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Monthly Archives: August 2016

Here are ways to Pay for Home Improvement

# Utilizing your investment funds

The fortunate thing about utilizing your reserve funds for home enhancements, instead of for occasions or another auto for instance, is that – and also making your surroundings a more pleasant place – you are making a speculation. The right enhancements can build the estimation of your home exponentially. Case in point, a cutting edge lavatory could add as much as 3% to its sticker price, while an OK new kitchen could include 5%, as per assessments.

On the off chance that you have money to hand, utilizing it to finance your home changes could be the most sensible choice – particularly with investment funds rates so low. Be that as it may, if your cash is tied up in an altered rate security for instance, it may not be worth paying the related punishment to get the money out – on the off chance that you can get it out by any stretch of the imagination. Keep in mind additionally, that on the off chance that you pull back assets from a money ISA, you won’t have the capacity to beat up your recompense again inside the same assessment year.

The main downside to paying directly with cash, however, is that you will not be protected should anything go wrong, such as the company carrying out the work going bust or even turning out to be fraudsters. So, even if it’s just the deposit, putting the cost on a credit card and then using your cash to pay it off is a good idea, as I go on to explain.

# Putting it on a 0% purchase credit card

If you use a credit card to pay for your refurb and the work turns out be faulty or even never gets completed because the company goes bust for example, you’ll be able to claim the money back from your card provider.

This is the case even if you only pay for the deposit on your card –so long as the total bill comes to between £100 and £60,260, you’ll be covered under the terms of either the Consumer Credit Act 1974 or the more recent Consumer Credit Directive. Once you’ve used your card, this protection is locked in place.

If you’ve not got the money squirrelled away in savings to clear the balance with, you should get a card that charges an introductory 0% on purchases. This will enable you to clear the cost (preferably by monthly direct debit) during this interest-free period.

Santander’s Credit Card for Purchases and Tesco’s Clubcard Credit Card for Purchasescurrently come with the longest interest-free period on new purchases, both offering 18 months at 0% before jumping to a representative APRs of 18.9% (variable).

If you regularly shop at Tesco, the Clubcard credit card could be the deal to go for, as it enables you to rack up the Clubcard points faster. You get one point for every pound you spend in Tesco and one point for every four pounds you spend elsewhere.

However, if you are planning on clearing your debt, sooner, why not throw in some cashback instead…?

#Interest-free purchases with cashback

The American Express Platinum Purchase Cashback card for example, offers 16 months at 0% interest as well as 1.25% cashback on all purchases – meaning you not only get to spread the cost of your home improvements without paying interest, you actually get money back on them.

Once this 16-month honeymoon period is up, you’ll be paying an APR of 18.7% (variable) once the card’s £25 annual fee is factored in.

Alternatively, if you bank with Nationwide, the Select Card offers 15 months at 0% on new purchases and 0.5% cashback. You will then be charged a representative APR of 15.9% (variable).

However, if your credit card limit won’t stretch to the cost of your home improvements, unsecured personal loans are also offering great value at the moment with rates at their lowest ever.

# Personal loans

If you’re planning major improvements such as converting the loft or adding a conservatory then you can easily be looking at spending upwards of £10,000 – in which case a personal loan could be the way to fund it.

Sainsbury’s Bank, which took the gong for best loan provider , has just lowered the APR on its standard personal loan to a market-leading and all-time low of 4.4% APR. This rate applies to borrowing of between £7,500 and £15,000 and you can choose a repayment term of between one and three years. If you need longer to repay, Sainsbury’s has also reduced its rate on the same-size borrowing to an APR of 4.5% against a four or five year repayment term.

Santander offers a slightly higher rate of 4.5% on the same levels of borrowing to everyone – but goes further for existing customers, by extending the same loan to £20,000 instead. If your improvement project is a particularly big one, it could even be worth making the switch to its 123 account before you apply.

Then there’s one final option – letting your home raise the money for its own improvements…

#Using your home

If you’re planning on building an extension then it might be worth approaching your mortgage lender to see if you can free up some cash with a further advance. However, borrowing extra against the value of your property is not a decision to be taken lightly. The additional funds may not be offered at the same rate as the rest of your mortgage for example, and could even tie you in for a certain period. If this doesn’t tally with any tie-ins on your main mortgage, things can get tricky when it comes to renewing your deal.

If however, your current mortgage deal is coming to an end, you could move the whole loan – plus the extra required for the work – to one lower rate. For instance, the West Brom Building Society is offering a market-leading fixed rate of just 1.48% for two years before jumping to 3.99%.

Final tip! Once the work is done, make sure you notify your insurer to make sure your home insurance is completely up to date – failure to do so could invalidate your policy.

About borrow Cash Lump Sums

Cash exchange cards, some of which don’t charge enthusiasm for more than TWO-AND-HALF YEARS, can be less expensive and more adaptable than taking an individual advance – which is the conventional first port of call for money loaning.

What are cash exchange charge cards?

So how do cash exchange cards function? The arrangements resemble adjust exchange cards (where your Mastercard obligation is changed starting with one supplier then onto the next which doesn’t charge premium) – just for this situation, the adjust is paid as money into your present record.

Like 0% adjust exchange bargains, 0% cash exchange cards charge an expense – regularly around 4% of the sum you acquire. This thinks about to around 3% for the longest 0% adjust exchange cards.

# So what are the best deals out there?

-The MBNA Platinum Credit Cardcharges a leading 0% for 31 months – that’s more than 2.5 years – on money transfers. Also offers 0% on purchases for first three months. Fee is 4%.

-Virgin Money’s Credit Card (which comes with perks including a £50 wine voucher) charges 0% for 29 months on money transfers. Also offers 0% on purchases for first six months. Fee is 4%.

MBNA’s Everyday credit card charges 0% for 21 months on money transfers BUT offers a leading 11 months at 0% on purchases. Fee is 4% (but if you are just doing a balance transfer it’s super-low at 1.5%).

-The Leeds Building Society credit card charges 0% for 24 months on money transfers. Also offers 0% on purchases for three months). Fee is 4%.

So, while you wouldn’t pay interest on your cash borrowing for these 0% durations, transferring, say, £3,000 into your current account with any of these cards would cost £120.

The brands may be different but, in fact, all these cards are issued by MBNA. They all come with high APRs too – typically18.9% (representative and variable) which kick in after the stated interest-free borrowing is up. But what if you can’t commit to clearing your debt by then?

-In this case, MBNA’s Low Rate Credit Card charges one market-leading rate on money transfers of 6.5% (variable and representative) and NO money transfer fee.

# Personal loans Vs money transfer cards

 But what about personal loans? There are some fantastic rates around at the moment which charge APRs of less than 6.5%?

You can, for example, borrow £10,000 over two years with HSBC at just 3.9% APR – and it comes with no fees.

# Money transfer cards can still be cheaper!

But here’s the rub: even if you have an excellent credit score borrowing smaller amounts is much more expensive.

Still over two years, the best deal on £3,000 borrowing for example is from Hitachi priced at7.8% APR.

And if you want to borrow just £1,000 from a mainstream lender, Sainsbury’s Bank sits top of the tables, despite charging a whopping APR of 18.4%.

So, for smaller borrowing, money transfer cards can work out a lot cheaper.

# Money transfer cards can be more flexible!

The other advantage of plastic over a loan is that it’s easier and cheaper to clear your debt as and when you want to.

You can pay off your credit card monthly – or in any sized chunk you like. But personal loans come with a set number of fixed payments and if you clear the debt early…

…you can be charged up to 58 days’ interest under the Consumer Credit Regulations 2004

… you could also be charged a one-off fee. HSBC, for example, charges one month’s interest to redeem its personal loan ahead of time.

# Cash from money transfer cards can be quicker!

Finally, if you need cash in a hurry, a money transfer card can also prove a quicker way to access it.

If you are accepted for a money transfer deal with MBNA before 4.30pm, the cash will hit your account the very next day. This can compare to a week or more with some personal loan providers.

# But beware…!

But money transfer cards which offer a 0% introductory period are ONLY beneficial if you can clear your balance within the stated time.

Fail to do this and the high interest rates that kick in could end up costing you way more than any of the loans mentioned above.

What’s more, unlike loans, APRs on credit cards are variable so COULD go up while your debt is still outstanding.

As far as the MBNA’s 6.5% Low Rate card goes, so long as you qualify for this rate (and this will depend on your credit score), it’s currently the cheapest way to borrow £3,000 over two years.

Have a balance languishing beyond that though and the best loans could start to look cheaper.

Know More About Secured Loans Basic

Nonetheless, you should always remember that securing an advance against your property could prompt you losing your home should you get to be not able meet the reimbursements.

Here, we clarify the masters, and the cons, of secured credits and offer a few tips on getting the most ideal arrangement for your conditions.

What is a secured advance?

With a secured or mortgage holder credit, you utilize your property as security against the sum you obtain.

Banks are glad to loan more over a more extended period than they will with unsecured, or individual, advances subsequently.

Furthermore, that implies you can for the most part get up to amongst £50,000 and £120,000 over a greatest term of 25 years.

Likewise with individual advances, the reimbursement terms will by and large include altered, regularly scheduled installments and you will confront early reimbursement punishments (see beneath for a clarification of how these function) on the off chance that you need to pay the advance off before the concurred term.

# What are the advantages?

Secured loans can prove easier to qualify for than unsecured borrowing – mainly because the lender concerned knows it can reclaim any losses from the sale of your property should you default.

If you have a less-than-perfect credit file, a secured loan may therefore prove your only option.

As mentioned above, secured loans are also a useful way of accessing larger amounts of say above £25,000.

Few unsecured lenders will allow you to borrow above this amount, while the lowest rates are often reserved for those who borrow no more than £15,000.

Secured loans can also be paid back over a longer timeframe.

You can, for example, obtain a secured loan over 25 years.

With unsecured loans, on the other hand, most of the best deals require you to repay the full amount within about five years.

# What are the disadvantages?

While the interest rates on offer to secured loan customers with good credit scores are low, those available to unsecured loan borrowers with similar credit histories are lower still.

At the time of writing you can shave almost 2% off your loan rate by going for the market leading unsecured loan rather than the best secured deal.

The penalties if you become unable to repay a secured loan can also be more onerous – notably if your home is repossessed and sold off to clear your debt.

And you are unlikely to find a secured loan offering the flexible features, such as overpayments and payment holidays, now available from some unsecured lenders.

The bad news for people with low credit scores, meanwhile, is that – as with unsecured loans – the lowest interest rates are reserved for borrowers with higher scores.

While a secured loan may be available as long as you own your own home, you may therefore end up paying more than double the interest charged on the market-leading deals.

# Is a secured loan right for me?

First things first, you will not qualify for a secured loan unless you own your own home.

If you are not a homeowner, there is therefore no point applying for a loan of this kind.

Those looking to borrow smaller amounts may also be better off with a personal loan, especially if the amount required is £15,000 or less.

The general rule of thumb is that an unsecured loan is probably a better choice unless you need to borrow a very large amount, require a long repayment period or will not qualify for an unsecured arrangement because you have defaulted on debts before or are self-employed, for example.

Either way, check the interest rate (often called the representative APR – see below for an explanation) as well as any charges, such as early repayment or arrangement fees, that could affect the overall cost of the loan before making your choice.

# What is the representative Annual Percentage Rate (APR)?

The representative APR quoted in loan advertisements is the headline interest rate figure the lender uses for marketing purposes.

This does not mean that everyone who is accepted as a customer will pay that rate, though.

Under current European Union rules, lenders only have to offer the “representative” rate to 51% (or more than half) of the people they take on as borrowers.

If your credit score is lower than the average, you may therefore be only accepted as a customer if you agree to pay a higher interest rate.

This process is called risk-based pricing and is designed to ensure that borrowers who pose the lowest risk to a lender (or in other words are the least likely to miss payments) pay the lowest rates.

# What are early repayment penalties?

Early repayment penalties, otherwise known as redemption fees, are generally charged when borrowers want to repay their loans before the agreed term.

Lenders impose them as a source of compensation for the interest payments they miss out on due to the loan being cleared in a shorter time.

A typical penalty could be equivalent to one or two months’ interest, although the penalties charged will often start to fall as you approach the end of the loan agreement.