It's a fact: around 20 per cent of marriages in the UK currently end in divorce and while many couples do attempt to remedy their situation by means of counselling or compromise, their efforts are unfortunately not always successful. Moreover, in reference to historical trends, this figure looks set to rise at a steady pace.
Divorce can take its toll on many areas of life, concerning anything from child custody to the emotional wellbeing of everyone involved. However, divorce carries much more than an emotional burden - it can also be one of the most costly expenditures for anyone to face.
The process of a divorce is undoubtedly expensive; in fact, most divorces cost anywhere between £15,000 - £50,000 in the form of divorce attorneys, moving expenses and property appraisers, among various other indispensable costs. However, most people are not financially prepared for such costs - let alone the emotional burden of a divorce, thus making the process tremendously stressful. But while a divorce can be one of the most difficult times in anyone's life, there are certainly ways to alleviate the strain. Bearing in mind that the financial aspect of a divorce is often one of the most weighty, releasing equity through a secured loan may be a good place to start.
If an individual owns property that is worth more than the mortgage and other debts secured against it, the excess amount is known as equity. It's possible to release equity in order to raise a lump sum of cash, which can in turn be used for anything from taking care of divorce expenses to settling outstanding debts. One way to release equity is to keep an existing mortgage while taking out a loan that's secured against the equity in a property. This, in essence, allows borrowers to "unlock" and borrow funds against the value of their home. However, it's also important to remember that when an individual obtains a secured loan, he or she agrees to offer their property as security for their loan.
Equity release plans can be complicated, not to mention a major step to take. Moreover, the asset in question when obtaining a secured loan is your home - therefore, good advice is essential. If you're considering equity release through a secured loan to help with the costs of your divorce, rest assured that there are many secured loan specialists who can help arrange a suitable financial agreement. Furthermore, a specialist can help arrange fair deals for both people, factoring in all the relevant legal details. By taking unique circumstances into consideration, a secured loan can do wonders to alleviate the many financial pressures of a divorce.


Debt Write-off at Record High In 2006
As consumer debt in the UK hit £1trillion in 2006, a recent report states that creditors had written off £1.4billion of personal debt during the same year. The record amount has been written off after people signed up for Individual Voluntary Arrangements (IVAs).
The report, undertaken by accountancy firm KPMG, also stated that 2006 had seen the number of people becoming insolvent rise above 110,000, while consumer groups have warned that debt levels had risen to ‘dangerous proportions’. Earlier, Government figures showed that the number of personal bankruptcies had declined as more and more consumers signed up for IVAs – a scheme which allows people with high levels of debt to work out a repayment plan with their creditors.
KPMG said that a person entering into an IVA owed on average £52,000, with IVAs proposing to repay 39% of the amount outstanding. Many of the debts are personal loans, credit card balances and other forms of ‘buy now, pay later’ unsecured loans. Much of the money was borrowed to meet expenditure – including lifestyle items such as holidays and cars – rather than to acquire assets or fund a business. The report also estimated that around 3,000 people entered into an IVA with debts in excess of £100,000, while some as young as 21 years of age were carrying debts of more than three times their annual income. A spokesman for the report’s author said: “Too many people have debts that they have no realistic hope of repaying”.
With much of the money being owed to banks, building societies and other financial institutions, the burgeoning debt problem has seen more and more delinquent credit accounts being bought by specialist debt recovery agencies, such as those operated by the Capquest Group. In fact, the Capquest Group currently manages in excess of £1 billion of delinquent debt.
The rise in IVAs has however, been controversial, with critics claiming they are heavily marketed by firms who stand to earn a fee once an arrangement is in place; these are often sold to debtors who would likely find themselves better off making an informal arrangement with creditors or declaring themselves bankrupt. The claim has been refuted by IVA providers, who argue that they have simply reacted to consumer needs.
The Government has stated that it has no plans to strengthen regulation surrounding IVAs, although there have been several steps taken to address concerns surrounding the scheme and to make consumers struggling to manage their debts more aware of the solutions available to them. Consumers who find themselves in financial difficulty are advised to speak to a licensed insolvency practitioner or local Citizens Advice Bureau for help and advice on how best to tackle their situation.


Balancing your mortgage loan options
In the past, it was believed that mortgage loans were all the same no matter which was chosen. But this theory is no longer workable because of the many mortgage loan products available in the market. Before choosing a mortgage loan, it is very important to decide which one is right for you.
Finding the right loan means balancing your mortgage loan options with your housing requirements and financial goals, now and in the future. Keep in mind, the right mortgage is not just having the lowest interest rate but much more. And this “much more” will be determined by your personal situation.
Your personal situation and your limits to pay for monthly mortgage payments can be evaluated by at the very least answering the following questions:
- What is your current financial situation? (including income, savings, cash and debt ratio)
- How long do you intend to keep your home?
- How comfortable you are with a changing mortgage payment amount?
- How do you expect your finances to change in the coming years?
- Have you planned to payoff the mortgage loan before retiring?
The answers to these few questions will give you the idea of your financial position.
Now the next step is to decide two key options:
- mortgage loan term,
- type of interest rate and payment (fixed interest rate, adjustable interest rate or interest only)
The length of mortgage loan can be 5 years; it can be 15 or 20 years, or even 30 years. While selecting a fixed or adjustable interest rate you should be aware that the adjustable interest rate mortgage is more risky because the interest rate will change. A fixed-rate loan offers more stability because of the locked-in rate.
You will be able to pay off a shorter-term loan more quickly, but your monthly payments will be significantly higher. Long-term fixed-rate loans are usually popular because they offer stability, and many people find that they are easier to fit into their budget. In the long run they will cost you more, but you will have more available capital when you need it, and you will be less likely to default on the loan should an emergency arise.
It is clear that the key to selecting the right mortgage loan for your needs should fit comfortably into your financial goals and that is having payments within your budget and at a comfortable level of risk.
By all means, do your homework when it comes to your mortgage loan. The information you gather will be vital to your future finances and comfort. We encourage you to take a look at: http://mortgage.inet-promo.com/
There you will find some very useful guides and tools as well as other resources to help you through the mortgage loan process and provide you with valuable information.