In recent years we have been swept away with the notion of “buy now, pay later” and it has allowed us to have what we want when we want it.
Credit cards are no longer a luxury item for the rich and famous but an accessory we almost can’t live without. Because of the growing amount of people with credit cards, the market is becoming more and more competitive and people are becoming more confused about what is and isn’t a good deal.

To take advantage of this information overload, cards are now targeting where the problems start – in store.
Store Cards are increasingly becoming more popular, particularly in department stores, as a convenient way to shop and gain rewards in your favourite or most frequented store. So what’s the catch?

Store cards don’t pose a problem if you are disciplined enough to pay off the balance within the interest-free period (typically between 35 and 55 days).

But, if you can’t pay the outstanding balance each month, the interest due on the unpaid debt can soon mount up. And it won’t be hard to do with the annual percentage rate (APR) hitting the 30 per cent mark on some store cards.
Store cards are regulated under the Consumer Credit Card Act, which sets out rules for any loan under £25,000. The taskforce is also examining whether a complete overhaul of this is needed.

Impulse Buying

Offered at the point of sale, store cards can be obtained after an application has been filled in and a credit check has cleared, which can literally take as little as 10 minutes. You can start spending on you store card as soon as you’ve signed the dotted line.
Recent research by the Office of Fair Trading has revealed that many people who take out a store card had no actual intention or want in making a big purchase before they reached the shops. In fact, 42% of people who take sign up for store cards never had any intention of doing so before they were asked at a point of sale and persuaded by the sales person.

It’s up to you

Store card rates vary, but according to data provider Moneyfacts some of the worst offenders are Comet’s Timecard which currently charges an APR of 29.9% and Debenhams whose store card charges an APR of 28%.
Better value store cards include John Lewis (includes Waitrose) with an APR of 13% and Marks & Spencer at 18.9%.
Most financial experts agree that credit cards with lower APRs are generally a better deal than store cards. But, you may be tempted by some of the benefits of a store card which could include introductory discount on goods - typically around 10% - or extra money off during the sale period.
Keep these points in mind

Before signing up for a store card take some advice from the Office of Fair Trading:

1. An initial discount may be a good deal - but it will depend on how quickly you pay off the balance.
2. Be APR wise - just how much will you pay on an un-cleared balance?
3. Is there is an interest-free period? When does it end and what will the interest rate be afterwards?
4. Check all details of the agreement - APR, interest free period, penalties for default and late payment - and don’t be afraid to ask questions.
5. Remember to consider carefully the costs and benefits of any Payment Protection Insurance (PPI) offered. It is optional and will cost you money.
6. Compare with other payment methods.
7. A store card can be a serious credit commitment for which you may need to budget.
8. Beware of pushy sales staff and don’t be lured into taking out a store card you don’t want – remember, the person selling it to you will probably be rewarded if they sign you up.
9. There is no need to sign on the spot - if in doubt, take the agreement away, read it and seek advice on it before you sign.
Carrying around a purse or wallet-full of credit and store cards can be a temptation to spend more than you can really afford. And, like any credit card, a statement will only come once a month making it difficult to keep track of how much you’ve spent overall.

Various credit cards and store cards are designed for various people with different needs. If you are considering a store card look into all the options and read the fine print. Is that new pair of shoes really worth what you’re paying plus a possible 30 per cent? Shop around, and get you and your money the best deal.

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Would you buy the first car you saw in the first showroom you stumbled upon? No, most of us look at car magazines, compare prices at dealerships, car supermarkets and even the Internet! We only pause to buy when we’re sure we’ve found the best car for the lowest possible price package.

But when it comes to car insurance, all that inbred nous flies out the door. It seems that many simply hate haggling for car insurance! Research shows that 23% of us just sit with our feet up and automatically stay with our previous insurer.

The cost of failing to engage our money saving instincts costs us dear. If the renewal premium comes in at 5% or even10% higher than last year, many just accept it. Bad move! By shopping around the average motorist would save £55 – and that’s without the additional online discount!

Insurance companies frequently offer their less competitive pricing to existing clients. Awful isn’t it? They’re relying on your apathy to improve their profit margins.

There are now around 100 car insurers in the UK all eager for your business. Competition is so strong that for the last 2 or 3 years premiums have been static. That very much falls into line with the boom in car insurance on the Internet. Over 2.25 million motorists buy their car insurance online and that too has hotted up the competitive fervour in the marketplace.

Internet sales are growing rapidly, reports this week suggest 10% of retail sales - and it’s not surprising. In fact it’s share of the insurance market will be even bigger. That’s because the Net’s quick and generally easy to use. Surfers can check out specific insurers or go to comparison web sites or use web sites, like ours, that recommend specific insurers for specific categories of driver. It doesn’t half beat a morning down the high street or trolling through yellow pages. And it’s certainly better than fending off Indian call centres!

New insurance products such as pay-as-you-go, a multi-car policy and the appearance of new niche market insurers such as Sheila’s Wheels all point to a further stiffening up of competition within the market. And this indicates that now’s a good time to go car insurance shopping.

But there are warning clouds for consumers. Pips are beginning to squeak at the insurers as a result of accelerating claims, placing doubts over their ability continue to hold down prices much longer. The cost of settling personal injury claims is rocketing at 12% per year whilst accident damage is costing around 5% more per year. The increase in the average cost of repair has far outstripped the savings from decreases in the number of accidents.

Says Ian Crowder of the AA, “If we don’t start to see modest price increases, then there could well be an unpleasant and sudden price hike. That will not be good for the industry’s reputation or for customers”.

We say, let’s take our chance. We’ll continue buying online!

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Most mortgage buyers feel like celebrating when they close a low interest rate deal. Securing a low rate of interest is everyone’s prime objective but let’s hope they weren’t too blinkered.

The problem is that in many cases, fees and charges are often poorly explained, or kept out of immediate view, and these can add up to thousands of extra pounds over the period of the mortgage.

Unwary homeowners can easily opt for a very plausible rate of interest only to find out a few years later when they want to re-mortgage for a better deal, that they’re faced with retaliatory early redemption fees. Other will find that, along with their bargain cheap rate of interest comes a hefty arrangement fee.

The mortgage industry has found that low rates of headline interest pack the punters in. So they put a lot of energy into devising ancillary and less obvious ways of parting you from your money. Here are some of the area’s you need to check out:

Charging interest at the month end
Some lenders like the Stroud & Swindon and the Skipton building societies, charge interest up to the end of the month in which you redeem your mortgage. This can mean that if you later decide to switch that mortgage, you can effectively end up paying interest twice for the month in which you switch.

For example, if you switched on the 1st of the month you will be charged interest by you old lender up to the end of that month – and at the same time your new lender will also have started charging you interest from the 1st, your switch over date. This means that you will end up paying double interest for that month. Sneaky eh!

The way around this is to plan the switch to complete just before the month end. That way you’ll minimise the double payment. The trick is to be aware of the problem and plan for it.

Annual Interest Calculations
Another sneaky one! Here the lender charges you interest based on what you owed at the commencement of the year. This means that you end paying interest on money you’ve already repaid months ago. Who are the guilty ones here? Well fortunately there are only a handful, the most well known of them being the Portman Building Society and the West Bromwich Building Society.

What you really want is interest to be calculated daily. This means that all your repayments are credited immediately and you end up paying interest on exactly what you owe.

Arrangement Fees
Where fixed rate arrangement fees are charged they tend to be in the £399 to £650 range but you can end up paying much more if the fees is calculated as a percentage of the sum you’ve borrowed.

Some lenders such as the Woolwich, the Northern Rock and the Nationwide offer borrowers the option to pay an arrangement fee and pick up their headline interest rate or refuse to pay the fee, in which case they pay a higher interest rate.

For example, the Nationwide’s current 10 year fixed rate is 4.88% but attracts an arrangement fee of £399; their fee free version of the same product charges 5.28%. This means that if you go fee free, the monthly payments for a £125,000 mortgage work out at £751.28 whereas if you paid the fee and added it to your mortgage the monthly payment would be £724.90. Over the full ten years of the 10-year fix, you’ll end up paying £3,165.60 extra for the privilege of going fee free.

As a general guideline, the longer you expect to stay with a mortgage, the less it’s likely that a fee free option will work out cheapest. So, always ensure that you or your mortgage adviser works out what’s the cheapest way to go.

Exit Fees
These are the charges levied by almost every lender when you pay off a mortgage or switch.

In theory they are meant to reflect the administration cost of the redemption process but if this is the case why do these charges vary from Britannia’s £35 up to £295 with the Alliance and Leicester? The Financial Services Authority is currently investigating the matter.

Extended tie-ins
Beware of deals that tie you in with big penalties to remain with the lender for several years after the deal rate ends and which then move you to an uncompetitive rate of interest.

For example, the Portman currently has a fixed rate deal running to May 2008 at just 1.79%; but after May 2008 you have to stay with the same mortgage for another 4 years and on the society’s standard variable rate. And if you want to jump ship before May 2012? Then if you moved before May 2009 you’d be charged an exist fee equal to 7% of the outstanding mortgage, 6% in the following year, then 4% the next year and 2% during the final lock in year.

Higher Lending Charge (previously known as a Mortgage Indemnity Guarantee or MIG)
If you can’t raise a 10% deposit, some lenders will require you to pay a Higher Lending Charge (HLC). This is in effect an insurance policy which protects the lender if you default on the mortgage and the proceeds of the sale of the property fail to repay the outstanding balance on your mortgage.

But whilst you pay the one off up front premium, you never benefit from it. If things get nasty and the lender repossesses your property and sells it at auction for say £100,000 when you still owed the lender £110,000, the insurance policy would pay £10,000 to your lender. But that will not help you - you would still owe your lender £10,000 and they will take action against you to recover the £10,000 from you.

We doubt the justification for HLC’s especially since so many lenders have now ceased using them. A higher loan-to-value mortgage may attract a higher interest rate but you’re still likely to be better off accepting that rather than paying a HLC. If it applies to you, get you mortgage adviser to check it out.

Lender that do not charge HLC’s include Cheltenham & Gloucester, the Nationwide, Northern Rock, the Woolwich (which is now part of Barclays Bank) and HSBC.

Fees from Mortgage Advisers
With thousands of mortgages on the market and with so many aspects to watch out for, it makes sense to use a mortgage broker. After all few purchases you make will be bigger or more important than your home!

Your broker will match your requirements and personal circumstances to a choice of mortgage alternatives. They’ll then talk through with you the best options available and make the various calculations to evaluate them. It’s then up to you to decide.

The point is that nothing is free these days - including this service! Some brokers will charge you a percentage of the mortgage and some charge you a flat fee. Others elect to receive fees from the lender rather than charge you a fee. Be sure you understand how your broker will be charging before you appoint them to work for you.

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As landlords know, there’s a huge demand for small self-contain units, especially in University towns. But as from the start of this tax year, landlords are faced with the necessity to have a building licensed for occupation if the property is on at least 3 floors and several unrelated tenants occupy it.

Whilst this represents a problem for those less scrupulous landlords, it will serve to help those landlords wanting to enter that market. That’s because the tighter regulation will help to convince more mortgage lenders that these larger properties which are suitable for division into smaller units, are acceptable for a buy to let mortgage.

The licences introduced on 6th January this year are just one part of a three prolonged attack on properties in multiple occupation.

Licence for Multiple Occupation
These licences are a move to improve the standard of housing. The licences are issued by your Local Authority and are expected to cost around £100 for each occupant for a five-year license. The preceding inspection will be concerned about fire regulations and the size and arrangement of rooms and facilities. Even the landlord will be assessed with regards to the ongoing arrangements for the management of the properties. And what if a landlord tries to dodge this licence? That’ll be a fine of up to £20,000!

Landlords will find more information about this at: www.propertylicensing.gov.uk

Housing Health and Safety Rating System
This regulation is concerned about how the building’s condition can affect the health of its residents. Tenants will be able to call in inspectors who will be empowered to demand repairs and fine landlords £5,000

Tenancy Deposit Scheme
This forthcoming regulation affects the way deposits are held and administered. This results from research that showed that some Landlords refused to return deposits and some concocted dubious reasons for deductions. So from October all deposits will have to be held in official Tenancy Deposit Schemes. This basically means that the deposit must be held by a scheme administrator who is, in practice, neutral. Then at the end of the tenancy, both the landlord and the tenant have to inform the scheme administrator that either the whole deposit is returned to one party or part of the deposit returned to both parties and the scheme administrator must pay out in accordance with the agreement within 10 days of receiving notification.
If agreement cannot be reached between the landlord and the tenant the scheme administrator will retain the deposit until either the tenant or landlord obtains a final court order specifying the proportion of the deposit to which each is entitled. The scheme administrator will then immediately pay out in accordance with the court order.
Where a scheme administrator returns a deposit, they must do so with interest added at a rate yet to be specified by Government. Any interest additional to this will be retained by the scheme administrator and can be used to fund the administration of the TDS scheme.
The TDS Scheme is being introduced as an ammendment to the Housing Act 2004.

In our view, the short-term result of all these regulations will be that poorer standard properties will close as the landlord will be either unable or unwilling to comply. In the longer term, the number of properties may well rise again and be at a higher standard than the current stock of such properties.

Having said that, landlords are certain to increase rents in a move to offset the additional compliance costs they are faced with.

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Smokers have less money to burn that the rest of us – that’s because on average, smoking costs them £92,000 during their lifetime.

So the forthcoming ban on smoking in enclosed public places which comes into effect in summer 2007 is surely a great time to take your last drag! Similar smoking bans already in force in Scotland and Ireland, have persuaded thousands and thousands to give up.

Indeed, recent figures from the Health Development Agency show that smoking is the biggest single cause of illness and premature death, killing some 83,200 people a year in England alone! It’s not surprising therefore, that health considerations are the most persuasive reasons for kicking the habit – but there are some significant financial reasons as well!

As smokers and ex-smokers alike can testify, it’s far from easy to quit the habit – but along with the health dividend, the thought of extra spending money should provide a major incentive. Reformed smokers could put some of their newfound money into savings or pay off debts quicker, or even overpay their mortgage. Even more holidays come into play!

And life insurance is another area to make big savings. Smokers frequently pay up to twice as much for their cover than non-smokers and it seems as if premiums for smokers are still rising. That’s because for some years now the insurance companies have been locked in a price war fuelled by the Internet.

People searching the Internet for low prices, have forced the insurance companies to cut their standard rates – these are the rates they quote all their initial enquiries. But the insurers have had to recover some of their revenue in other ways. What we have seen is a tightening of underwriting criteria. This means that anyone who is not a lithe, fighting fit non-smoker will have to pay non-standard rates – to you and me, that means more! And as smokers expose themselves to a self imposed health risk, they get hit in the neck!

So giving up smoking is a really good way to save on your life and critical illness premiums. Most companies won’t classify you as a non-smoker until you’ve fully given up for a least a year - and some even want five years. But once you’ve passed the 12-month stage you need to contact your insurer and be re-quoted. And don’t be tempted to lie because that’s false economy. If you were subsequently to make a claim, the insurer is certain to seek confirmation from your Doctor that you were a non-smoker and if that was wrong, the claim would be thrown out under the policy’s non-disclosure provisions.

Once you have the re-quote you’ll see a big reduction in the premium but don’t accept it automatically. The odds are that you’ll still get a cheaper quote elsewhere on the Internet – and what better place to start than our web site!

Just a word of warning. If you do find it’s cheaper to switch, don’t cancel your existing policy until the new policy is confirmed and in place. That’s because it’s always possible that the new insurer will revise their initial quote upwards when they’ve seen your full application details and health record. Only cancel your existing policy when everything’s in place with your new policy.

And it’s quite easy to terminate a policy – simply cancel your direct debit! After a few weeks the insurer will contact you to find out why - just tell them you don’t need the policy anymore, and that’s that! There are no cancellation charges just more savings in the bag.

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When you go shopping for a mortgage you’re bound to face a decision between choosing a cheap interest rate mortgage or a higher rate mortgage with no, or very low, up front costs.

We’ve all seen them in the national press and on the Internet – mortgages with incredibly low interest rates. Lenders know that it’s a low interest rate that pulls in the punters so they bust a gut to out do their opposition. The only problem is that these super low rates mean that the lenders have to recover some of their money in other ways. High arrangement fees is a classic solution.

Arrangement fees are charged to cover the cost of administering the mortgage application and reserving the mortgage monies. Sometimes these fees can be added to the mortgage and sometimes they have to be paid upfront. And they can vary greatly, not only between lenders but even between the mortgages offered by the same lender.

Most arrangement fees are in the £399 to £699 range and clearly work out cheaper for larger mortgages. But some lenders such as the Stroud & Swindon Building Society, charge 1% fees on top of some of their mortgages. On a £150,000 mortgage that’s a whacking £1,500! Not to be taken lightly!

There’s no doubt that whilst we’ve seen arrangement fees steadily increase, a number of lenders have used them to reduce headline interest rates. The Bank of Scotland being a recent example. Other lenders will even give you a choice – either pay a fee and have a low interest rate or fee free and pay a higher rate.

This means that it’s essential to you find out which is the best option for you. If you expect to stay in the house for only a few years or you intend to re-mortgage as soon as any special offer rate runs out, you can afford to take a short-term view. In our experience, it’s not always easy to get these calculations right, so we think it’s best to use a mortgage broker to do the figures and then source the deal that’s best for you. That way you’ll avoid a potentially costly mistake.

Take the following basic example. Say you’re looking at a 2 year interest only mortgage for £100,000 at an interest rate of 4.5%. That will cost you £4,500 a year. If the mortgage attracted an arrangement fee of £699 and the purchaser was expecting to re-mortgage after the interest deal expired in two years time, the mortgage will cost £9,669 over the two years. If the alternative was an interest rate of 5% but without a fee, the two year cost would be £10,000. So in this case it’s worth getting the 4.5% deal and paying the fee.

In our experience, you’re likely to find that the bigger your mortgage and the longer you are tied into the mortgage, the more important the interest rate will be rather than the fee.

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Did you know that the Office of Fair Trading (OFT)have ruled that £12 is the maximum your credit card can charge you for each late payment or unauthorised borrowing? What’s more, you can claim back any excess charges you’ve paid going back 6 years!

The consumer magazine “Which” and lawyers have confirmed that this gives the go ahead for customers to reclaim all credit card, store card, mortgage and bank account penalties which exceed £12.

Stephen Alexander, a partner at solicitors Class Law, said, “Now that the OFT has decided that anything over £12 is unfair, it will be a lot easier for people to succeed against the banks in the Small Claims Court. People are entitled to claim back charges made within the last 6 years”.

The OFT’s ruling will hit the banks hard. After all, last year they took around £1 billion in charges with the Halifax, part of the Bank of Scotland Group, being one of the worst offenders. They’ve been charging £39 for unpaid cheques, direct debits and standing orders. The norm amongst banks has been closer to £30.

If you want help in claiming back the excess charges you’ve paid, you can’t do better than visiting the web site run by Which. For a fee of £10, Which will provide all the draft letters you need to enable you to mount your own court claim for excess charges going back 6 years.

Emma Bandey, a spokes person for Which said, “We’re urging people to claim back what they should never have been charged in the first place. The OFT has agreed with us that these charges are unfair and we think people should be empowered to do all they can to get their money back from banks that have posted billions of pounds in profits this year”.

Banks have until 31st of May to respond to the OFT’s ruling but says that it will take court action against any that have not reduced their charges by then.

The banks response hasn’t exactly been enthusiastic! They’re expected to generally comply with the OFT’s ruling for at least some of their charges and seem bent on battling it out for others. The British Bankers Association has questioned why the OFT has extended it ruling to encompass store cards, mortgage penalties and overdrafts when the original investigation only covered credit cards.

Their spokes person said, “We are surprised that the OFT has widened the scope of its ruling when it only spoke to credit card providers. We expect our members to challenge this. We believe our bank’s products provide good value”. As Mandy Rice-Davis, an infamous prostitute caught entertaining a Government Minister said, “Well he would say that, wouldn’t he!”

The OFT’s central position is that penalties must only be used to recover administrative costs – not boost profits! The OFT’s chief executive said, “We expect credit cards issuers to adjust their default levels quickly. We have not ruled out future legal action if the market does not respond positively”.

Wow, aren’t the Courts going to be busy!

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If you don’t ensure that the value of your contents is kept up to date, you’ll have to dig into your own pocket if anything from your home is damaged or stolen.

It’s all too easy to become under insured. New electrical goods are a thief’s best dream and the value in these items can soon mount up. Those mobile phones, iPods, televisions and lap toptops are always at the top of most thieves “must have” list. Then there’s all your other purchases you’ve made during the year. So when you look back at what you’ve bought and what the value of your insurance cover is, you’ll see it’s all too easy to become under insured.

If you make a claim and the insurance company concludes that you’re under-insured, the payout on your claim will be reduced. So if you have insured your contents for £20,000 and the insurer estimates that it would cost £30,000 to replace them, then any claim you make could be reduced by at least 50%.

But not all insurers are so tough. Norwich Union Direct pays out up to the limit of the cover and then any shortfall is just hard cheese. More Than says that underinsured claims are reduced by up to 20%.

Most insurers have a minimum of at least £15,000 when it comes to Contents Insurance but that’s rarely enough. Bear in mind that the contents value of a typical family home now stands at just over £45,000.

So why not take a quick check of the value of your contents. And don’t forget to add in your CD collection, many do! Norwich Union values CD’s at £10 each so a collection of 500 will account for £5,000 of cover just by themselves! And then there’s the garden furniture and the things in your garden shed – they’re particularly vulnerable! Even the plants in your garden need to be included!

More Than have been so concerned about the under-insured problem that they’ve recently increased the cover for all of their 470,000 clients by 25%.

A spokes person for More Than said, “The increases will be made from customers’ renewal dates. There will be no direct effect on premiums until then”. Other insurers are certain to follow suit in the near future.

If you take or advice and recalculate the value of your contents, you can find a useful checklist for householders at the web site run by the Association of British Insurers, www.abi.org.uk.

Remember that Contents insurance covers everything that’s moveable in your home – that includes your carpets and curtains. But immoveable items such as kitchen furniture and fixed lighting are covered by your Buildings insurance. It’s the same rule outside. Your child’s toy paddling pool is covered by your contents insurance but your big boys’ and girls’ hot tub is covered under your Buildings insurance!

And whilst you’re at it reconsider the cover you’ve got for your Buildings insurance. The easiest solution is to contact your insurer and they’ll recalculate it for you based on the number and types of room you have and your post-code. It’s not the sale value of your house you have to insure for. It’s the cost of demolition and rebuilding that counts. Your insurer will price rebuilding costs on your post-code.

In the last Budget, Gordon Brown put back the clock some twenty plus years by announcing that life insurance can attract tax relief. However, tax relief only applies to a particular new sort of life policy.

The initial response from life insurance professionals was subdued. That was until the full extent of the savings became appreciated. Standard taxpayers can save around 15% and higher rate taxpayers can save a hefty 30% off the cost of their life insurance premiums. And it now looks as if up to 50% of all new policyholders can make these savings!

These new policies are marketed under a number of names ranging from Level Term Pensions Life Insurance to just plain Pensions Life Insurance. But don’t be put off by the word “pensions” – you don’t have to buy a pension and neither do you have to have a pension already! The word “pensions” is there because the legislation which introduced the tax loophole for these policies is part of a wider change in tax legislation which relates to primarily to pensions and Inheritance tax.

You should be aware that not everyone will qualify for these tax savings and a Pensions Life Insurance policy will not suit everybody. That’s why these policies must be bought from a broker who will advise you. And because of the nature of these special policies, at the moment you can’t get a live quote on your computer screen – the broker will have to get competitive quotes and phone you back.

So what does Pensions Life Insurance do? It pays out a lump sum if the policyholder dies or is diagnosed with a terminal illness which will result in death within twelve months.

But there’s only one type of policy available: there can only be one policyholder (joint policies are not available but you could take out a policy for yourself and a separate policy for your partner), and the cover remains constant for the duration of the policy. Neither can you add critical illness cover into the policy.

That means that a Pensions Life Insurance policy will not be the cheapest way to protect a repayment mortgage unless you’re happy to buy more cover than you actually need to repay the mortgage. If sadly, there is a payout, then with a Pensions Life Insurance policy, your mortgage would be repaid and any the surplus could go to your family. However, if you want the cheapest way to protect a repayment mortgage, then a low cost Mortgage Life Insurance policy with decreasing cover will almost certainly be the best solution – but you won’t get tax relief on your premiums!

Now you may be wondering why the savings you’ll make are less than the value of your tax relief. It’s because on average, Pensions Life policies are some 15% more expensive than a like for like conventional life policy. The insurance companies are charging more for them because they have more work to do to reclaim the standard rate tax relief.

If you’re a higher rate taxpayer, you’ll get the standard rate of tax deducted from your premium by the insurance company but you’ll have to reclaim the difference between standard and higher rate tax via your Annual Tax Return. Once you’ve entered this on your Return, H M Inland Revenue will continue automatically to award the relief for the policy’s duration.

By now you will have begun to appreciate why we believe that you must get advice before you buy one of these tax relief policies. If you aren’t already convinced, consider the some more elements which the Chancellor of the Exchequer threw in!

You cannot have a Pensions Life Policy if your pensions contributions plus your life insurance premiums are greater than £215,000 per year. That shouldn’t worry too many people!

Then you have to factor in that if the value of your pension fund plus the payout from the policy exceeds £1,500,000, then you will be taxed at 55% on the excess! (Conventional life insurance policies are excluded from this calculation.) Again this restriction shouldn’t concern too many people - but you have to be aware of it.

So in summary, the information we are receiving indicates that around 50% of people will find that Pensions Life Insurance is the cheapest solution for their life insurance needs.

But, we repeat, do not buy it without expert advice.

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Most claims on home and contents insurance proceed smoothly, except perhaps for the occasional argument about how much something was worth. But another re-occurring problem is where the damage is due to poor maintenance of the building itself. The insurers take a very dim view of this and may scale down or even reject your claim, as a result.

Our advice is to give your house an annual Maintenance MOT every spring. By carrying out a few simple checks, it’s possible to catch problems at an early stage.

Snow, frost, rain and wind put the biggest day-to-day strains on the structure and heating in your home. Most homes develop a few problems in the winter months, so a check in spring can save considerable time and expense further down the line. It’s not as if you’ll be paying out money that you could claim later on your insurance. Indeed, any costs included in a claim that were really a maintenance issue, will automatically be rejected by your insurer.

Here’s our ten point MOT for your home:

1. Get a pair of binoculars and check out your roof. Search for slipped, cracked or loose tiles. A leaking roof can result in major damage and allow rot to take hold in the roof. There’s also a safety issue. If a tile falls off, someone could be badly injured. Even your car could be damaged!

2. Check out the exterior paintwork. Any peeling, cracked or blistered paintwork needs attention. Then touch it up to preserve the wood from further cracking. Summer time can be especially hard on paintwork with expansion and contraction cracks resulting from high temperatures and big temperature changes.

3. Clean the gutters out. Autumn especially creates a lot of debris that needs to be removed. Blocked gutters and down spouts can cause immense damage if water is left to overflow and penetrate. Just be careful with this job. Working with ladders is dangerous so maybe you can get your window cleaner on the job!

4. If you’ve used your chimney heavily during the winter, get it swept. The danger is that any heavy build up of soot could catch fire.
5. Walk around the house and make sure that nothing is covering over, or bridging, the damp course. Garden rubbish pilled up against the wall is the most common offender. If damp gets past your damp course you’ll end up with damp inside the house, damage to your decoration and plasterwork, and probably rot.

6. When you are planting trees and shrubs you need to make sure that their roots are not going to cause damage. If roots penetrate your drains or get into your foundations you could be in for horrendous bills. Popular and willow trees are some of the worst offenders. Did you know that you shouldn’t have a popular tree within 150 feet of a property? New houses built within this distance, have to have specially reinforced foundations!

7. Whilst on the subject of trees, you should be aware that your Buildings insurance will usually cover you for damage caused by falling trees. But what happens if the tree was rotten or the bough already damaged? Yes, you’ve guessed it, that’s a maintenance issue. Unless you can show that you took reasonable care of the trees, the insurer could refuse any subsequent claim. If have big trees you are advised to get an annual report from a tree expert detailing any work that is needed – and don’t forget to carry it out!

8. Do you have any plants climbing up the house? Check out that they are not causing damage to your brickwork. Ivy is the biggest offender.

9. Now inside your house. Get your central heating boiler serviced – it’s had a hard winter! Also get it checked out for carbon monoxide emissions. Whilst he’s there, get the engineer to give your radiators the once over.

10. Finally, up into the loft. Check for signs of water penetration, and rodent damage to the exposed wiring. Squirrels love warm lofts and they love wiring! The fire brigade hate squirrels! And whilst you there, remove any old wasp or bird nests and block up the openings.

We’re now in the Chinese Year of the Dog and according to Chinese folk law, anyone born during the year, which runs between 29th January and 28th January 2006, will be honest and loyal. They also aren’t concerned about wealth.

This might explain why there are 5.2 million homes owning dogs without pet insurance cover. As many will have discovered to their cost, this leaves them exposed to huge veterinary bills.

The average cost of treating a dog following a road accident is a wealth damaging £379 and the cost of just a scan could exceed £1,000.

On average, an insured pet owner makes a claim every three years. But do watch out. Pet insurance policies do widely vary in terms of what they cover, excess levels, limits on the maximum that can be claimed each year and various exclusions.

So when you’re shopping for pet insurance it’s important to study the small print. Don’t automatically buy the cheapest. Cheap premiums invariably reflect restricted cover. For example, not all insurers will offer cover for life. This means that if your dog’s problem requires ongoing treatment for more than a year, then cover ceases at the twelve-month stage.

Take Darren Gittins alsatian, Chelsea. Five years ago Darren wisely took out insurance for Chelsea as soon as she joined the family as a pup. All was well until the first spring arrived. Then, Chelsea developed a skin allergy and soon after a hip problem. Treatment turned out to be an ongoing process requiring regular visits to the vet.

Says Darren,” Chelsea is on a special diet plus regular injections to control her allergies. The monthly bill from the vet is usually between £350 and £450 so my decision five years ago to take out insurance, proved a great investment as my insurance premium is just £15 per month. In fact I’m not sure what we would do without it!”

Darren’s budget policy is issued by Pet Plan and covers lifetime conditions up to £4,000 per year. Pet Plan also have two other schemes – their Standard Plan which pays up to £6,000 per year and their Supreme Plan which provides unlimited cover. So you can see that even within the same insurance provider, you can be faced with several policies to choose from.

Some policies even provide protection for kennel fees, or boarding fees if you become ill or even receive a cancellation fee for your holiday if your pet becomes ill before you travel.

Our advice is to visit several pet insurance web sites, including our pet insurance page! Then spend half an hour comparing premiums and see what you get for your money. We know it’s a bore but put a little extra effort in and you will probably be rewarded with a great deal and peace of mind.

And if your dog could talk, we’re sure he’d say thanks too. But perhaps a big lick will have to suffice!

George, our freelance web site designer doesn’t take kindly to people driving into his car. It’s not as if he’s into road rage or uses his fourteen stone of gym honed muscle to exact retribution. No, he’s really got it covered another way.

He’s got legal insurance included in his car insurance. This allows him to claim for losses and costs not normally covered. So three months ago when his car was hit from behind at the traffic lights, the legal profession rallied round! Not for free you understand, after all who’s ever heard of a solicitor toiling for free? No, but it was free to George – his insurer paid all the legal costs.

Whilst his insurer got his beloved MX5 repaid, it doesn’t normally cover claims for personal injury or loss of earnings. So the extra £2 per month George paid for legal expense cover, proved money well spent. He’s already received compensation for the broken arm he suffered and negotiations for his loss of income are well advanced.

Legal expense insurance assists victims to claim back losses and compensation where the accident was not their fault. The losses can include the cost of hiring a replacement car whilst yours is off the road and, if you’re not comprehensively insured, the costs of having your car repaired. As in George’s case, legal expense cover will fund claims for personal injury and loss of earnings.

Legal expense cover is one of those things that’s under rated until it’s used. The insurer runs the claims on your behalf and sends you the settlement cheque at the end of the process. All you have to do is fill out the legal expense claim forms, speak to the solicitor nominated by the insurer, possibly answer a few more questions, and sit back.

You’ll find that on the Internet, most of the policies offer legal expense cover as an optional extra. That’s because as price competition is so fierce, the insurers chose to keep their headline premiums as low as possible.

The optional cost does however vary from company to company. For example, Budget charges £24 per year, Churchill £21, Direct Line £19.95, and More Than comes in at £17.85. Just a few such as Admiral, include some legal expense cover for free.

Make sure you check it out when you buy. Remember, complicated claims can drag on your years especially is severe injury is sustained, and settlements can end up in £ millions.

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The latest figures from the insurance companies continue to show large numbers of rejected claims. Whilst the figures do vary between insurers,
On average they work out at around 1 in 5 claims are rejected. (see below).

Critical illness insurance pays out a tax free lump sum if the policyholder is diagnosed with one of a long list of qualifying illnesses and conditions included stipulated on the policy.

The biggest reason for claim rejection is that the insurer has identified that the policyholder failed to fully disclose their medical condition when they originally applied for the insurance. This always results in conflict between the insurer and the policyholder so our best advice is always disclose everything, no matter how small or insignificant you think it may be.

If you do make a claim, your insurer will always search through your past medical records to satisfy itself that you had disclosed everything at the time you made your application. Then if they find that you did omit medical information, they have a valid contractual reason for refusing your claim.

In some people’s eyes this makes critical illness insurance the least reliable form of insurance – but we disagree. We say if you’ve disclosed everything about your medical history, no matter hoe small, then there should be no problem.

Having said that the rejection figures from the insurance companies do vary, so it may be that some are more stringent than others.

Rejection rates published by UK insurers

Insurance Company Percentage of Critical Illness Insurance claims rejected

The other factor that affects the rejection rate is that more recently issued policies tend to have higher claims and higher rates of rejection. So if an insurer has not been in the market for a long time, or it has had a major sales campaign on critical illness insurance during the last few years, then it’s rejection rates will be higher.

Our advice is buy the critical illness policy that suits you best and on your application form, fully disclose everything about your health. Don’t miss anything out. Then you’ll be OK

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There a clear signs that traders in the City are expecting interest rates to rise by 0.5% by December this year. The Bank of England tends to make a series of small interest rate changes rather than one big change, so watch out for the first 0.25% rise around August.

Mortgage rates are already beginning to react with the rates for two and three year fixed rate mortgages rising. The rates on loans and credit cards are generally variable, so these aren’t likely to rise until the Bank of England moves.

It’s all because inflation is coming under pressure. The target for inflation is 2% per annum but with energy prices high, and likely to soar even further, we are beginning to see the knock on effect on prices of goods and services across the economy. And despite fuel bills siphoning money from the man in the street, new car registrations are up 7% in the year to March, industrial orders rose more than 13% and business confidence improved again last month (April). Even America the economy is experiencing surprising levels of activity.

All this is good news for Britain’s economy. The annual rate of exports has risen almost 20% virtually matched by imports. The major quarterly survey of the economy suggests that growth will remain strong.

Economic figures are all well and good, but for the man and woman in the street, it’s the housing market that is perhaps the key barometer. Here the current news is good for homeowners, but perhaps less good for those aspiring to get on the housing ladder.

Currently, the housing market is buoyant. Prices rose another 2% in April according to the Halifax, meaning that they are now some 10% higher than over the same time last year.

The problem is that sentiment in the housing market is very fickle. As soon as we get the first interest rate rise, watch the buyers dive for cover. A rise in August followed by another in early autumn, will probably cause the housing market to stall. As we all know, forecasts eighteen months ago that the housing market was in for a crash proved false – and we’re still not expecting prices to fall heavily. But it’s the property hot spots that will bear the brunt of any slow down. They’ll be the first to experience a slow down and a dose of realism in respect of prices.

At the moment nationally, the average house is being sold at around 95% of its asking price. When the interest rate rises emerge, we expect to see this percentage fall to just under 90% and asking prices will trim as a result.

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Have you ever totted up how much you spend on insurance? Home and Contents insurance, life insurance, critical illness insurance, medical insurance, income protection insurance, travel insurance, mobile phone insurance and car insurance but to name a few.

Try adding up your premiums now – we think you’ll be shocked at how much you spend.

You’ll be even more surprised to learn there’s also a likelihood that you’ve duplicated some of the cover you’re paying for. Cut the duplication out and you’ll save precious money.

Many people have insurance cover for theft, legal expenses, loss of income, even death without even realising it. This arises because lots of people don’t fully appreciate what’s covered by the policies they have, especially if the policies had been arranged for them by brokers and financial advisers.

In a recent survey, The Financial Services Authority (FSA) found that optional extras such as legal expense cover and breakdown recovery, were often added to car insurance policies without checking whether the policyholder already had cover elsewhere. It is also quite common to find that people with Income Protection policies have duplicated their cover via their payment protection policies taken out to cover monthly mortgage, loan and credit card payments. The issue here is that if they claim on their Income Protection policy, their payout will be reduced because part of their claim is already covered by their other payment protection policies – so that’s a waste of money.

The Financial Ombudsman confirms our view saying, “People often contact us when they find themselves over-insured. They often do not realise until they make a claim that they have been paying for a policy that provides very little, if any, benefit”.

There is also plenty of evidence that some people simply don’t understand what they are actually insured for. Take the situation of Amanda Lariviere from West Yorkshire. The mother of two is recovering from ovarian cancer and had an allergic reaction to chemotherapy which was still keeping her off work. She decided to visit her building society to enquire if she could raise some cash by re-mortgaging to pay an unwelcome tax bill. The Society’s adviser wisely asked her to bring in all her life insurance policies so that they could be used in her re-mortgage application. So imagine her surprise when the adviser told her that the policies with Scottish Provident and Norwich Union which had been costing her £80 per month, were not life insurance policies at all – they were in fact critical illness policies with a combined insured value of £100,000. She has now received a payout from both policies, enough to pay off some of her mortgage and her tax bill!

Some typical insurance cover to check out.

Life Insurance
Some employers provide life cover within their pension schemes. Called death-in-service benefit, it typically pays out a lump sum worth 3-4 their annual salary if the employee dies whilst employed by the company.

Critical Illness Insurance
Critical Illness cover is often sold as an optional extra on a life insurance policy. Furthermore, some employers provide critical illness cover as part of their employment package. Check out exactly what you’ve got.

Income Protection and Payment Protection Insurance
Permanent Medical Insurance (PMI) is also known by some as Income Protection Insurance. It pays out the insured monthly sum if the policyholder is off work because of illness due to a wide range of specified medical conditions - and some policies will also pay out during redundancy. The policy continues to pay out indefinitely or at least until the policy comes to the end of its term.

The point is that PMI policies eliminate the need for Payment Protection insurance – the sorts of policy frequently sold alongside credit cards, loans and mortgages to maintain monthly payments. Indeed, you cannot make claims against more than one insurance policy for the same event – only one policy will agree to pay out! (The others will reduce their payouts by the value of money you are receiving from the other policies)

Legal Expense Insurance
Cover for legal expenses concerning disputes relating to your home, will normally be included in your home and contents insurance policy. Many car insurance policies provide legal expense cover as standard or as an optional extra. Some trade unions also include automatic access to legal advice as part of their service to all their members. Check this out before you pay for more cover!

Mobile Phone Insurance
Most mobile phone policies have a hefty excess. You might be better off changing to a pay-as-you-go plan.

ID Theft Insurance
According to the consumer magazine “Which”, you’re only legally responsible for the first £50 if your identity is stolen. Is the premium worth protecting just £50?

Other Insurance cover
Most credit cards automatically insure your purchases for a specified number of days following their purchase. Take Barclaycard for example. If you use Barclaycard to buy something between £50 and £2,000, you are insured against accidental damage and theft for the next 60 days.

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If you have an accident and it is proved that the accident was due to your failure to keep your car roadworthy, your insurer may well refuse to pay up. Quite reasonable I can hear many saying. But what if it’s you that’s not roadworthy?

How many accidents occasion the comment “I didn’t see the other vehicle”? And what happens if you eyesight has deteriorated to a dangerous extent?

Well all of us know if we have a problem with eyesight and opticians are on every high street. If you need glasses or contact lenses for driving then you must wear them and if your eyesight deteriorates you must get a new prescription. If you drive, it’s your responsibility to make sure that you are safe to drive.

Only last week I saw an elderly motorist who was clearly unable to read the road signs. She was leaning forward trying to read the signs indicating towards Coventry and rolling forward at 15 mph – all this at traffic lights that by then had turned red – and she hadn’t seen those either! She was lucky that the cars coming across from the right saw her early.

The law states that a driver who cannot meet the minimum level of eyesight must not drive. They must also surrender their driving licence.

The eyesight test for drivers states that you must be able to read a number plate containing figures and letters 79mm high and 50 mm wide (the legal number plate) from 20 meters. But you are allowed to use your driving glasses.

Having said that there is no legal requirement for you to have regular eyesight tests although you are obliged to inform the DVLA if you develop any medical problem that affects your fitness to drive. If you don’t notify the DVLA it’s a criminal offence.

Older drivers of 70 and over must complete a medical form every three years confirming their fitness to drive and this includes eyesight. If they don’t, they lose their driving licence. (I wonder what that lady at the traffic lights said on hers?)

On the insurance front, if you are involved in an accident where your poor eyesight was a contributory factor, your insurer can argue that you were at fault and refuse to pay out. This could even be because you needed your driving glasses but weren’t wearing them.

Drive carefully, and keep your eyes peeled – little lady in Coventry please note!

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Weight and the way people want to see themselves, convinces lots of people to go on a diet and others to deceive themselves that they’re on a diet. The loss of a pound or two occasions delight and celebration, whereas the same two pounds going back the next day remains unannounced. Ring any bells for you?

Well normally, a porky or two about your weight doesn’t harm anyone other than perhaps yourself. But now life insurance companies are taking a much closer interest. They suspect that lots of people are carrying their creative assessment of their weight and height onto their life insurance application forms.

One of Britain’s largest life insurers, Scottish Provident, is tightening up its application procedures because experience has shown that applicants often lie about their weight. Now, as well as asking them their weight, they’ll be asked when they last weighed themselves. It’s a move to encourage them to answer more accurately rather than pluck a figure out of the air.

A spokesman from Scottish Provident said, “We know that people normally understate their weight, mainly because they are in denial about the subject, although there are also some people who will lie just to get cheaper premiums”.

The British are now the second most obese nation in Europe – second only to Greece. 21% of British adults are now classified as obese and a quarter of these do not want to lose weight despite the risks to their health according to a survey from by Cancer Research UK.

The British Medical Association considers any one with a body mass of 25 or more to be obese but most insurers are now using 30 as their limit. Above that figure and you’ll find that they will load your premium. Someone who is overweight may well see their premium loaded by 50% and extreme cases will be refused life insurance cover.

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The proportion of home buyers taking an interest only mortgage is steadily increasing. The reason is clear. Interest only mortgages reduce the monthly repayment as borrowers only pay off the interest and are not making any reduction in the capital they have borrowed.

In the first three months of 2002, 9% of all new mortgages were interest only but by the last three months of last year, this had risen to 23%. And amongst first time buyers the rise was from 6% to 15%. (Source: Council of Mortgage Lenders.)

It’s a reflection of people trying to minimise their fixed costs in order to preserve their lifestyle – they still want their nice cars, nights out and holidays abroad. But borrowers’ reluctance to cut back a bit on their life style spending, combined with steadily rising house prices, could be storing up problems for them in the future. If they’re not chipping away at the capital now, how exactly are they going to repay it?

Many lenders are now becoming much stricter by insisting that there is a viable repayment vehicle in place before agreeing an interest only mortgage. These repayment vehicles could be the forecast tax-free cash from a pension, or an ISA or some other regular savings or investment scheme. The danger is that having got the mortgage, they subsequently cancel their savings scheme.

If that happens, when retirement arrives accompanied by the impending repayment of their mortgage capital, they’ll be faced with having to sell their house and down size in order to free up sufficient money to repay the mortgage. And that’s a scenario that lenders are anxious to avoid.

Twenty years ago interest only mortgages were the norm with endowment policies being used to underwrite the capital repayment. But as we all now know, returns on endowment policies are not high as many assumed they would be and they’re certainly not the “guaranteed “ repayment solution that twenty years ago many had assumed.

Then during the late 90’s when the shortcomings of endowment policies slowly became understood, repayment mortgages became the norm. Now with interest only mortgages, the pendulum is swinging again. It’s as a result of high house prices and people straining to get onto and up, the housing ladder without being prepared to economise in other areas of their spending.

We are sure that the economics of family finances will continue to fuel the current popularity of interest only mortgages. It will become the duty of the lenders and the mortgage brokers to point out to their clients the alternatives open to them.

In the past, the norm has always been to start the home ownership with a 25 year mortgage. But an alternative could be to stretch it out to 30 or even 35 years. Then at least repayments are being made and when family finances permit, borrowers can make optional lump sum repayments to reduce the repayment term. In any case people tend to move home every eight to ten years and at each move a new mortgage has to be arranged. Those occasions then represent an obvious opportunity to reassess long term family finances.

For example, the monthly repayments for a £120,000 repayment mortgage over 25 years at say, 4.9% would cost £702.42 per month but if the repayment period was stretched to 35 years, the monthly repayment drops down to £603.03.

But there are other solutions. You could arrange a mortgage where part of the loan is on an interest only basis and the balance is on a repayment basis. It’s a sort of mid way option. At least these mortgages start the repayment process and later when you move or the family income builds, take the opportunity to reassess the type of mortgage you need.

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