Have you noticed the mortgages being promoted at just 2.49% per annum? It’s hard to argue with these super low rates. But be warned they are not always what they appear.

Low rate mortgages are all the rage at the moment but check out the small print and some of the gloss wears off. Take the deal being offered by Lloyds TSB. Depending on the size of your deposit it comes with an interest rate of between 2.49% and 2.59%. But you haven’t got long at that rate – that rate only lasts until February next year, seven months. After that borrowers automatically move to a fixed rate of between 5.49% and 5.59% until November 2012.

These higher rates are at least half of a percent more than comparable three year fixes from lenders such as the Woolwich and Alliance & Leicester.

There is also a question of whether it’s sensible to fix for less than 12 months. Very few commentators are forecasting that interest rates will rise in the short term. In mid 2010 and beyond, yes, but not until then.

So if you are tempted by these super low rates, check out the small print and think hard. Better still, take professional and independent mortgage advice.

The banks are at it again! There is growing evidence that small businesses are being steered away from The Government’s Enterprise Finance Scheme and into loans that gave the banks fatter profits. Don’t just take our word for this – a report from the all party Business and Enterprise Committee also says so!

So far £400 has been offered under the Enterprise Finance Scheme to over 4,000 businesses. But the report shows that banks have not always offered the scheme but instead pushed their business clients into loan deals at higher interest rates. There was also evidence that banks were also insisting that business owners provide their home as security. If the business had a EFS loan the bank would receive qualified guarantees and their homes would not be needed as security.

If you have first hand experience of your bank acting like this, the Business and Enterprise Committee wants to hear from you. The Committee wants you to write to them before 12th October this year describing your experience.

A report out from the charity the Money Advice Trust has urged Debt Managers to be more transparent about their fees.

Debt Management companies are hired by those in debt to renegotiate the amount they owe and organise an achievable repayment plan. But the report from the charity claims that clients are often not told about the fees they incur until very late in the renegotiation process. The report also says that some Managers don’t make it clear that in addition to a scheme set up charge, monthly fees also have to be included within the clients’ payments.

This seems a little strange to us. If a person appoints a Debt Management company to sort out their financial affairs do they think that the service is free? Most schemes last up to 5 years and do they expect the company to run their scheme for that time for nothing? Clients must expect charges and be told clearly what they are but the client should remember that usually, these charges are included within their single monthly payment. As such they know what they are paying in total.

Having said that, we are supporters of transparency in all financial matters whether it be debt, loans, mortgages, insurance, credit cards etc. People work hard for their money and have a right to know who is charging for what and on what terms.

Some insurance companies only have one in one hundred endowment policyholders on target to repay their mortgage and over 3 million homeowners have been warned that their policies will not fully repay their mortgage when the time comes.

With-profits endowment policies were sold a reliable way to repay your mortgage as the insurers added an annual bonus to the policy every year and then added one big bonus at the end of the policy’s term. Projections were then used to show how the bonuses would add up to produce an investment sum that would exceed the money you took out on your mortgage. Throughout the 70’s and 80’s Policyholders were assured that this was the savvy way to finance the repayment of your mortgage. They had never failed to perform and they never would.

Never say never!

The insurance companies all blame the failure to reach investment targets on the performance of the investment markets, it’s not their fault! But if that was the whole reason why is Standard Life facing 98% of its policies behind target whilst Royal London only has 2% behind target? It seems clear that the worst performing insurers cannot entirely blame the stock market. In actual fact, to us it seems that the insurers themselves are to blame!

Another question supports our belief. The insurers have resolutely failed to explain how policies that were previously on target can suddenly fall behind so much. For example, last year only 19% of the Pru’s 164,000 endowment policies were likely to fall short of their target. That figure has now risen to 74%. How come?

Perhaps the insurance offices would care to explain.

Medical insurance companies are feeling the pinch. Not just because of the credit crunch but also because increasing numbers of policyholders are claiming help for cancer drugs that could prolong their lives.

The cost of cancer drugs has soared in recent years as medical advances have developed more and more sophisticated treatments. And costs are due to explode in coming years. There are forty or so new drugs ready to be licensed plus other developments - and they won’t be cheap.

And this has hit the pockets of the insurance companies – so much so that many now limit the cost of cancer care, including treatments designed to ease, not cure, symptoms. Only three medical insurers now offer full cancer cover – Pruhealth, Exeter Friendly Society and Bupa. How long they will hold this position, or their premiums, waits to be seen.

Traditionally, private health insurance has accepted claims to treat acute conditions – those are the illnesses that can be cured - but they don’t cover conditions that are managed medically because they medicine doesn’t have a cure for them. For example, diabetes and asthma. Those are called chronic conditions.

The problem is that in the medical world, not everything is so black and white. Take the rise in biological therapies for cancer such as Avastin and Herceptin. These drugs are designed to slow the spread of cancer, they don’t actually cure it. The question is whether this is acute or chronic treatment and that’s the grey area.

From the insurers’ perspective, they know that heart disease and cancer are the two illnesses people fear most and are the main reasons they buy medical insurance. So they don’t want to be seen to restrict cover. On the other hand the Financial Services Authority is keen to ensure that policyholders are fully aware precisely what is and what isn’t covered - grey areas are most unwelcome.

If you follow the logic it seems inevitable to us that the three insurers currently providing full cancer cover, will bow to the inevitable and join the others restricting cover by cost.

It’s a sign of the times.

Some mortgage companies are actually paying borrowers up to £25,000 or 10% of the value of their outstanding mortgage, to take their mortgage to another lender. It’s all because they need to down-size their mortgage portfolios in the wake of the credit crunch.

The problems are particularly difficult for the companies that lent to those borrowers with relatively poor credit track records – the sub-prime market. And it is precisely these lenders who are paying the highest rates of interest.

So we sniff an opportunity! If you took out a mortgage when your credit record was, well let’s say “less than perfect”, but your record has since improved, try asking your lender if they will pay you to move your mortgage elsewhere. You might get a rather nice surprise. Then you can use that money towards the deposit for your replacement mortgage and the odds are that you’ll end up with a mortgage at a much lower interest rate than you were previously paying. We know of one family who did this and their monthly repayments fell from £475 to £240.

But a word of warning. Check out how much equity you have with your existing mortgage. With house prices having fallen, even with the “goodbye payment” you may still not have enough equity in the house to fund the necessary 10% deposit you’ll need for the replacement mortgage. If you’re going to have a difficulty funding a 10% deposit with everything taken into account, the deal’s not on.

Sale and lease back arrangements are where the homeowner sells their house to a third party at a knock down price and then rents it back. It’s been one of the options people have had when they are in financial difficulties but are desperate to remain living in their house.

One of the problems has been that some unscrupulous landlords have thrown their tenants out after the first year and then gone on to sell the property at a healthy profit. The Financial Service Authority which now regulates these deals has already said that such actions are unfair.

Last week the Birmingham County Court backed up the FSA’s view. The Court said that a couple from Shropshire could remain in their house even though the company they had sold it to had stopped paying the mortgage. In fact the judge said that they could remain in the house for life by either renting from the mortgage company that had repossessed the house or buy it back.

Whilst this shows the way the English courts are thinking, the judgement in Birmingham doesn’t represent a legal precedent. Precedents can only be made in the High Court.

So if you are court in a similar position, before you take ant action, talk to the experts at the Citizens Advice Bureau to see whether they agree that you have been treated unfairly.

How about travel insurance that’ll pay out if it rains on more than four days during your holiday? Sounds good? Well some leading French package holiday companies are offering just that!

The insurance, underwritten by AON, pays out a “substantial refund” if it can be proved that it rained during four days of the holiday. We have more than a suspicion that this offer won’t apply to holidays taken in Britain.

Nevertheless, British travel agents could be making a similar offer for holidays taken in warmer Mediterranean climes.

AON will be using photos from satellites operated by France’s national weather centre to assess how much money clients would receive and the cash would be paid out within days of the holidaymakers’ return.

The insurance sounds a good gimmick to us but whether it is a good buy depends upon how much the insurance costs. I suppose we’ll have to wait and see.

Many Britons heading off for the sun rely on their credit cards to fund their day to day holiday expenses – but they are playing a dangerous game.

Rising credit fraud, especially relating to transactions abroad, has led credit card companies to impose tougher operating criteria on all overseas transactions. This means that you are quite likely to have your card swallowed when you present your card to a cash machine as operators query almost any overseas transaction.

Some commentators have recommended that the way to avoid this problem is to tell your card operator beforehand that you are going on holiday. With some companies like Barclays, HBOS and HSBC this may help but it won’t guarantee that your card doesn’t get eaten. With most of the other operators, telling them won’t help a jot as their computer systems simply can’t store that information, let alone alter the fraud protection criteria on your card.

We could be arriving at the situation where card companies simply do not want you to use your card abroad. Certainly their policy of querying or rejecting a large proportion of overseas transactions would indicate this.

Our advice is, if at all possible do not use your card abroad. Use traveller’s cheques. And if you have to use your card, use it at stores and restaurants etc not at hole in the wall cash points. If you do this, then if your card is declined, at least you won’t have it swallowed up.

Few people are aware that most comprehensive motor policies revert to basic third party status when you take your car abroad. This means that if you were involved in an accident which was your fault, your insurer would pay up for the damage to the other party’s vehicle but not your own. Neither would they pay to recover your car.

Statistics issued by the AA show that the average repair cost in Europe is £400 but the cost of returning your car to Blighty could easily be £1,000.

Those companies that only provide third party cover for driving abroad include Churchill, Aviva (previously Norwich Union), Direct Line, LV, Sheila’s Wheels and Esure. Of the remaining insurers, some provide just a few days free comprehensive cover whilst others preserve the comprehensive cover.

Our very STRONG ADVICE is contact your insurer if you are intending to take your car abroad and double check the level of cover you will qualify for. If it drops to third party cover, get the cover toped up back to fully comprehensive.

The typical cost for upgrading to fully comprehensive is from £15 per week depending on the car you drive but there could also be an administration charge for £20 to £30.

And if you are driving outside the EEC always speak to your insurer and find our what you’re covered for.

Almost 66% of packaged holidays to destinations in the UK are being charged Cancellation Insurance and charging as much as £45 for a week’s holiday for a family of two adults and two children.

What’s wrong with that you may ask.

Well first of all it’s a price rip off. The same family could buy a full travel policy for £6.60 for a weeks holiday and that would include £3,000 for cancellation and well as luggage, health cover and travel delays etc.

Secondly, when the Cancellation Insurance is being sold, the clients are not being asked whether they already have travel insurance. Those clients who already hold Multi-Trip or Annual travel insurance policies will already have cancellation cover – so if they buy Cancellation Insurance separately for their UK holiday they are in effect insuring themselves twice! What a waste of money!

It is clear that the holiday companies selling these holidays must first ask whether their clients already have travel insurance. And in any case, anyone wanting any form of travel related insurance should first get online and check out the prices. Competition online is fierce especially at this time of the year so great price deals abound.

Indeed, if any travel agent tries to sell you travel insurance, say NO! We can almost guarantee you’ll save money by buying online.

Mortgage lenders now believe that 1 in 10 borrowers owe more on their mortgage than their house is worth. But the position does vary depending upon which area of the country you look at. For example, the East Midlands is particularly bad in cities like Northampton, Derby and Nottingham with up to 23.6% of borrowers facing negative equity.

Whilst we have seen growth in house prices over recent months, commentators are warning that the worst may not be behind us. We warned about this very point last month and we still believe that the green shoots of the housing recovery will die back. If housing prices do go into reverse again, the curse of negative equity could easily hit 1 in 3 borrowers.

This is very worrying, not just for those afflicted because many more of them will end up in default and subsequent repossession but also for the housing market at large.

Negative equity prevents people moving home because they cannot afford to buy another home if they sell. This means that the supply of homes to estate agents is restricted and, somewhat perversely, this tends to push prices up. Then as the supply of houses increases again, unless mortgage financing becomes easier, prices edge back again.

If you are in negative equity, don’t panic. Negative equity is only a problem if you have to move or remortgage. Your best bet is to ride out the storm – this may take time but for many it’s the only option.

If you undergo a DNA test to find out your likelihood of contracting inheritable disease such as breast cancer could a life insurance company demand to see the results? Well currently, a voluntary agreement prevents insurers from even asking whether the person has had a test and they can’t instruct anyone to take a test.

But as we all know, things can change and the agreement is only voluntary. Indeed the agreement is due to expire in 2014 and we are sure that the current arrangements will change.

We don’t believe that people in the UK will stand for demands for wholesale DNA testing and the politicians will probably support that view. But the issue is heightened by the increasing availability of DNA testing. There are even DIY testing kits, albeit at the princely sum of £700 (well outside the budget of an insurance company!) but at one time a basic flat screen TV’s were £2,500!

So what’s the chance that if you decided to take a test now for your own peace of mind, that the insurers couldn’t demand to see the results after the 2014 expiry date? Well, if the results are on your health records at your GP’s then as things are now, nothing. In fact as far as we are aware, when you give your GP your approval to provide information to a life insurance company, the GP is at liberty to disclose everything in the file.

So if the DNA results are in your health file then your insurer could get hold of them.

Will you avoid this problem if you have a DIY DNA test? Well, yes but as with many of these new developments the problem comes with interpreting the results. To get it 100% right you really need a medically trained person – and if you ask your GP, it’s on your records again!

It’s a difficult one. But if you have a strong reason for testing because for example, your family has a history of breast cancer, you’ll just have to go ahead and hope that the politicians sort the law out before 2014.

As the banks tighten their credit criteria are and more people are being refused any form of credit. That goes for loans, mortgages and credit cards.

According to Datamonitor, by the end of 2009 some 9 million people will be unable to raise credit from Britain’s banks. That’s 1 in 7 people.

On top of this, the companies that only two years ago were lending to those with poorer credit histories are falling like flies. London & Scottish went bump before Xmas, Benefitial Finance closed last month and Cattles appears to be teetering on the brink. That leaves just a few companies such as Provident Financial operating.

But don’t rush to Provident. They operate through agents going door to door collecting weekly instalments and their interest rates are eye watering. What would you guess their typical interest rate is? 25%? 30%? Could it be 40%? No it’s a mere 100%!

For some the only other option is what’s called a “pay-day loan”. That’s a loan given to workers to tide them over until they receive their next pay cheque.
A typical charge fort this service is £25 for a £100 loan. And that works out at an annual interest rate of 2000%. So perhaps we should consider Provident as a bargain!

These interest rates look morally wrong to us. We think that the Government will have to set up an enquiry into what is happening to see whether these interest rates are giving rise to excess profits – and if they are, they’ll have to set a cap the maximum interest rate and charges.

At last the Government has decided to ban credit cards from posting out unsolicited cheques. The credit card companies will also be banned from increasing interest rates without warning and forced to raise the minimum monthly payment.

Last year over 14 million promotional cheques were sent out by credit cards. The technique of sending out these un-requested cheques has proved to be highly profitable for the credit card companies. The interest charged on the money was usually higher than the rates on the card. And then there were usually handling fees of up to 2.5%. Not cheap! As a result many consumers have been led into excessive debt and it was clear that this practice would have to stop at some time.

These reforms were published in a White Paper last week. But that wasn’t all. There is going to be a crackdown on illegal loan sharks and plans for an advocate who will fight on behalf of those consumers who have been cheated by financial businesses. Finally, a specialist enforcement team is to be formed to focus on online fraudsters.

To us this is all good news. Let’s hope that the proposals in the White paper are implemented without further delay.

The Financial Services Authority has announced plans to increase fines for mis-selling financial services by up to 300%.

The FSA says it is responding to evidence that businesses fined for mis-selling are failing to sufficiently improve their standards and operations. This seems to particularly apply to the Payment Protection Insurance scandal where improvements and the resolution of claims seem to be grinding ever so slowly.

Under the new proposals penalties will be based on up to 20% of the company’s revenue from the product category concerned involved in the mis-selling or, in the case of an individual, up to 40% of their annual salary and bonuses.

The record fine for mis-selling Payment Protection Insurance was £7 million which was levied last year on Alliance & Leicester. Alliance & Leicester subsequently got tangled up in the credit crunch and it now owned by Santander, the huge Spanish based banking group.

If you have had money stolen from your bank accounts or credit cards as a result of fraud or identity theft, then unless the bank is sure you took care to protect your banking details, they won’t pay up and the police won’t bother to investigate the case either.

This leaves you in a legal black hole. Unless you yourself can prove who stole the money (some chance!), you have no way of getting either justice or compensation.

And in the mean time you’re out of pocket – and probably big time!

In the four years since chip & pin systems were introduced, fraud on bank cards has halved but it is still running at the rate of £54 million a year. But remember, this figure represents the money the banks lost. It doesn’t take into account the stolen monies that the banks would not reinstate.

Under the Banking Code, you are entitled to claim for any money fraudulently taken from your accounts unless the banks believe you have acted irresponsibly. In practice, this means that if your bank thinks you did not keep your banking details secure, they won’t repay the money that’s been stolen from your accounts.

Banks have been easing in big increases in the cost of personal loans. Within the last month several loans companies have increased their headline interest rates by at least 1% making the headline rates over 9%. This is happening despite the Bank of England holding its base rate at 0.5%.

The average headline rate on personal loan is now 9.07% - but remember if you have any level of distress in your credit history, the rate you’d be offered would be considerably higher. Indeed, at the moment, more people are being absolutely refused a loan than are receiving an offer.

If you want a loan of up to £10,000, then our advice is try to get an unsecured loan. However, the odds are that you will only be offered anything over £7,500 as a secured loan – that means that if you were to default on the repayments, the lender has a legal entitlement to sell your home to obtain the monies to repay the loan. So if you are tempted by a secured loan think long and hard about the potential repercussions.

Of course, if you don’t own your own home you wouldn’t qualify for a secured loan anyway – it would be an unsecured loan or nothing!

Now that the interest rates on fixed rate mortgages have shot up, it may be a good idea to consider a tracker mortgage with a cap.

The way capped trackers work is that you would pay their current interest rate, which should be around 3%. Ah, I can hear you saying, but you’ve been telling us that the bank of England’s base rate is going to rise – so that tracker rate will rise too. Yes that’s correct, but if you have your interest rate capped, the rate on your tracker will never be higher than that cap and that limits your upside risk.

Take First Direct for example. The cap on their new tracker mortgage is set at 4.99% until 2012 whilst the rate you’d currently pay is 2.98%.

This means that if interest rates were to rise by more than 2% then you would have the security of knowing that 4.99% was the absolute ceiling on what you’d have to pay.

So you have a dilemma – go with a tracker and accept that you’ll have to pay more as interest rates rise or pay more now with a fixed rate mortgage knowing that you’re paying more now (than a tracker) but sitting comfortably knowing that your payments won’t rise until the fix terminates.

So we’re back to difficult decisions in the mortgage market! Our advice is take advice and get a mortgage professional to help you get your decisions right.

The fine for not wearing a seat belt is doubling to £60. The Department of Transport says that this is not about money and is all about saving lives.

According to official statistics, around 565 people killed each year in car accidents were not wearing their seatbelt and of these more than 300 would have been saved if they’d been belted in.

Last year some 235,000 fixed penalty notices were given out because the vehicle occupants were not wearing their seat belts - and a further 4,000 cases were heard in court.

In our view is it simply daft to not wear a seat belt. No matter what “non-users” say, they don’t restrict your ability to drive the car and what restrictions they do impose are surely small beer compared to the pain and suffering they undoubtedly save.

If you don’t believe me ask the doctors who end up piecing together the accident victims whose injuries are twice as serious because they weren’t belted in.

Or ask the families of the 300 people who would be with their families now if they had only worn their seat belt.

To re-coin an old phrase – “clunk click every trip”.