Tag Archives: financial advice

Navigating the festive season financially: A guide to refraining from debt and boosting your credit score

Financial wellbeing, , ,

Navigating the festive season financially: A guide to refraining from debt and boosting your credit score

The holiday season – a time for joy, celebration ,and unfortunately, sometimes feeling pressured to overspend. It’s easy to get caught up in the magic of Christmas, but the financial hangover come January is far from enchanting. This alongside current financial challenges and price increases in relation to the cost of living crisis is far from ideal.

So this year, let’s embark on a journey to celebrate without breaking the bank. Here’s your guide to refraining from debt and even improving your credit score during the Christmas spending frenzy.

 

avoid Christmas debt by setting a budget alongside your Christmas shopping

1. Set a Realistic Budget to avoid Christmas debt

The magic word for a debt-free Christmas holiday is “budget.” Determine how much you can comfortably spend without jeopardising your financial stability. Allocate funds for gifts, decorations and festivities, and stick to your budget religiously.

This means that you will only spend money that you have accounted for and will have no surprises post festive spending.

 

receive financial pressure by choosing experiences over items this Christmas

2. Consider thoughtful gifts to keep your bank balance happy this Christmas

Remember, it’s the thought that counts. Instead of showering your loved ones with expensive presents, focus on meaningful and thoughtful gifts. Consider handmade items, personalised presents, or even the gift of your time through shared experiences.

Memories made through a shared experience can be enjoyed for several years and can be more precious in the long run. Its could be something as simple as a group meal.

 

take out your disposable income as cash to avoid overspending when funding Christmas

 

3. Cash is king when looking to avoid debt with your Christmas spending habits

Embrace the power of cash. When possible, use physical cash for your Christmas purchases. This helps you stay within your budget and minimises the temptation to overspend with credit cards. Avoid putting things on credit cards unless you intend or are in the habit of repaying this fully each month.

The most important thing being to always check your purchases against your set budget during the festive period.

 

try not to borrow Money to afford Christmas, a great piece of debt advice

4. Resist the Credit Card temptation to avoid racking up Christmas debt

While credit cards offer convenience, they also bring the danger of accumulating debt. If you must use credit, be strategic. Opt for cards with lower interest rates, and commit to paying off the balance as soon as possible.

This will also reflect greatly on your credit score as it will show your commitment to paying off debts in a timely and consistent fashion.

 

receive pressure in December by keeping track of your bills and budgeting for additional payments

5. Track your spending over the festive period to avoid hidden expenses

Keep a close eye on your expenditures. Create a spreadsheet or use a budgeting app to monitor where your money is going. This awareness can help you make informed decisions and avoid impulsive purchases.

 

don't avoid your debts to fund Christmas and other debt advice from the mortgage hub

6. Prioritise debt repayment to avoid struggling financially post festive period

If you already have existing debts, prioritise repayment of these as a priority. Allocating a portion of your holiday budget to settle outstanding debts demonstrates financial responsibility and contributes to improving your credit score.

 

avoid retail finance and repay options to avoid overdraft charges and debt this festive period

7. Avoid Retailer financing over the Christmas period to avoid running debts

Steer clear of store financing options. While “buy now, pay later” schemes may seem tempting, they can lead to increased debt and potentially impact your credit score negatively if you plan to apply for a mortgage in the near future.

 

calculate how much debt you have before you start to purchase gifts to celebrate Christmas

8. Check your Credit Score over the festive season

Take advantage of the time off during the Christmas holiday season to check your credit score. Knowledge is power, and understanding your credit standing allows you to make informed decisions about your finances.

 

get ahead of the cost of living Christmas and review your spending for next year

9. Plan for Next Year with smarter spending and budgeting

Consider opening a dedicated savings account for holiday expenses. Contribute a small amount regularly throughout the year, ensuring a stress-free and debt-free Christmas holiday season next year.

 

find top tips to improve your financial status by reading relevant literacy

10. Educate and empower yourself to improve your spending habits

And finally Familiarise yourself with financial literacy resources. Understanding the basics of budgeting, credit, and debt management empowers you to make wise financial decisions, not just during the Christmas holidays but throughout the year.

This Christmas, let’s celebrate the season without compromising our financial well-being. By embracing a mindful approach to spending, you can enjoy the festivities while laying the foundation for a financially healthy New Year.

Cheers to a joyous, debt-free holiday season! This financial awareness will put you in good stead for 2024 and will have your credit score looking great for 2024. Perfect if you are looking to purchase a new home in the new year.

 

Mortgage advice and the options available to you

If this does sound like you the get in touch with The Mortgage Hub team directly on 01698 200050 or e-mail info@mortgagehub.co.uk

Interest Rates and Your Finances – what does the rise mean for you?

Mortgages, , ,

Interest Rates and Your Finances

Following the May rise in interest rates to 4.5%, many people are now wondering what that means for their mortgages.

Lenders regularly review the interest rates of their mortgage products, adjusting the deals available to those looking to buy their first home or remortgage their existing property.

The Bank of England (BoE) meets every six weeks to decide whether the Base Rate should go up or down or stay the same. Last month, the interest rate went up 0.25% percentage points, from 4.25% to 4.5%.

What does the interest rate increase mean for your mortgage payments?

This rate rise is unwelcome news for those with a mortgage on a variable rate – this could be a base rate tracker, discounted-rate deal, or a lender’s standard variable rate (SVR).

For those on a tracker mortgage, their deal directly follows the base rate, and at 5.25%, their repayments will rise by £21 per month if they have a £150k repayment mortgage with a 20-year term. Compare this to last year; that same homeowner will have been paying £776 a month, indicating a rise in the previous 12 months.

A Standard Variable Rate mortgage goes up at the lender’s discretion. However, these are likely to go up even if not by the total 0.25% percentage points.

For those on a fixed-rate mortgage, this news will not impact their mortgage repayments each month. This accounts for around six million households in the UK – but if their current deal is about to end, they will feel the impact of the increase in their monthly payments. If they are coming to the end of a 2-year fixed rate, they could be used to paying around 1.5 to 2% and will experience a big jump.

US investment group Goldman Sachs anticipates rates will rise to 5% this summer.

Mortgage rates are increasing by an average of 0.39% across all LTVs, and these latest interest rate changes hardest hit those with a 10 or 15% deposit. However, some lenders are trying to remain as competitive as they can.

What does the increased interest rate mean for savings rates?

 The Bank began raising interest rates at the end of 2021, and at this time, the best easy-access savings rate was 0.67%. Following the rate rises, the rates for savers have improved, and the highest easy access savings rate is now 3.71% – this is significantly below the inflation rate of around 10%. Following the recent rate rise, several savings providers have raised rates to be competitive and attract new customers.

For those who don’t need an easy access account, rates of 4.91% are available – but this means tying up funds for two to five years.

The Commons Treasury select committee has recently campaigned to encourage high street banks to increase the savings rates offered to loyal customers. While the online accounts above pay relatively attractive interest rates, easy-access accounts at many big banks still provide meagre returns.

How does the increased interest rate affect credit card and loans?

When interest rates go up, so do the rates on borrowing via credit cards and loans. If you already have a loan, it’s likely to be on a fixed rate, so your repayment won’t change. If you have a credit card, it may be worth moving it to an interest-free offer. However, you will need to pay a transfer fee.

Are house prices falling as a result of the increased interest rate?

According to the latest House Price Index from Zoopla, buyers and sellers are pressing ahead with their plans despite the rate rise. Recent inflation figures might still put a brake on market activity however.

The Index shows that:

  • UK house prices have dropped 1.3% over the last two quarters but this is now a slow reduction.
  • Lower mortgage rates in the first half of this year supported an increase in housing market activity.
  • Confidence is improving.
  • Housing market conditions vary across the country with weaker demand in areas where house prices have risen the most.
  • The likelihood of further interest rate rises may weaken demand and market activity at the end of 2023.

House prices are currently falling slower than they did at the end of last year, indicating some improved confidence from both buyers and sellers. In fact, the number of property sales in the UK has increased due to lower mortgage rates over recent months. The strong labour market has also prevented prices from falling further.

The annual rate of house price growth is 1.9% for the UK – down from 9.6% last year – ranging from -0.2% in London to 3.6% in Wales. House prices are expected to remain broadly the same for the rest of the year despite inflation data currently being higher than predicted. Mortgage rates could rise in the coming months which will impact house prices.

Looking for more information/ mortgage advice?

If you want to know how the recent interest rate rise might affect you, talk to the team at The Mortgage Hub. We can help you with your new mortgage or find a deal if you are coming to the end of your existing deal.