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FOOL'S EYE VIEW
So, did you enjoy the sunshine over the weekend? Spring seems to finally be here, prompting good intentions regarding DIY, gardening and various other tasks that we've all been putting off! But shouldn't we do the same for our finances? By spending a couple of hours 'dusting off' your financial affairs you could reap the benefits - paying less in interest on your mortgage and loan debt, whilst gaining more interest on your savings! Mortgage According to National Statistics, over 70% of us own our own homes in the UK, and we owe over £867 billion in mortgage debt as a result. But how many of us know exactly how much our mortgage is costing? Even though most of us know there are good discounted repayment mortgage deals out there, one in three of us are unbelievably paying our lender's Standard Variable Rate! A recent study by Moneyfacts, has found that switching a 25-year, £100k repayment mortgage from the average lender's Standard Variable Rate (6.54%) to the average Best Buy rate (4.77%) would save £1,277 over the course of a year. Do you know the interest rate you are paying for your mortgage? And when you are able to re-mortgage? Depending on how long ago you took out your mortgage deal, you may even find that the type you've got isn't necessarily the most suitable. If you're not sure of the details (interest rate, time period) of your mortgage, dust off that dreaded 'Mortgage File' and find out today. If your rate has tumbled out of the Best Buy tables, and you're able to re-mortgage, start investigating the options available to you without delay – you can get help here. And for those already signed up to a good deal (and your lender allows it), have you considered overpaying your mortgage? An extra £50 a month on the example given above (average Best Buy rate of 4.77%) would reduce this term by 3.5 years, whilst saving nearly £11,500 in interest! Find out more in our Mortgage Centre. Personal Loans What is the interest rate payable on your personal loan? Moneyfacts have found that the average monthly repayment for a three-year unsecured loan of £5,000 is £181; total repayments £6,517 (with Payment Protection Insurance or PPI). However, again, by taking the average of the Best Buys (roughly 5.9%) you could cut this monthly payment to £169 – saving £419 over the duration of the loan and repaying a total of £6,098. Of course, we at the Fool are not big fans of PPI – and it is effectively adding about a sixth to the cost of this loan! Comparing the same deals without PPI, the average total repayment would be £5,659; with the Best Buy average saving £151, at £5,508! So by switching to a better deal and not paying PPI, the total repayable could be reduced by £1,000! If your personal loan is costing a fortune, why not move to a cheaper deal – and consider whether or not you should be paying PPI very carefully. Find out more in our Loan Centre. Savings Are your savings earning a packet? Or are they effectively being eroded each year as the interest rate payable doesn't keep up with inflation? If you're a taxpayer, you may decide that a Cash ISA is a good place to stash your cash (due to its tax free status). And for extra savings, and those who intend opening a maxi-share ISA this year (and are therefore ineligible for a mini-cash ISA), there are many savings accounts paying over 5%. The main thing to remember is not to leave your savings festering in a poorly paying account. You could be missing out on over £150 interest each year on a balance of £3,000, simply by leaving your cash in an account paying 1%, rather than moving it to a top-paying Cash ISA account. Not very Foolish! So if your savings need sprucing up, get out that statement (or log-on online) and find out the interest rate you're being paid. Remember, also, that if you're a non-tax payer (or have recently become one), you need to have handed in a form R85 to each account provider or you'll be taxed on your interest anyway. Find out more in our Savings and ISA Centres.
Credit Cards
How long have you held your credit or store cards? Are you getting a good deal? And importantly, do you have a balance on your card(s) which is being charged interest? If so, your cards need some serious spring cleaning! The new breed of 0% cards don't charge annual fees, and can give you up to nine months to repay your balance, interest free. There are seven cards in the Fool's Credit Card Centre alone offering 0% on balance transfers. And for those Foolish enough to avoid racking up credit card debt, there are five cards that offer 0% for up to nine months for new purchases too. A study by Moneyfacts found that switching a £2,000 balance from a card with an APR of 15.4%, to a 0% card would save over £230 each year (if you only paid off the minimum amount each month). So what are you waiting for? Transfer that balance to a 0% credit card without delay! Find out more in our Credit Card Centre. Get better deals on: