Month in review: June and July
ClearScore brings you the financial news from June and July
Homeowners don’t understand how their mortgages work
This month it was revealed that most home owners are ‘clueless’ about how their mortgage works. When presented with different offers, most people couldn’t name which deal would be most cost-effective. In particular, younger owners in their twenties and thirties really struggled to differenatiate between the deals on offer.
Confusion over interest rates, the impact of taking out a home loan over a longer period and cash-back offers are putting the younger generation at a further disadvantage. And this group already finds it difficult to get on the property ladder. In fact, single Brits in their twenties spend nearly half of their income after tax on rent, making saving for a deposit almost impossible. Building societies also need to do a better job of making deals clearer.
If you’re confused about mortgages, The Money Advice Service’s beginner’s guide is a good place to start.
FCA warns Brits to watch their credit limit
Research out in July from the Financial Conduct Authority (FCA) found that 1.4 million UK borrowers have only made the minimum repayments of their credit card bills for the last three years. This can lead to many people racking up ever bigger credit card bills as interest stacks up.
The industry has agreed to bring in alerts which will tell people when their borrowing is getting dangerously high, or when low interest introductory offers are about to end. This is a good start but we won’t benefit until 2019.
To take control of your credit situation, keep a careful eye on your borrowing to make sure you’re only spending what you can afford — your ClearScore Timeline is handy for this. Try to pay over and above your minimum payments if you possibly can, so that you’re actually paying off your debt and not just the interest.
Make more of your savings
With the recent Bank of England rate cut, finding the best interest rate for your savings is going to take a bit of shopping around. In fact, some banks are now offering accounts which offer a 0% interest rate for savings.
Most of these stingy deals are on accounts for existing customers only, so make sure to check you’re savings account isn’t one of them and, if it is, it’s a good idea to think about switching.