FinanceBAM News

I tried to tell Dora my wifely dragon that the country’s economy was falling into a deep depression so now wasn’t the best time to spend more - but would she listen? You bet your bottom dollar she wouldn’t! (Is my dragon one of a kind? If you’ve got a similar one, no matter what the pedigree (or lack of one) let me know!)

With flashing eyes and bursts of yellow and green flame, she insisted that meant the family needed more financial protection. Who’s going to argue? Not me! So despite the current recession telling me to reduce expenditure wherever I could, I was given my marching instructions. Don’t return until I’d increased the family’s financial protection. And I was given a shopping list!

The dragon’s specific instructions (where does she get her inspirations from?) were to increase my Life cover to ensure that the mortgage would be repaid if the grim reaper caught me knapping (nice of her to plan for that!). I also had to make sure we had insurance which would provide a monthly income if I lost my IT job at Next. She even wanted insurance that would pay our mortgage each month if I lost my job – that, it turned, out was called Mortgage Payment Protection Insurance. And whilst I was sorting all that out, I decided to look into Medical Insurance. Ever since I needed an operation on my sinuses, I had a bee in my bonnet about Medical Insurance which would pay for me to go private - so I decided to add that to my shopping list.

Being in IT and the dragon doing a lot of her shopping online, I knew I’d be able to sort it all out online. So when I got home from work yesterday, I once again settled down behind a computer. After 7 hours behind a computer at Asda, I’m a glutton for punishment!

Now I’ve already got life insurance cover for £75,000 which I bought during those hallucination days before I met the dragon. Since and I admit to being rather dilatory in not getting more life cover to repay our mortgage if the worst were to happen. (Does the dragon know something I don’t? Perhaps she uses her magical reptilian powers to create the future!) Anyway, I started with life insurance.

My next door neighbour suggested I go through a broker as, he said, brokers can get low prices by playing off one life insurance company against another. So on to Google. I decided to ignore the web sites from Legal & General, Norwich Union, Bupa, other direct insurers, until I came across a web site operated by Brokers Online – this name sounded right to me but it was strange that their web site address was www.life-insurance-bureau.co.uk. Their “About Us” page explained that Brokers Online is actually a co-operative of web sites all calling themselves Brokers Online. Every member of the co-operative specialised in family finances and insurance. They turned out to be a smooth operation.

Brokers Online gave a quotation comparison service for my life cover and within ten minutes an adviser from Click Financial phoned me. (Apparently Click Financial team up with Brokers to provide this service.) The adviser suggested that as I had a repayment mortgage, a low cost Decreasing Term Life policy would suit me fine. So we went through four or five quotations and I decide on a policy underwritten by Fortis. Their quote was far cheaper than anyone else - but just to double check I got a comparison price from Bupa through their own site (Yes I know I said I wouldn’t!). Anyway, the Fortis life insurance policy was still the cheapest by far.

Whilst on Brokers Online web site I saw that they could also sort out my mortgage payment protection insurance and income protection insurance. The site explained that they’ve linked up with a company called British Insurance to supply all of that type of insurance. Apparently British Insurance has been inundated with industry awards for their family protection policies. It took me just fifteen minutes to get both of them organised. I could have got the policies a bit cheaper but the level of cover was much better than any other policy I could find. What’s more if I want, I can cancel them without notice and without penalties. The dragon was certainly impressed!

That just left my medical insurance. Again I used Brokers Online. The more I looked into it the more I realised that medical Insurance is complicated. It’s not that it’s difficult to understand, but there are lots of policies each with different benefits and options. It would take days to research them all. So I completed my details online and a specialist medical insurance adviser called back to chat through the various options and costs. It was certainly much easier than swatting it up myself. I’m sure that if I had been left to my own devices, I’d have got something wrong. In the end I bought a combined family medical insurance policy which insured us all and that suited the dragon OK.

The whole procedure to organise the four policies took me an hour online and 45 minutes on the phone. Quite efficient I thought - thanks Brokers Online!

As financial institutions tighten up their purse strings to get through these difficult times, it may be more important than ever to ensure your home insurance policy is adequate for the purpose. For example, many have not been able to move house recently due to low house prices or the difficulties in obtaining a mortgage.

Many have opted to improve their existing home instead, by extending their property adding conservatory, adding composite doors or a loft extension. For some of these improvements they may not have changed their insurance position with their company. An example could be where a house originally had good composite doors at the rear with 5 cylinder lock, but now had added a conservatory with a different lock system. Or say a back door had now been replaced with sliding doors, if these new improvements have not included the required lock system of makes entry into your home easier than was described in the original premium, then your policy could be void for certain insurance claims.

It is possible that improvements have taken the value of your home over the replacement limit. Remember in many cases you are not insured for the market value of your home, but the cost to rebuild or replace. If this cost now exceeds the original policy value than you may not get enough payout to bring your home back to its original position. This is compounded for those who have just renewed their policies over a few years.

The advice is simple. Go back and review your home insurance policy, especially the small print and schedule. If you believe you have crossed and limits, or do not have sufficient security measures in place as per the conditions of the policy, then you should upgrade your security or speak to your insurance company to amend your policy, before it is too late.

Many of you who read our news section will know that we are currently developing a sister service called Mortgagebam with the objective of bringing mortgage seekers and independent advisers together. To fully understand how we were going to do this, we needed to look at how the internet is currently generating mortgage leads.

What we found out was quite surprising and although it does not represent the whole mortgage market, is it worth mentioning and how Mortgagebam will address these issues.

The first thing is that many mortgage leads generated through a third party website are often only available to the highest bidder. The mortgage adviser is guaranteed exclusivity, sometimes by the mortgage seeker receiving a phone call first to qualify the lead, then that one adviser will get access to the phone number and address of that client.

Some sites put the mortgage lead into an auction, where the winning bidder gets the mortgage lead. We re not sure why a client would wait until this process is completed, but that is what we found.

The issue we see with this process is that there is no guarantee that the winning financial adviser is the right one for that client. We are not talking qualifications here we are talking about a relationship that may last 25 years.
Mortgagebam as a business is a mortgage lead or internet marketing company. It does not offer mortgages themselves, so it is all about marketing a service and hoping potential mortgage seekers will fill in a simple form.

However where things will be different to above is that all mortgage leads will be the same price. The client will see immediately who has been informed of their information and the client, not Mortgagebam will get to choose who they want to work with. Add the fact; the mortgage seeker can leave a review on the service they got from that Independent mortgage adviser, you would hope that the whole process is controlled by the customer not Mortgagebam or the mortgage adviser.

Back in July 2008 the good old Which magazine did a review and report on the breakdown services and as a review site, with your opinions important to us, it makes sense to share some of those from the Which League.
The clear winner was the AA with an impressive overall score of 78%, the worst performer from the 8 companies listed was Europe Assist with only 50%.

Now we are not going to list the full report as you can read it direct here at Which breakdown services league, but we do want to comment on a few things.

The first thing that comes to mind is the difference between the Green Flag score of 59% and the Direct Line score of 69%. As both these organisations are owned by the Royal Bank of Scotland, as far as we know, the Direct Line breakdown cover polices are in fact delivered by the Green Flag service. Tell us if we are wrong here!
So it is strange that there be such a difference in scores. However one reason could be the variation of breakdown cover agents that deliver the call outs. They are not employed by these companies, just follow by their rules, so there may be a message of inconsistency here.

The final issue is the noticeable absence of other companies such as Britannia Rescue, Autonational, Gem Motoring Assist , Breakdown Direct, Rescue My Car and  probably a few others we could mention. If they were part of the report, why we do not see any mention of them, to give a clearer view, especially as at least one of these has awards from national magazines for their breakdown cover services so the members of the public must be using these companies.

Anyway, for now read the information from Which as it is the most comprehensive we have.

Trying to find the right Christmas present for the person who has everything can be a nightmare at the best of times, but now during the financially hard hitting times, there are those who could do a few practical gifts this Christmas.

One solution could be to buy breakdown cover as a gift, either for someone who doesn’t think they need it, or maybe someone who may just not renew their current policy due to money problems. The breakdown cover organisations have never really been that good at marketing the fact that you can buy a breakdown cover policy for someone else and it is not until you visit their websites as an afterthought, which you can find out, that in most cases you can.

The AA, has just put a small banner on their homepage leading to the gift membership page, which pretty much explains it all. There is some considerations though, before you go to the AA Breakdown Cover site credit card in hand, thinking you have solved a gift problem. You will need to spend a bit of time establishing, if the policy you will buy for that person will suit their needs. No point in buying a breakdown cover policy, thinking it covers that car and only covers the driver, or maybe buying a roadside assistance option, when they do a lot of mileage away for home and really need a policy that will get their car and themselves home, should they breakdown.

At the time of writing the gift breakdown cover options start from ?39, which is a bit more that if you were to buy the cheap breakdown cover option yourself, so we must assume, there is some sort of gift package, card that comes with it. I suppose it could be an administration charge also.

Once again we have been slow updating some financial news on Financebam, we will get it right soon.
Let’s start with an update on some financial news items over the last few weeks that will only scratch the surface of what really happened.

Yesterday it was mentioned that even though the high street is taking a battering with sales leading up to Christmas, there is a different story for online sales. Not only is it expected that sales will stay at the same level than last year, but there is real evidence, that credit crunch or not, sales will increase for online purchases compared to last year.  Nothing was mentioned about the online insurance market, such as car insurance or breakdown cover.

We clearly have different priorities to the USA. We have easily let our motoring history disappear when the car factories were unable to compete with Japanese and foreign cars imported to us. The message has always been clear in the UK, that if a business is unsustainable then it is right for it to fail, job losses or not.  It is not seen this way in other European countries that have no problem saving their national car manufacturing forms by pumping in tax payer’s money.

This trend has crossed the Atlantic, which the big car manufacturers, Ford, General Motors and Chrysler all going cap in hand to the American government for $34b or so to keep them afloat.

Insurance comparison sites have come under some criticism recently, stating they do not do a though enough job of helping customers buy the right insurance. It is claimed that insurance comparison sites, are good at delivering prices, but not so good at ensuring all the facts and conditions of each policy is explained in enough details.

Last week saw another huge drop in bank landing rates, down to an astonishing 2% base rate, in an attempt to get people borrowing and banks lending especially in the mortgage market. Many however are still complaining that they have not yet seen a reduction in their mortgage payments from the last reduction, never mind this further recent one.

It was also mentioned that the government would allow a 2 year holiday (if you could call it that) on interest payments, should you lose your job. This mortgage interest will accumulate and you will have to pay it in the end. Should your home continue to drop in value, this could create some serious negative equity. However, should home prices start to rise again; this could be the answer to giving customers some piece of mind with mortgage payments.

Finally the announcement that Honda have pulled out of Formula One should not have been a surprise in hindsight.  How can they justify spending £350 on making 2 cars go around a track faster, when thousands of jobs are on the line and factories are being shut, to keep costs down, with compounds full of unsold cars.

There are several trusted and free organisations in the UK who are willing to help you clear personal debts. One of the UK’s main debt advice agencies, The UK Insolvency Helpline is strengthening its services in preparation for a debt-ridden period ahead.

Many families are feeling the pinch as a result of high fuel and food prices, and the impact of the credit crunch on mortgage lending. But when people are facing money worries they often don’t know where to turn. The UK Insolvency Helpline services make it much easier for people to get access to information, debt help and debt advice

The UK Insolvency Helpline is determined to do more to create an environment where people get personal finance education and information from the start of their lives to the end; helping them with money problems and supporting them at key points in their lives, for getting access to debt solutions such as Individual Voluntary Arrangements (IVA), Debt Management, Protected Trust Deeds, Bankruptcy and Budgeting advice. Some of these are discussed below:-

IVA advice to those with debts over £15,000 – The Individual Voluntary Arrangement (IVA) is a legally binding contract which writes off the debt that the person cannot afford to pay. It is not the right solution for all and the application criteria are very strict. But it can mean stability is introduced into the debtor’s life and the creditor will receive (in many cases) more than they will do in bankruptcy. There is still a stigma attached to bankruptcy and many people do not want to choose that route. The number of people in Bristol taking out IVAs is up 45% followed a general rise borrowing in the last five years. People in the 30 to 40 age group took out the most IVAs while the number was growing fastest among 20 to 30-year-olds. The majority of young people entering IVAs were manual and unskilled workers with a worryingly increasing amount being from middle class backgrounds.

Debt Management Advice for those with personal debts- A Debt Management Plan is an informal process of negotiating with your creditors for the freezing or reduction of interest. The extension of repayment terms or the writing off of part of your debt. The growth in debt management plans for residents of Bristol has been fuelled by excessive consumer spending from people who have ignored rising interest rates.

Bankruptcy help for those in debt – Bankruptcy is the final debt relief option and will result in personal assets being seized. It can restrict future employability and

should only be considered as a last resort The social policy team in Bristol predict a record number of personal bankruptcy cases this year meaning people living in Bristol are entering formal bankruptcy proceedings at a rate of several a day.

The UK Insolvency Helpline is a national organisation set up to provide free support to help people with serious debt problems. The debt advice team has a particular skill in avoiding individuals or households going bankrupt. To contact an advisor call 0800 074 6918. Alternatively complete an online enquiry form and an advisor will call you back at the time that you specify.

We considered carefully about adding mortgages to our Financebam site but decided against this as we believe this sort of commitment needs to be done with professional qualified mortgage advisers to ensure you get the right advice, rather than just filling in a form with Financebam.

It is not like car insurance where if you get it wrong you can change your provider next year. Buying a mortgage could be for at least 25 years and a lot of life changing things can occur in that time. Even at the time of writing this, we are in the middle of a financial crisis affect the worlds economy and mine and your mortgages, so getting the right long term advice from an adviser or mortgage broker has got to be the right thing to do.

Mortgagebam is not about offering advice; in fact it is merely a lead generation programme where professional mortgage brokers and adviser subscribe too in order to receive leads from the internet. We will be working to link out to correct websites offering the right advice like Money Made Clear or maybe wikipedia.

This way everything that occurs through Mortgagebam is independent of any concern. We at no point will employ or have any connections with these Independent Mortgage Brokers, accept to generate leads for them.

Watch for the launch.

For those of you who visit FinanceBam regularly have probably seen a bit of a change recently. Gone have all the financial banners and we are currently just focussing on reviews only. The truth is we felt we had lost our way and had started to push the banners more than what the site was all about right from the start and that is reviews.
So we are now going through the whole site, changing our content to reflect the needs and want of our visitors. This has been hampered a bit from the work going on with a second site called MortgageBam that will focus on putting you in touch with mortgage advisers throughout the UK, so you can see what Mortgages are really available and get face to face advice. But enough of that back to Financebam.

We had a lot of pages throughout the site which now need changing an that is a huge task, as most are done manually, it is also important we ensure we are FSA compliant and have been talking to them recently about this.

We will be adding a disclaimer to the site, even though we do not introduce financial services anymore, but just in case it is not seen to be correct.
That’s it for now; we will aim to keep you more up to date with the news as we go along.

We have been very lapse at keeping Financebams’ financial news section up to date, but this is itself has given the subject of our first article in a while. You can clearly see the mood of the financial world from our previous posts, with none suggesting the downturn in economy or drop in house prices we have seen recently. In fact today see’s a unique time in the housing market as the US government effectively take control, albeit temporarily of the mortgage security companies in the USA, to try and give confidence back to the financial markets across the pond.

Depending on what source you believe, UK house prices have dropped from 5% to 35%, with a national building society mentioning 12.5 % recently over the last 12 months. The variation is due to locality, with even some Scottish areas showing an increase in property prices. With so many people having most of their wealth tied up in their home, we have to ask a question, who would sell their house in this current climate anyway, unless they had too. So are the prices, what is being asked or what is being achieved, and what type of home owners are affected, i.e. are these 2nd homes, or even buy to let properties.

As you walk around the private housing estates you are now finding home extensions popping up everywhere. Those who can afford to trade upwards are so worried of selling their own property, which they are choosing to stay put, but make their own home bigger.

The nickname of credit crunch, seems to staying put and now globally accepted, but as usual, it is understanding how much is this about consumer confidence and how much about a price readjustment, after all only 12 months ago, we thought we had a crisis that prevented first time buyers getting on the property ladder.