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Spring Clean Your Finances

Whilst it might not feel like it, Spring is officially here. The days are getting longer, the sun is (occasionally) shining and there’s a renewed sense of positivity in the air. If you’re finding that your finances remain shrouded under a wintery cloud, now’s the perfect time to review and take control.

It’s easy to put-off reviewing your finances, but by taking just a few hours to look at the latest deals and seek out some expert advice, you could reduce your monthly payments by hundreds, or even thousands of pounds. Afterall, who doesn’t want a few extra pounds in the bank to put towards a treat?

To help you focus on sharpening up those finances, why not complete our ‘Four-Step Spring Clean Your Finances Challenge.’ You might be surprised at just how much you could save!

1. De-clutter and give yourself the best possible starting point for your financial spring clean

1.1 Separate your important documents
Collate your mortgage documents, tenancy agreements, insurance policies and any other relevant financial information and file them away safely and logically.

1.2 Safely destroy any obsolete paperwork
Consider ‘going paperless,’ wherever you can. ‘Online’ isn’t only greener, it’s also more secure (remember to use a strong password) and easier to manage. You could also benefit from exclusive offers and discounts.

1.3 Automate bill payments
If you haven’t already done so, ensure you setup direct debits for all your ongoing credit commitments as this alleviates the need to remember payment dates. A word of caution – it’s important that always have enough money in your account to cover your bills. If a payment fails to go through it could show as a ‘missed payment’ on your credit report.

2. Scrutinise your current financial situation

It can be very difficult to work towards improving your finances without having a clear picture of your current position. Start by making a list of the credit commitments you have, including any credit cards, car loans, personal loans, store cards etc. Go through each item carefully – is there an expense that you always forget to account for (dental plan)? Say goodbye to any subscriptions that you don’t use (that wasted gym membership – you know who you are)!

On your list, include a column for ‘credit type,’ ‘monthly cost’ and the ‘total outstanding’ to pay. If you borrow money on credit or store cards, but pay them off monthly, simply insert ‘£0’ in the monthly cost and ‘outstanding’ columns. Your list might look something like this:

Type of credit Monthly cost Total Outstanding
Credit card £50 (minimum payment) £1500
Car loan £165 £5600
Store card 1 £25 £400
Store card 2 £0 £0
Total: £240 £7500

 

The final row is used to calculate the total monthly cost of the different credit commitments and the total outstanding to pay.

Next, scrutinise your list carefully. Do you have any extra money left in your bank account at the end of each month that could be used to clear your credit commitments quicker? This positive step could reduce the level of interest you’re paying.

If you have a few small credit commitments that you pay off monthly, but you don’t have any additional savings to reduce the debt sooner, keep on going as you are.

If you’ve found yourself in a position where you’re struggling to meet your monthly payments or have too many credit commitments, perhaps consider consolidating your debt into one simple loan payment. Often, this works out less expensive than making payments to several different providers, especially if you’ve borrowed money on credit or store cards with high interest rates.

Homeowners with a large amount of debt might be better off remortgaging or taking out a second charge mortgage. Remortgage and second charge mortgage rates are often much lower because they are secured against your property. If you’re considering this option, our friendly team will advise you on the best options available, along with a free no-obligation quote.

A word of advice – Before paying off, or consolidating your credit commitments, check your agreements carefully for any early repayment fees. Unsure – then speak to your credit providers for further advice.

3. Find out what mortgage or buy-to-let deal you’re on

If you’re a homeowner or a landlord, check your latest documentation to find out what type of deal you’re on. If your current mortgage is due to mature, rates are at an all-time low, making it a great time to secure a good deal. Plus, many lenders have introduced additional incentives such as cashback and free legal work and valuations – significantly reducing the cost of remortgaging.

With Brexit likely to be delayed until the end of June (at least!), it’s worth remembering it’s possible to start the remortgaging process well before the end of a current mortgage deal. The majority of mortgage offers are usually valid for between three to six months – this means you can make your application well in advance, locking in on the current product rate.

When reviewing your paperwork, ask yourself the following questions: –

Are you on standard variable rate?
When a fixed, tracker or discounted mortgage comes to an end it usually transfers to a standard variable rate -this tends to be more expensive as the rate is determined by your bank (not tracked against the Bank of England base rate).

Are you on a fixed, tracker or discounted rate?
If your mortgage or buy-to-let deal is due to come to an end within the next 3 months, it’s a great time to shop around for a new product to transfer to. Our ‘Best Buy’ tables compare thousands of products and are great for exploring the potential options available to you.

When you took out your mortgage did you shop around or take out a deal with your bank?
Many people like to keep all their finances in one place and when considering a mortgage, pick up the phone to an Adviser from their local bank branch. However, be aware that your bank can only advise on the products that they offer. These products might not necessarily be the best priced or suited to your needs. If you’re not tied into a product, shop around – you could get yourself a cheaper deal.

Do you want to borrow more?
If you’re considering remortgaging or taking out a loan to raise funds, for home improvements for example, don’t just approach your current lender – shop around for the best deal!

Tied to your current lender until the end of a fixed deal? Don’t panic, we might still be able to help you with a second charge mortgage (a loan secured against your property). We can do a side-by-side comparison of a remortgage and second to calculate the cheapest option.

4. Find out what insurances you have in place

Review your insurance policies and find out exactly what you’re covered for. Perhaps you took out life insurance when you first secured your mortgage, but haven’t reviewed the policies since. Naturally, our circumstances change over time, so a policy taken out a decade ago probably no longer provides sufficient protection should an unfortunate incident occur.

The number of insurance products available on the market can be overwhelming. At Ingard we pride ourselves on being experts in our field and will happily assist you to review your policies and search the whole of the market to find the most cost-effective product to best suit your needs.

If you want to spring clean your finances, secure your first mortgage, remortgage or review your insurance policies, there’s never been a better time. Give our expert team of Advisers a call on: 01702 533 400 for your free, no-obligation quote.

Be sure to let us know how much you saved at the end of the challenge! Share your story with us on Facebook, Twitter or LinkedIn.