Browse content similar to 26/04/2014. Check below for episodes and series from the same categories and more!
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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. | :00:00. | |
Your Money. Welcome to Your Money. Your weekly | :00:00. | :00:17. | |
guide to making the most of your cash. | :00:18. | :00:22. | |
The banks want to know more about how we spend our money before they | :00:23. | :00:25. | |
will give us a mortgage. We will find out what they will ask and how | :00:26. | :00:33. | |
to get ready for it. We will look at shared ownership and the problems | :00:34. | :00:36. | |
you could face when you try to sell up. | :00:37. | :00:39. | |
And dial P for payment, using your mobile to pay your bills. We will | :00:40. | :00:43. | |
see how it works and what happens if it goes wrong. If you are applying | :00:44. | :00:50. | |
for a mortgage from today, your lender will ask you a lot more | :00:51. | :00:53. | |
questions about how you spend your money. The point of it is to find | :00:54. | :00:56. | |
out if you can really afford that home loan and if you could still | :00:57. | :01:00. | |
afford it interest rates went up. You might be surprised they weren't | :01:01. | :01:05. | |
asking that question already. Jane King is here, mortgage adviser. | :01:06. | :01:10. | |
You would think any sensible lender would ask the sort of question | :01:11. | :01:15. | |
anyway, what's new about this? Well, lenders have been asking these | :01:16. | :01:17. | |
questions already. We have one lender that is already stress | :01:18. | :01:22. | |
testing at nearly 6%. We are obliged to tell our clients what the | :01:23. | :01:27. | |
repayments will be for every 1% increase in rates going forward so | :01:28. | :01:30. | |
the questions are actually already being asked. It is asking are you | :01:31. | :01:35. | |
able to afford it? Could you afford it if interest rates go up? They | :01:36. | :01:41. | |
will rise and the difference is now as well as before, it was an | :01:42. | :01:44. | |
agreement between a lender and a borrower, the FCA are insisting the | :01:45. | :01:49. | |
lenders have to check the liability for the affordability. That's why | :01:50. | :01:54. | |
they are tting agitated about it. Do you think people really factor the | :01:55. | :01:59. | |
interest rates in? The clients thaw deal with `` that you deal with, | :02:00. | :02:03. | |
have they got it in the back of their mind that maybe mortgages are | :02:04. | :02:06. | |
going to become more expensive again? It is the first question | :02:07. | :02:11. | |
question they ask me at meetings when I think rates will rise? People | :02:12. | :02:16. | |
are aware they are going going to rise, but they know they will have | :02:17. | :02:22. | |
to amend their budget to afford them. They are aware of it. Some of | :02:23. | :02:26. | |
the questions that, you read the commentary that's been around this | :02:27. | :02:30. | |
week and it is things like how much do you spend on cat food and how | :02:31. | :02:34. | |
much do you spend on gym membership? You wonder if the lenders have gone | :02:35. | :02:38. | |
too far? They are out of practise out of asking these questions they | :02:39. | :02:42. | |
no longer know which ones are sensible to ask? We are asked by | :02:43. | :02:46. | |
lenders to sort out the essential commitments from the non essential | :02:47. | :02:50. | |
and for most people gym membership and mobile phones are not essential. | :02:51. | :02:54. | |
But some lenders feel that broadband is. Regular travel costs are being | :02:55. | :02:58. | |
taken into consideration and sadly pension costs are being taken into | :02:59. | :03:04. | |
consideration. So do we tell people to stop into their pension to pay | :03:05. | :03:08. | |
their mortgages? It is a tricky question to ask people. In terms of | :03:09. | :03:13. | |
getting ready for the questions they ask, how much information do you | :03:14. | :03:16. | |
need with you? Do you need to be able to prove that your pension | :03:17. | :03:21. | |
contributions are X amount a month? Do you need to bring bank statements | :03:22. | :03:27. | |
with you? They will note them on the payslips. Student loans which a lot | :03:28. | :03:31. | |
of lenders used to ignore are being taken from payslips and yes, bank | :03:32. | :03:36. | |
statements. I heard from a colleague that somebody had a flutter on the | :03:37. | :03:43. | |
Grand National and the lender asked if they had a gambling problem. | :03:44. | :03:49. | |
Isn't this an old`fashioned budget? Yes. In a word. It is old`fashioned. | :03:50. | :03:55. | |
So why all the fuss? The fuss is being called because the FCA are | :03:56. | :03:59. | |
making the lenders take the liability and a lot of lenders see | :04:00. | :04:03. | |
it as a future mis`selling scandal and they are contracting their | :04:04. | :04:10. | |
criteria considerably. They are covering their backs. Well, if you | :04:11. | :04:13. | |
want more information on there, there is a guide to it, by our | :04:14. | :04:17. | |
personal finance mini guru, you will find it on the BBC's website. | :04:18. | :04:25. | |
You will remember that in the early 80s the TSB had an advert which | :04:26. | :04:31. | |
showed someone applying for a mortgage, a bright spotlight in | :04:32. | :04:36. | |
their face, sweat streaming down and shrinking back in the chair as the | :04:37. | :04:42. | |
bank manager screamed at them, "What's your mother`in`law's | :04:43. | :04:45. | |
postcode?" If house prices are too high and you don't earn a fortune | :04:46. | :04:48. | |
and you don't have enough savings, getting any mortgage or buying your | :04:49. | :04:53. | |
first home might appear to be an impossible dream. Shared ownership | :04:54. | :04:56. | |
could be an answer for some, but it could make life difficult when you | :04:57. | :04:57. | |
try to sell later on. Matthew bought this flat in West | :04:58. | :05:07. | |
London as part of a shared ownership scheme back in 2007. He was | :05:08. | :05:11. | |
delighted to be able to get on the housing ladder. He owns 65% of the | :05:12. | :05:17. | |
property. Now, he wants to sell. But for the first eight weeks, he has to | :05:18. | :05:20. | |
rely on the housing association who own the rest of the apartment to | :05:21. | :05:26. | |
find potential buyers. And not having immediate access to the open | :05:27. | :05:30. | |
market isn't his only frustration. To sell a shared ownership property, | :05:31. | :05:33. | |
you find out once you start the process that you have got extra | :05:34. | :05:37. | |
costs which are through the housing association because you have got to | :05:38. | :05:39. | |
use their panel of surveyors which we have to pay for. That valuation | :05:40. | :05:44. | |
or that survey would last for a three month period. If the flat | :05:45. | :05:48. | |
hasn't sold by then, then you need to have it revalued. His housing | :05:49. | :05:53. | |
association claims that in around 80% of the cases they have been able | :05:54. | :05:57. | |
to sell the property in this initial eight week period. We do try and | :05:58. | :06:02. | |
explain that it is slightly different to the open market when we | :06:03. | :06:08. | |
sell shared ownership. The fact is shared ownership has received public | :06:09. | :06:13. | |
subsidy. So what we try and do is recycle it at point of resale. | :06:14. | :06:20. | |
As well as restrictions when it comes to selling a shared ownership | :06:21. | :06:24. | |
property, there are hurdles to overcome in order to buy one. In the | :06:25. | :06:28. | |
UK, you can qualify for a shared ownership scheme if you earn less | :06:29. | :06:32. | |
than ?65,000 a year. However, that figure is higher in London at | :06:33. | :06:38. | |
?77,000 a year. Typically, you will only between 25% and 75% of the | :06:39. | :06:42. | |
property. But you will end up paying rent on the share of the home you | :06:43. | :06:46. | |
don't own. So if this is the only way you think you will be able to | :06:47. | :06:50. | |
become a home`owner, there are basic guidelines you should follow. The | :06:51. | :06:54. | |
biggest and most important thing you need to do is read the pam work. You | :06:55. | :06:58. | |
need to `` paperwork. You need to read the contract and have a lawyer. | :06:59. | :07:04. | |
You need to get into the detail in what is being expected of you and | :07:05. | :07:08. | |
what the clauses are in terms of being able to resell. Matthew is | :07:09. | :07:17. | |
keen to buy a bigger property. He believes in the merits of shared | :07:18. | :07:21. | |
ownership, but believes you should check the details carefully before | :07:22. | :07:22. | |
you commit. Some energy bills are going up if | :07:23. | :07:33. | |
you are with the Co`op. That's an electricity deal. The | :07:34. | :07:38. | |
average customer with that deal will pay an extra ?2.21 a month from the | :07:39. | :07:45. | |
27th May. If you don't like your bill, you can use a price comparison | :07:46. | :07:48. | |
website to see if there is a better deal. Ofgem has a long list of them. | :07:49. | :07:53. | |
A warning that householders are cheated out of hundreds of pounds by | :07:54. | :08:00. | |
con artists claiming they are part of the green deal energy scheme. The | :08:01. | :08:03. | |
genuine scheme let's you borrow money from the Government to get you | :08:04. | :08:09. | |
double glazing or insulation. To check you are entitled, you have to | :08:10. | :08:12. | |
get a survey. They have been phoning people up or calling on the doorstep | :08:13. | :08:18. | |
and tricking people into paying for fake surveys. There is a list of | :08:19. | :08:21. | |
energy companies that are authorised to carry out the surveys. It is on | :08:22. | :08:26. | |
the Government website. They have not made it ease yes to find. In the | :08:27. | :08:30. | |
search box, type in find a green deal company, click on the first | :08:31. | :08:34. | |
link that throws up and scroll down to the bottom and you should find | :08:35. | :08:39. | |
the right link. If you want more advice on the green deal, is it | :08:40. | :08:42. | |
worth it? Information on the BBC website, of course, but you can look | :08:43. | :08:48. | |
at the Energy Saving Trust website, Energy Saving Trust dorg.co.uk. | :08:49. | :08:57. | |
It is available in England, Wales, and Scotland and not Northern | :08:58. | :09:03. | |
Ireland. The banks say they will look at our | :09:04. | :09:09. | |
mistakes and ponder possibly do something about it faster than they | :09:10. | :09:14. | |
used to! They are there are new guidelines from the Payments | :09:15. | :09:17. | |
Council, but no guarantee we will get our money back. The Payments | :09:18. | :09:21. | |
scam council say from next week, we will be able to use our mobile phone | :09:22. | :09:25. | |
numbers to make payments from our bank accounts to the accounts of | :09:26. | :09:28. | |
friends, family or traders without having to get their details. I'm | :09:29. | :09:35. | |
joined by the Chief Executive of the Payments Council. We will talk about | :09:36. | :09:39. | |
the mobile stuff in a moment. On making mistakes and putting in the | :09:40. | :09:43. | |
account number, it is easy to do and there is no guarantee if you make a | :09:44. | :09:46. | |
mistake you will get your money back. Why is that guarantee not in | :09:47. | :09:50. | |
place? Well, what we have tried to do is as you say, provide clear | :09:51. | :09:55. | |
guidance as to how to deal with the situation if money apparently has | :09:56. | :09:59. | |
gone to the wrong place, but it is respect of the of the fact `` | :10:00. | :10:05. | |
respect ful of the fact there are two customers involved. It provides | :10:06. | :10:08. | |
a clear way to resolving matters if there is a dispute. We want to | :10:09. | :10:12. | |
continue to make progress and this is linked with the way that the | :10:13. | :10:15. | |
mobile payment service will work. You say that you have to be | :10:16. | :10:22. | |
respectful of the fact there are two sides to the tran action, there is a | :10:23. | :10:27. | |
direct `` transaction, there is a direct debit guarantee. There are | :10:28. | :10:29. | |
two sides to that. I can't understand why you can have a | :10:30. | :10:36. | |
guarantee for one, but not for the other? We have made a positive step | :10:37. | :10:40. | |
forward. You told the banks to get a move on. That's hardly addressing | :10:41. | :10:43. | |
the issue of us getting our money back if we get a digit wrong? One | :10:44. | :10:52. | |
thing I want to reassure you of, we are trying to make things better. We | :10:53. | :10:55. | |
think it is a genuine step forward. We think with the addition of new | :10:56. | :10:59. | |
systems like mobile payments, that we're going to continue to move | :11:00. | :11:08. | |
forward so that we minimise the risk of mistakes and if there are | :11:09. | :11:12. | |
mistakes, there is a simple way of resolving it. One other way of | :11:13. | :11:16. | |
making sure there aren't as many mistakes is for the banks to check | :11:17. | :11:21. | |
the account name as well as the account number because people will | :11:22. | :11:23. | |
assume they do, the banks don't always check that? This is where it | :11:24. | :11:38. | |
is worth bringing in the new mobile application. It is a brand`new | :11:39. | :11:42. | |
National service which is going live on Tuesday. What it will allow you | :11:43. | :11:47. | |
to do is make a payment to someone in your family, a friend. You do not | :11:48. | :11:51. | |
need to know your account number or sort code at all. All you need to | :11:52. | :11:55. | |
know if the person 's mobile phone number. We will call up an app and | :11:56. | :11:59. | |
put in the mobile phone number and the amount you want to pay. You will | :12:00. | :12:04. | |
press the button and it will replay on the screen the name of the person | :12:05. | :12:08. | |
it is going to, so you can verify it will go in the same place. `` in the | :12:09. | :12:15. | |
right place. What happens if you get the mobile phone number wrong? That | :12:16. | :12:19. | |
is why it is useful it is replaying the name. Say I needed to pay you | :12:20. | :12:25. | |
?10. We have gone to dinner and we are splitting the Bill and I need to | :12:26. | :12:30. | |
give you ?10. If I have put in the wrong number, it will come up with a | :12:31. | :12:33. | |
different name or tummy the number is not registered at all. It is a | :12:34. | :12:38. | |
really positive way forward of confirming that the money is going | :12:39. | :12:44. | |
into exactly the right place but with a simple to use and effective | :12:45. | :12:52. | |
manner. That is all for this week. You can keep up to date with | :12:53. | :12:58. | |
whatever takes your fancy. That is all on the BBC website. Updates on | :12:59. | :13:04. | |
social media as well. You can follow our lead on Twitter. More again next | :13:05. | :13:06. | |
week. See you then. `` our feet. This is BBC News. Some breaking news | :13:07. | :13:25. | |
coming out of southern Afghanistan. We are hearing that five service | :13:26. | :13:27. | |
members have | :13:28. | :13:29. |