26/04/2014 Your Money


26/04/2014

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financial crisis, we're going to fun out today what type of questions

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they are likely to ask and how you can get ready for them. That's on

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Your Money. Welcome to Your Money. Your weekly

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guide to making the most of your cash.

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The banks want to know more about how we spend our money before they

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will give us a mortgage. We will find out what they will ask and how

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to get ready for it. We will look at shared ownership and the problems

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you could face when you try to sell up.

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And dial P for payment, using your mobile to pay your bills. We will

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see how it works and what happens if it goes wrong. If you are applying

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for a mortgage from today, your lender will ask you a lot more

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questions about how you spend your money. The point of it is to find

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out if you can really afford that home loan and if you could still

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afford it interest rates went up. You might be surprised they weren't

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asking that question already. Jane King is here, mortgage adviser.

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You would think any sensible lender would ask the sort of question

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anyway, what's new about this? Well, lenders have been asking these

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questions already. We have one lender that is already stress

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testing at nearly 6%. We are obliged to tell our clients what the

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repayments will be for every 1% increase in rates going forward so

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the questions are actually already being asked. It is asking are you

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able to afford it? Could you afford it if interest rates go up? They

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will rise and the difference is now as well as before, it was an

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agreement between a lender and a borrower, the FCA are insisting the

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lenders have to check the liability for the affordability. That's why

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they are tting agitated about it. Do you think people really factor the

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interest rates in? The clients thaw deal with `` that you deal with,

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have they got it in the back of their mind that maybe mortgages are

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going to become more expensive again? It is the first question

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question they ask me at meetings when I think rates will rise? People

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are aware they are going going to rise, but they know they will have

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to amend their budget to afford them. They are aware of it. Some of

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the questions that, you read the commentary that's been around this

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week and it is things like how much do you spend on cat food and how

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much do you spend on gym membership? You wonder if the lenders have gone

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too far? They are out of practise out of asking these questions they

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no longer know which ones are sensible to ask? We are asked by

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lenders to sort out the essential commitments from the non essential

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and for most people gym membership and mobile phones are not essential.

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But some lenders feel that broadband is. Regular travel costs are being

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taken into consideration and sadly pension costs are being taken into

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consideration. So do we tell people to stop into their pension to pay

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their mortgages? It is a tricky question to ask people. In terms of

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getting ready for the questions they ask, how much information do you

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need with you? Do you need to be able to prove that your pension

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contributions are X amount a month? Do you need to bring bank statements

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with you? They will note them on the payslips. Student loans which a lot

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of lenders used to ignore are being taken from payslips and yes, bank

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statements. I heard from a colleague that somebody had a flutter on the

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Grand National and the lender asked if they had a gambling problem.

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Isn't this an old`fashioned budget? Yes. In a word. It is old`fashioned.

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So why all the fuss? The fuss is being called because the FCA are

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making the lenders take the liability and a lot of lenders see

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it as a future mis`selling scandal and they are contracting their

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criteria considerably. They are covering their backs. Well, if you

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want more information on there, there is a guide to it, by our

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personal finance mini guru, you will find it on the BBC's website.

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You will remember that in the early 80s the TSB had an advert which

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showed someone applying for a mortgage, a bright spotlight in

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their face, sweat streaming down and shrinking back in the chair as the

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bank manager screamed at them, "What's your mother`in`law's

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postcode?" If house prices are too high and you don't earn a fortune

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and you don't have enough savings, getting any mortgage or buying your

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first home might appear to be an impossible dream. Shared ownership

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could be an answer for some, but it could make life difficult when you

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try to sell later on. Matthew bought this flat in West

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London as part of a shared ownership scheme back in 2007. He was

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delighted to be able to get on the housing ladder. He owns 65% of the

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property. Now, he wants to sell. But for the first eight weeks, he has to

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rely on the housing association who own the rest of the apartment to

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find potential buyers. And not having immediate access to the open

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market isn't his only frustration. To sell a shared ownership property,

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you find out once you start the process that you have got extra

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costs which are through the housing association because you have got to

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use their panel of surveyors which we have to pay for. That valuation

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or that survey would last for a three month period. If the flat

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hasn't sold by then, then you need to have it revalued. His housing

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association claims that in around 80% of the cases they have been able

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to sell the property in this initial eight week period. We do try and

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explain that it is slightly different to the open market when we

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sell shared ownership. The fact is shared ownership has received public

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subsidy. So what we try and do is recycle it at point of resale.

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As well as restrictions when it comes to selling a shared ownership

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property, there are hurdles to overcome in order to buy one. In the

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UK, you can qualify for a shared ownership scheme if you earn less

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than ?65,000 a year. However, that figure is higher in London at

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?77,000 a year. Typically, you will only between 25% and 75% of the

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property. But you will end up paying rent on the share of the home you

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don't own. So if this is the only way you think you will be able to

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become a home`owner, there are basic guidelines you should follow. The

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biggest and most important thing you need to do is read the pam work. You

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need to `` paperwork. You need to read the contract and have a lawyer.

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You need to get into the detail in what is being expected of you and

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what the clauses are in terms of being able to resell. Matthew is

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keen to buy a bigger property. He believes in the merits of shared

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ownership, but believes you should check the details carefully before

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you commit. Some energy bills are going up if

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you are with the Co`op. That's an electricity deal. The

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average customer with that deal will pay an extra ?2.21 a month from the

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27th May. If you don't like your bill, you can use a price comparison

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website to see if there is a better deal. Ofgem has a long list of them.

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A warning that householders are cheated out of hundreds of pounds by

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con artists claiming they are part of the green deal energy scheme. The

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genuine scheme let's you borrow money from the Government to get you

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double glazing or insulation. To check you are entitled, you have to

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get a survey. They have been phoning people up or calling on the doorstep

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and tricking people into paying for fake surveys. There is a list of

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energy companies that are authorised to carry out the surveys. It is on

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the Government website. They have not made it ease yes to find. In the

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search box, type in find a green deal company, click on the first

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link that throws up and scroll down to the bottom and you should find

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the right link. If you want more advice on the green deal, is it

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worth it? Information on the BBC website, of course, but you can look

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at the Energy Saving Trust website, Energy Saving Trust dorg.co.uk.

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It is available in England, Wales, and Scotland and not Northern

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Ireland. The banks say they will look at our

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mistakes and ponder possibly do something about it faster than they

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used to! They are there are new guidelines from the Payments

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Council, but no guarantee we will get our money back. The Payments

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scam council say from next week, we will be able to use our mobile phone

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numbers to make payments from our bank accounts to the accounts of

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friends, family or traders without having to get their details. I'm

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joined by the Chief Executive of the Payments Council. We will talk about

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the mobile stuff in a moment. On making mistakes and putting in the

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account number, it is easy to do and there is no guarantee if you make a

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mistake you will get your money back. Why is that guarantee not in

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place? Well, what we have tried to do is as you say, provide clear

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guidance as to how to deal with the situation if money apparently has

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gone to the wrong place, but it is respect of the of the fact ``

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respect ful of the fact there are two customers involved. It provides

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a clear way to resolving matters if there is a dispute. We want to

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continue to make progress and this is linked with the way that the

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mobile payment service will work. You say that you have to be

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respectful of the fact there are two sides to the tran action, there is a

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direct `` transaction, there is a direct debit guarantee. There are

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two sides to that. I can't understand why you can have a

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guarantee for one, but not for the other? We have made a positive step

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forward. You told the banks to get a move on. That's hardly addressing

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the issue of us getting our money back if we get a digit wrong? One

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thing I want to reassure you of, we are trying to make things better. We

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think it is a genuine step forward. We think with the addition of new

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systems like mobile payments, that we're going to continue to move

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forward so that we minimise the risk of mistakes and if there are

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mistakes, there is a simple way of resolving it. One other way of

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making sure there aren't as many mistakes is for the banks to check

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the account name as well as the account number because people will

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assume they do, the banks don't always check that? This is where it

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is worth bringing in the new mobile application. It is a brand`new

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National service which is going live on Tuesday. What it will allow you

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to do is make a payment to someone in your family, a friend. You do not

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need to know your account number or sort code at all. All you need to

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know if the person 's mobile phone number. We will call up an app and

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put in the mobile phone number and the amount you want to pay. You will

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press the button and it will replay on the screen the name of the person

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it is going to, so you can verify it will go in the same place. `` in the

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right place. What happens if you get the mobile phone number wrong? That

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is why it is useful it is replaying the name. Say I needed to pay you

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?10. We have gone to dinner and we are splitting the Bill and I need to

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give you ?10. If I have put in the wrong number, it will come up with a

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different name or tummy the number is not registered at all. It is a

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really positive way forward of confirming that the money is going

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into exactly the right place but with a simple to use and effective

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manner. That is all for this week. You can keep up to date with

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whatever takes your fancy. That is all on the BBC website. Updates on

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social media as well. You can follow our lead on Twitter. More again next

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week. See you then. `` our feet. This is BBC News. Some breaking news

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coming out of southern Afghanistan. We are hearing that five service

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members have

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Weekly round-up of news about mortgages, savings, credit cards, bank accounts and pensions. Helpful tips and advice on how to get the best deals, consumer rights and making your money work harder for you. With Declan Curry.


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