Debt help for high risk borrowers

Several organisations offer free advice for people struggling with their debts. The common ones are Credit Advice and Citizens Advice and Consumer Credit Counselling  are the most common service. However, there are other services in the UK for people who are suffering from high interest rates and rising utility bills. 

Charcol.co.uk gives borrowers with a poor credit history free custom tailored mortgage advice.  This is a breath of fresh air in a climate overloaded with brokers making a fortune from their client’s debt problems.  Charcol.co.uk lives by the mission statement to break the vicious cycle of debt that forces borrowers into non-standard loans that trap them in the debt cycle. 

Services like this are vital in today’s economic climate.  Repossessions are predicted to increase by 55,000 in two years.  Those with a poor credit history will comprise 70% of this increase.

Peter Barrett, managing director at charcol.co.uk, comments:  "The amount of personal debt in the UK continues to grow, particularly in a rising interest rate environment, and for financially vulnerable borrowers to be charged outrageous fees for consolidating their debt, is simply not right.  There is no doubt that this is a growing market and the current solutions available are only really helping to grow it.  We are determined to do something about this and providing fee-free advice is absolutely the right thing to do.  We are setting those people who are financially vulnerable on the right path by tailoring advice specifically to them.”

“Of course, there is a certain stigma attached to borrowers who have financial difficulties but these can have occurred for any number of reasons.  For example, one of the most common causes is the end of a relationship and one partner simply not being able to cope with the financial burden that was previously shared.”

Charcol.co.uk works with the Consumer Credit Counselling Service (CCCS) to help train their counsellors.

Barrett concludes:  “Not only is there a clear financial benefit to arranging a mortgage through us, but our position as the largest mortgage broker in the country means we hold a great deal of weight with lenders.  We can often get people with a poor credit history mortgage offers that other brokers simply cannot.  And, we are committed to finding all our customers a mortgage in the standard sector if we think they qualify for one.”

The simple fact that very few consumers, probably less than 0.05% understand what they are signing when they sign a mortgage is the number one reason why it is so easy to victimize mortgage borrowers.

There are a dozen ‘tricks’ that can save hundreds of pounds a month on a mortgage.

Katie Tucker, Product Specialist for Charcol.co.uk suggests:

“Borrowers with a £100,000 mortgage could save £147 a month in pure interest simply by remortgaging from SVR at 7.5 per cent to a more competitive loan at 5.34 per cent (7.5% APR).  The monthly saving is a massive £450 for a mortgage of £250,000. With figures like this, even a one month delay loses you money.  As it is still uncertain just how high interest rates will go this year, it is more crucial than ever for any borrowers whose mortgage is due to fall onto the
lender’s SVR this year, to be aware of their revised reversion rate, and to really do their homework to make sure they move onto the right deal."

Another trick is to reduce the length of the mortgage. Homeowners who need to renew now will find their monthly payments higher, but they can save thousands of pounds by getting the shortest-term mortgage you can afford. For each £100,000 borrowed at 7% APR, you will save more than £75,000 interest on a 15-year than on a 30-year fixed rate mortgage.

Save a substantial deposit, or try and pay over the monthly mortgage repayment when you can. This is a commonly known trick, but one that most consumers overlook.  The typical savings is almost 50%.

A few hundred pounds overpaid every few years can make all the difference in the amount paid monthly.  Even a few hundred pounds can reduce the monthly payments by ₤20 - ₤50. 

There are other tricks. One is borrowing from parents.  Parents can obtain a lower interest rate on a secured loan than a young couple can borrow on a first time mortgage. Many people are now borrowing high interest 130% mortgages.  The 30% is a high interest unsecured loan.  Parents can borrow this money at only 7 – 10%, saving 10% interest, and reducing the amount of the overall mortgage.

These few tips are some of the advice that will help people in high risk, or bad debt, categories save money on their homes. A few hours with a free debt management counsellor can save hundreds of pounds over the length of a mortgage.