation, but for many there is a real risk that this additional payment will be a waste of money,” he warned.

“During their studies, they’ll borrow thousands of pounds which can be returned to bite off.”

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10 mortgage lenders have developed the market as a whole

The top 10 mortgage lenders remained unchanged in 2018 both in terms of gross loans and outstanding mortgages. This is based on data from UK Finance’s largest mortgage lender.
Among these, these banks controlled 82.4% and 82.2% of the market share, respectively; This is an increase from 80.4% and 82.1% in 2018.
At the top of the list for 2019 and 2018 is Lloyds Banking Group with a mortgage loan balance of £ 286.4 billion and a gross loan value of £ 46 billion in 2019.

Lloyds Banking Group alone holds a 17.2% market share in gross lending and 19.7% in mortgage lending.
The rest of the top 10 on both lists include: Nationwide Building Society (£ 189.8 billion and £ 33.7 billion, respectively); Santander (£ 165 billion and £ 30.9 billion); NatWest Group (£ 147.5 billion and £ 33.5 billion); Barclays (£ 142.7 billion and £ 24.9 billion); HSBC Bank (£ 96.7 billion and £ 20.1 billion); Virgin Money (£ 59.5 billion and £ 9.3 billion); Coventry Building Society (£ 42.1 billion and £ 8.6 billion); The Yorkshire Building Society (£ 36.7 billion and £ 7.8 billion); and TSB Bank (£ 28.9 billion and £ 5.9 billion).
Outside the top 10, it is mostly occupied by big, established names, however, there have been some notable changes in the rankings.

Skipton Building Society increased gross lending from £ 4.1 billion to £ 4.6 billion, up from 13th to 11th on the list.
Meanwhile, Topaz Finance increased its mortgage value from £ 11.2 billion in 2018 to £ 18.3 billion in 2019.
Legal & General Home Finance also saw significant increases in mortgage value from £ 3.1 billion to £ 4.2 billion and over £ 2.2 billion to £ 3 billion.
Metro Bank fell from £ 4.2 billion to £ 2.3 billion a year, down from 12 to 16 on the list.
Lloyds Banking Group also topped the list for the value of mortgage loans to buy and sell (BTL) – at £ 48.6 billion, although that’s down from £ 50.57 billion in 2018.
However, in terms of BTL’s gross loan value, BTL is ranked second by the Nationwide Building Society. Here Nationwide is up from £ 4.48 billion in 2018 to £ 6.6 billion in 2019, compared to a drop from £ 5.53 billion to £ 5.02 billion for Lloyds.
Although the key players in the top 10 BTL mortgages remain pretty much the same, there have been significant moves across the rankings.
The top 10 lenders who increased their gross loan value at BTL in 2019 include Barclays (£ 3.89 billion to £ 4.13 billion), Santander (£ 2.33 billion to £ 2.47 billion) and the NatWest Group (£ 1.36 billion to £ 2.08 billion). ).
Lenders to this group who cut their gross value on BTL loans include the Coventry Building Society (£ 3.82-2.8 billion) and Virgin Money (£ 2.26-1.88 billion). , Paragon (£ 1.58 to 1.47 billion) and Leeds Building Society (£ 1.32 to 1.16 billion).
In terms of BTL market share in 2019, the top 10 lenders on the list held 74.6% by gross loan and 73.2% by mortgage; This compares to 75.2% and 72.4% in 2018.
In 2019, gross borrowing was £ 268 billion, 0.3% lower than 2018; Gross borrowing for loan purchases was £ 42.2 billion, up 4.2% for 2018.
Loans allocated on the BTL market increased by £ 1.1 billion and in the overall market by £ 0.4 billion. Bank lending increased by £ 2.7 billion and £ 7.5 billion, respectively.

Overall, construction and intermediate lending declined in both markets – construction companies by £ 1.1 billion in BTL and £ 1.8 billion in the full market and intermediate lenders by £ 0.8 billion and British Pound 3.5 billion, respectively. .
Calum Bilbe, data and research analyst at UK Finance, said: “One possible explanation for this growth in the big banks is the decline in lending from direct competitors that coincides with the introduction of ring fencing in early 2019.”
He added: “In short, fencing means that by early 2019, the UK’s biggest banks will have to separate their main UK banking business from other banking activities (eg investing).
“With retail banking in the UK limited, there are a number of things banks can do with money from borrowers’ deposits.
“Because average savings are higher than loans, these large lenders have used excess retail savings in ring organizations to increase mortgage lending.
“This surge in mortgage supply has helped significantly lower the average cost of new mortgages as larger construction companies and mid-sized lenders compete with the largest banks to attract borrowers for their products.
“In addition, larger lenders can use the Internal Rating Based Rating (IRB) to weigh capital (as opposed to the standard small firm approach).
“This further lowers the costs for larger creditors by helping lower prices.
As a result, under the Standard Approach, smaller lenders make it more difficult to compete in mainstream markets where restrictions and IRBs allow the largest firms to dominate market share.
“This does not reduce the diversity of the mortgage market as specialist lenders continue to expand in market segments that require manual credit, such as self-employed customers or customers with more complex incomes.
“Large and sometimes medium-sized companies are less competitive in this segment because their largely automated systems cannot find the right approach to these loans.
“Overall, despite the largest bank market share with many different types of lenders, the mortgage market remains competitive and meets all borrowers’ needs.”

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