:00:00. > :00:00.financial crisis, we're going to fun out today what type of questions
:00:00. > :00:00.they are likely to ask and how you can get ready for them. That's on
:00:00. > :00:17.Your Money. Welcome to Your Money. Your weekly
:00:18. > :00:22.guide to making the most of your cash.
:00:23. > :00:25.The banks want to know more about how we spend our money before they
:00:26. > :00:33.will give us a mortgage. We will find out what they will ask and how
:00:34. > :00:36.to get ready for it. We will look at shared ownership and the problems
:00:37. > :00:39.you could face when you try to sell up.
:00:40. > :00:43.And dial P for payment, using your mobile to pay your bills. We will
:00:44. > :00:50.see how it works and what happens if it goes wrong. If you are applying
:00:51. > :00:53.for a mortgage from today, your lender will ask you a lot more
:00:54. > :00:56.questions about how you spend your money. The point of it is to find
:00:57. > :01:00.out if you can really afford that home loan and if you could still
:01:01. > :01:05.afford it interest rates went up. You might be surprised they weren't
:01:06. > :01:10.asking that question already. Jane King is here, mortgage adviser.
:01:11. > :01:15.You would think any sensible lender would ask the sort of question
:01:16. > :01:17.anyway, what's new about this? Well, lenders have been asking these
:01:18. > :01:22.questions already. We have one lender that is already stress
:01:23. > :01:27.testing at nearly 6%. We are obliged to tell our clients what the
:01:28. > :01:30.repayments will be for every 1% increase in rates going forward so
:01:31. > :01:35.the questions are actually already being asked. It is asking are you
:01:36. > :01:41.able to afford it? Could you afford it if interest rates go up? They
:01:42. > :01:44.will rise and the difference is now as well as before, it was an
:01:45. > :01:49.agreement between a lender and a borrower, the FCA are insisting the
:01:50. > :01:54.lenders have to check the liability for the affordability. That's why
:01:55. > :01:59.they are tting agitated about it. Do you think people really factor the
:02:00. > :02:03.interest rates in? The clients thaw deal with `` that you deal with,
:02:04. > :02:06.have they got it in the back of their mind that maybe mortgages are
:02:07. > :02:11.going to become more expensive again? It is the first question
:02:12. > :02:16.question they ask me at meetings when I think rates will rise? People
:02:17. > :02:22.are aware they are going going to rise, but they know they will have
:02:23. > :02:26.to amend their budget to afford them. They are aware of it. Some of
:02:27. > :02:30.the questions that, you read the commentary that's been around this
:02:31. > :02:34.week and it is things like how much do you spend on cat food and how
:02:35. > :02:38.much do you spend on gym membership? You wonder if the lenders have gone
:02:39. > :02:42.too far? They are out of practise out of asking these questions they
:02:43. > :02:46.no longer know which ones are sensible to ask? We are asked by
:02:47. > :02:50.lenders to sort out the essential commitments from the non essential
:02:51. > :02:54.and for most people gym membership and mobile phones are not essential.
:02:55. > :02:58.But some lenders feel that broadband is. Regular travel costs are being
:02:59. > :03:04.taken into consideration and sadly pension costs are being taken into
:03:05. > :03:08.consideration. So do we tell people to stop into their pension to pay
:03:09. > :03:13.their mortgages? It is a tricky question to ask people. In terms of
:03:14. > :03:16.getting ready for the questions they ask, how much information do you
:03:17. > :03:21.need with you? Do you need to be able to prove that your pension
:03:22. > :03:27.contributions are X amount a month? Do you need to bring bank statements
:03:28. > :03:31.with you? They will note them on the payslips. Student loans which a lot
:03:32. > :03:36.of lenders used to ignore are being taken from payslips and yes, bank
:03:37. > :03:43.statements. I heard from a colleague that somebody had a flutter on the
:03:44. > :03:49.Grand National and the lender asked if they had a gambling problem.
:03:50. > :03:55.Isn't this an old`fashioned budget? Yes. In a word. It is old`fashioned.
:03:56. > :03:59.So why all the fuss? The fuss is being called because the FCA are
:04:00. > :04:03.making the lenders take the liability and a lot of lenders see
:04:04. > :04:10.it as a future mis`selling scandal and they are contracting their
:04:11. > :04:13.criteria considerably. They are covering their backs. Well, if you
:04:14. > :04:17.want more information on there, there is a guide to it, by our
:04:18. > :04:25.personal finance mini guru, you will find it on the BBC's website.
:04:26. > :04:31.You will remember that in the early 80s the TSB had an advert which
:04:32. > :04:36.showed someone applying for a mortgage, a bright spotlight in
:04:37. > :04:42.their face, sweat streaming down and shrinking back in the chair as the
:04:43. > :04:45.bank manager screamed at them, "What's your mother`in`law's
:04:46. > :04:48.postcode?" If house prices are too high and you don't earn a fortune
:04:49. > :04:53.and you don't have enough savings, getting any mortgage or buying your
:04:54. > :04:56.first home might appear to be an impossible dream. Shared ownership
:04:57. > :04:57.could be an answer for some, but it could make life difficult when you
:04:58. > :05:07.try to sell later on. Matthew bought this flat in West
:05:08. > :05:11.London as part of a shared ownership scheme back in 2007. He was
:05:12. > :05:17.delighted to be able to get on the housing ladder. He owns 65% of the
:05:18. > :05:20.property. Now, he wants to sell. But for the first eight weeks, he has to
:05:21. > :05:26.rely on the housing association who own the rest of the apartment to
:05:27. > :05:30.find potential buyers. And not having immediate access to the open
:05:31. > :05:33.market isn't his only frustration. To sell a shared ownership property,
:05:34. > :05:37.you find out once you start the process that you have got extra
:05:38. > :05:39.costs which are through the housing association because you have got to
:05:40. > :05:44.use their panel of surveyors which we have to pay for. That valuation
:05:45. > :05:48.or that survey would last for a three month period. If the flat
:05:49. > :05:53.hasn't sold by then, then you need to have it revalued. His housing
:05:54. > :05:57.association claims that in around 80% of the cases they have been able
:05:58. > :06:02.to sell the property in this initial eight week period. We do try and
:06:03. > :06:08.explain that it is slightly different to the open market when we
:06:09. > :06:13.sell shared ownership. The fact is shared ownership has received public
:06:14. > :06:20.subsidy. So what we try and do is recycle it at point of resale.
:06:21. > :06:24.As well as restrictions when it comes to selling a shared ownership
:06:25. > :06:28.property, there are hurdles to overcome in order to buy one. In the
:06:29. > :06:32.UK, you can qualify for a shared ownership scheme if you earn less
:06:33. > :06:38.than ?65,000 a year. However, that figure is higher in London at
:06:39. > :06:42.?77,000 a year. Typically, you will only between 25% and 75% of the
:06:43. > :06:46.property. But you will end up paying rent on the share of the home you
:06:47. > :06:50.don't own. So if this is the only way you think you will be able to
:06:51. > :06:54.become a home`owner, there are basic guidelines you should follow. The
:06:55. > :06:58.biggest and most important thing you need to do is read the pam work. You
:06:59. > :07:04.need to `` paperwork. You need to read the contract and have a lawyer.
:07:05. > :07:08.You need to get into the detail in what is being expected of you and
:07:09. > :07:17.what the clauses are in terms of being able to resell. Matthew is
:07:18. > :07:21.keen to buy a bigger property. He believes in the merits of shared
:07:22. > :07:22.ownership, but believes you should check the details carefully before
:07:23. > :07:33.you commit. Some energy bills are going up if
:07:34. > :07:38.you are with the Co`op. That's an electricity deal. The
:07:39. > :07:45.average customer with that deal will pay an extra ?2.21 a month from the
:07:46. > :07:48.27th May. If you don't like your bill, you can use a price comparison
:07:49. > :07:53.website to see if there is a better deal. Ofgem has a long list of them.
:07:54. > :08:00.A warning that householders are cheated out of hundreds of pounds by
:08:01. > :08:03.con artists claiming they are part of the green deal energy scheme. The
:08:04. > :08:09.genuine scheme let's you borrow money from the Government to get you
:08:10. > :08:12.double glazing or insulation. To check you are entitled, you have to
:08:13. > :08:18.get a survey. They have been phoning people up or calling on the doorstep
:08:19. > :08:21.and tricking people into paying for fake surveys. There is a list of
:08:22. > :08:26.energy companies that are authorised to carry out the surveys. It is on
:08:27. > :08:30.the Government website. They have not made it ease yes to find. In the
:08:31. > :08:34.search box, type in find a green deal company, click on the first
:08:35. > :08:39.link that throws up and scroll down to the bottom and you should find
:08:40. > :08:42.the right link. If you want more advice on the green deal, is it
:08:43. > :08:48.worth it? Information on the BBC website, of course, but you can look
:08:49. > :08:57.at the Energy Saving Trust website, Energy Saving Trust dorg.co.uk.
:08:58. > :09:03.It is available in England, Wales, and Scotland and not Northern
:09:04. > :09:09.Ireland. The banks say they will look at our
:09:10. > :09:14.mistakes and ponder possibly do something about it faster than they
:09:15. > :09:17.used to! They are there are new guidelines from the Payments
:09:18. > :09:21.Council, but no guarantee we will get our money back. The Payments
:09:22. > :09:25.scam council say from next week, we will be able to use our mobile phone
:09:26. > :09:28.numbers to make payments from our bank accounts to the accounts of
:09:29. > :09:35.friends, family or traders without having to get their details. I'm
:09:36. > :09:39.joined by the Chief Executive of the Payments Council. We will talk about
:09:40. > :09:43.the mobile stuff in a moment. On making mistakes and putting in the
:09:44. > :09:46.account number, it is easy to do and there is no guarantee if you make a
:09:47. > :09:50.mistake you will get your money back. Why is that guarantee not in
:09:51. > :09:55.place? Well, what we have tried to do is as you say, provide clear
:09:56. > :09:59.guidance as to how to deal with the situation if money apparently has
:10:00. > :10:05.gone to the wrong place, but it is respect of the of the fact ``
:10:06. > :10:08.respect ful of the fact there are two customers involved. It provides
:10:09. > :10:12.a clear way to resolving matters if there is a dispute. We want to
:10:13. > :10:15.continue to make progress and this is linked with the way that the
:10:16. > :10:22.mobile payment service will work. You say that you have to be
:10:23. > :10:27.respectful of the fact there are two sides to the tran action, there is a
:10:28. > :10:29.direct `` transaction, there is a direct debit guarantee. There are
:10:30. > :10:36.two sides to that. I can't understand why you can have a
:10:37. > :10:40.guarantee for one, but not for the other? We have made a positive step
:10:41. > :10:43.forward. You told the banks to get a move on. That's hardly addressing
:10:44. > :10:52.the issue of us getting our money back if we get a digit wrong? One
:10:53. > :10:55.thing I want to reassure you of, we are trying to make things better. We
:10:56. > :10:59.think it is a genuine step forward. We think with the addition of new
:11:00. > :11:08.systems like mobile payments, that we're going to continue to move
:11:09. > :11:12.forward so that we minimise the risk of mistakes and if there are
:11:13. > :11:16.mistakes, there is a simple way of resolving it. One other way of
:11:17. > :11:21.making sure there aren't as many mistakes is for the banks to check
:11:22. > :11:23.the account name as well as the account number because people will
:11:24. > :11:38.assume they do, the banks don't always check that? This is where it
:11:39. > :11:42.is worth bringing in the new mobile application. It is a brand`new
:11:43. > :11:47.National service which is going live on Tuesday. What it will allow you
:11:48. > :11:51.to do is make a payment to someone in your family, a friend. You do not
:11:52. > :11:55.need to know your account number or sort code at all. All you need to
:11:56. > :11:59.know if the person 's mobile phone number. We will call up an app and
:12:00. > :12:04.put in the mobile phone number and the amount you want to pay. You will
:12:05. > :12:08.press the button and it will replay on the screen the name of the person
:12:09. > :12:15.it is going to, so you can verify it will go in the same place. `` in the
:12:16. > :12:19.right place. What happens if you get the mobile phone number wrong? That
:12:20. > :12:25.is why it is useful it is replaying the name. Say I needed to pay you
:12:26. > :12:30.?10. We have gone to dinner and we are splitting the Bill and I need to
:12:31. > :12:33.give you ?10. If I have put in the wrong number, it will come up with a
:12:34. > :12:38.different name or tummy the number is not registered at all. It is a
:12:39. > :12:44.really positive way forward of confirming that the money is going
:12:45. > :12:52.into exactly the right place but with a simple to use and effective
:12:53. > :12:58.manner. That is all for this week. You can keep up to date with
:12:59. > :13:04.whatever takes your fancy. That is all on the BBC website. Updates on
:13:05. > :13:06.social media as well. You can follow our lead on Twitter. More again next
:13:07. > :13:25.week. See you then. `` our feet. This is BBC News. Some breaking news
:13:26. > :13:27.coming out of southern Afghanistan. We are hearing that five service
:13:28. > :13:29.members have