After the fourth programme in the series Lawrence Gold and IFA Michael Brill answered your questions during a live chat.
You can read the full transcript here but don't forget you can check out our Expert Advice section or read the transcripts from our first and second live chats.
Part Two
Philippa: I have various types of debt - student loan, professional loan, overdraft, credit and store cards. What should take priority?
Lawrence: You should try pay off the ones with a greater interest rate quicker.
Michael: But that doesn't mean to say that you can afford to ignore the others. Write to the creditors and see if you can get help if you really can't make the payments. Don't forget though - as far as the credit companies are concerned, they are all urgent.
Martin: Is it best to pay off your mortgage or save for your pension?
Michael: Pay off your mortgage. I can't see any point in putting money away, if when you retire you will still have a mortgage.
The nice pension you've built up will have to pay the mortgage, so you have shot yourself in the foot.
Hel: Hi Lawrence, I had a lot of debt so I joined a debt management company but I don't feel they are paying my debt and I am losing a lot of money each mouth. Do you think I am just being paranoid?
Lawrence: Speak to Payplan or the CCCS. Payplan are a debt management company who don't charge a penny. Explain your situation and they can advise you of the best way forward.
Michelle: What would you consider is more important at aged 24, saving for the short term future with an ISA or thinking long term by starting a pension?
Michael: It depends whether you have anything in the short-term to save for, in which case an ISA is best but I would say to start a pension as soon as you can because it takes many years to build up a fund.
Lawrence: If you can start a pension early, perhaps you should although I don't like pensions.
Michael: But the point is, with a pension, whatever it is, you will get it for the rest of your life. We are both not lovers of pensions, but there is not a better true alternative.
NicolaW: How can I get financial advice? I have got about £50,000 debt that started at Uni, and can't seem to find anyone who can advise me where to start!
Lawrence: It's not a financial advisor you need necessarily. You are probably best to contact the Citizens' Advice Bureau or National Debtline. If you're in debt, they should be your first port of call because they are very good at this and they are truly independent, which is vital.
Dan: Is now a good time to have a fixed or variable rate mortgage?
Michael: There are very competitive variable rates and good fixed-rate mortgages around at the moment and they're expecting a drop in rate during August. I guess ultimately you have to stop trying to beat the system because no one has a crystal ball. However, generally I would say if people want to sleep at night and not worry if rates are going up, then have a fixed-rate. But if people have higher income, or more disposable income, and want to take a tracker rate, then fine you could save money. Before you should consider a variable rate you need to know how you can cope if rates go up.
Dispenser: At the end of the show a bailiff in the next show threatened to break down the door! Isn't it a fact that bailiffs cannot break into peoples homes.
Lawrence: Yes it is clear. You can't break into people's homes but there was a case a while ago where the bailiff's got in through a back door and it was allowed because the owners couldn't prove it was locked so technically the bailiffs hadn't broken in.
Harlie1: I agreed a payment plan through the CAB for my credit card, I have not had a change in circumstances and my wage is still the same, the credit card company no longer want to freeze the interest what can I do
Lawrence: Go back to the Citizens' Advice Bureau. I'm surprised they have changed the situation when there's no change in circumstances or income. Usually banks won't change an agreement without changed circumstances so get the CAB back involved and you should be able to sort it out.
Bruce: Online personal loan applications for debt consolidation often fail because of low credit score. Could I have more chance if I applied in person or is it always down to rating in the end?
Lawrence: It is down to a rating, however, if you do on-line loans you go to specialist lenders who give you a cheap rate. They can afford to offer this cheap rate because they usually go only on the credit score and they won't take the risk on bad bets. However some banks will be much more likely to take a bit of a risk on you, and not entirely go by the credit rating, if you go in to meet them face-to-face.
Bro: What are your views on getting a slightly higher rate of mortgage in order to get onto the property ladder?
Michael: Providing it's affordable, I have no problem with that. It all depends on disposable income and whether you can cover higher payments but certainly if you can afford it then it is preferable to staying renting, which is just throwing away money. If you have your own property at least it can be a good investment and will be a tangible asset.
Banjobex: I've been told there is a quick and easy way to repair my credit score is this true?
Michael: I don't know of any easy way to repair your rating if it's low. There are some companies who will do this, but you should be weary of being offered a deal too good to be true.
Lawrence: There are a couple of things you can do to help. You first need to get your credit report and notify the agency of mistakes. Make sure you're on the Electoral Roll as well. Opening store cards and paying them straight back will give you points as well. It's all about showing you are responsible.
Leigh: My partner and I have been renting for 2 years paying £450 per month. Does this work for us in any way when/if we applied or mortgage?
Michael: Yes, providing your payment on rent has always been up to date. A lot of lenders will actually write to landlords to check your payment record.
Adam: I am thinking of starting up my own business but don't have any money is there a thing that will give me a young persons business loan if I give them a good enough "idea" of what i want to achieve?
Michael: I think banks used to do this, but I don't know enough about it.
Lawrence: I think the Prince's Trust may help, but I'm not sure. Your best bet is to try Business Link.
Moominwj : Do most banks and credit cards freeze the interest if you can't pay your debts?
Michael: You've got to ask them first. They won't do it automatically. Also it depends on circumstances, but if there is a genuine need they are likely to want to try to sort out an arrangement.
Lawrence: If you're ill or have lost your job, then they will be sympathetic, but if you have just been irresponsible, then they won't be quite so kind.
Fletchie3: I do not have a company pension but my husband does, I contribute to a stakeholder pension do you think this is sufficient or do I need to have something else in place, I will retire in approx 30yrs time
Lawrence: It really depends on your circumstances, so we can't answer.
Michael: This is something you should talk to your financial adviser about and take advice. Go to the SOFA website for a financial adviser.
Lawrence: I recommend Michael.
Brougham: Is going into property (becoming a landlord) still a good idea?
Michael: I think it is still a good idea but being a landlord is not for a few months or necessarily a few years. It is not a way to make a quick buck and if you rely on that, you could get into trouble, but for a longer term investment it can be a good safe bet.
Phil: I receive lots of unsolicited mail from banks offering me loans I don't want or need. How do I get them to stop sending me such mail?
Lawrence: There is a system for stopping junk mail, you can get more info at the MPS website.
Michael: You can also write to the banks involved and tell them not to write any more, make sure you keep a copy of the letter and if it continues, contact the FSA.
John: I have a credit card with £3700 outstanding, bank loan outstanding £3400, I have savings of £3500 and disposable income of £450 per month. I want to pay of CC and Loan ASAP what should I do?
Answer: Your question implies that you are able to afford your ongoing contractual monthly instalments to your loan and creditcard, but want to look at strategies to pay these off as soon as possible. Any fixed sum agreement made under the Consumer Credit Act 1974 should contain provisions for early settlement. Where these provisions apply (i.e. your loan, as here you borrowed a fixed sum of money) you can ask the creditor for an early settlement figure under the Consumer Credit Act. You should find that this figure will be a lower sum than you would have paid were the agreement to run its full course. Your local Trading Standards Department should be able to help check the early settlement figure for you.
Details of your local Trading Standards Department can be found from the website (www.tradingstandards.gov.uk). However, you may still find that you do not have sufficient funds at present to settle your debts completely. If this is the case, one option is to build a regular savings plan into a monthly budget of income and expenditure.
Excellent guidelines on how to produce a budget sheet of income and expenditure can be found on the National Debtline website. Producing a budget sheet can help you identify areas where you can cut back on non-essential spending, thus enabling you to save more. It is important that your budget sheet is realistic and accurately reflects your current circumstances; otherwise it will be extremely difficult to stick to.
When saving, you may find it helpful to open a fresh bank account into which you can out a regular sum from your earnings. Try to choose an account that does not offer credit facilities so that you do not accrue further debt. Shop around different banks to see what is on offer. As you have a significant amount of surplus income, another option may be to approach your lender to see if they would be willing to restructure you loan to decrease the repayment term. Obviously this will mean that your monthly payment will increase, so you need to make sure you can afford this. Here, again, your budget sheet is an essential tool.
Whether your lender does this is at their discretion, but if they do you will have to sign a new agreement. Check any new agreement carefully before signing. Bear in mind that if you only pay off the minimum amount only from your credit card, it can take many years to pay off. Therefore, it you may wish to consider building an extra payment to your card into your monthly budget. As long as you don’t miss payments or make late payments to your current debts, your credit reference file should not be affected.
Please note: The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.
