How to finance your self-build

Building your own home is a long-lived dream for many but it doesn’t have to remain an unfulfilled dream. It is easy to see why it appeals - not only do you get to design a home around your tastes and needs, you could save over 30% on the cost of a ready-built house. It is because of the amount a self-build could save you that makes the dream not only possible but financially savvy. The global recession has made it more difficult to obtain self-build mortgages but plot prices have also plummeted so it is still a great time to fulfil that dream and build your very own house.

Calculating what you can afford

How to finance your self-build

Self-build mortgages tend to use the same calculations as traditional mortgages so you’re likely to be lent as much as 3.5 times a couple’s combined income or 4.5 times your individual income if you’re borrowing on your own. Remember though that the most important thing to consider is whether you’ll be able to make the monthly repayments.

Getting the ball rolling

Unfortunately, due to the uncertainty of an unbuilt house the application process for a self-build mortgage is more arduous and takes more time. You will need to be able to show the lender that you have planning permission for the size and type of house you intend to build, as well as your plans and the estimated cost of the build - try using an estimating software package. It may seem time-consuming and costly to have to do all this before you’ve even started the project, or perhaps before you’ve even bought the land, but it is necessary.

A unique way of funding

Self-build mortgages differ from conventional mortgages in the way they release funds. Rather than lending you the money in one lump sum, self-build mortgages release money in a number of stages throughout the build. This is because at the beginning the final value of the property is only a projected one - all you have is the plot of the land. As the build progresses, so does the worth of the property and therefore the risk to the lender lessens, allowing them to release further funds. There are usually six stages - the purchase of the land, the preliminary costs and laying of the foundations, the erection of the frame, ensuring it’s wind and watertight, the first fix and plastering, and the second fix up to completion.

Arrears mortgage vs advance mortgage

The most usual type of self-build mortgage is arrears based, in that money is released after each stage is completed and is verified by a surveyor. This works for those who already have some initial capital to buy the land and start the build, for example if you have savings or have sold your house. If you can’t wait until the end of each stage for payment and need up to 90% of the cost of the land and build because you don’t have enough savings or want to stay in your current house until the build is completed, an advance mortgage is best for you. However, advance self-build mortgages can sometimes have heavy insurance premiums hidden in the total cost so make sure you check the fine print.

Debt Mountain: 3 Steps to Help Make it a Shorter Climb

Debt is like a mountain. In the early days the gradient is gentle, but the more money a person owes, the steeper the slope becomes until that person stops, exhausted and sick of climbing. Taking stock of the situation, our climber will feel like he’s trying to walk up-hill while carrying a Mule on his back. Thinking about his dilemma and aching muscles, he might start wondering why isn’t the Mule carrying him?

Debt Mountain: 3 Steps to Help Make it a Shorter Climb
That’s the fundamental question: why does money work against us, instead of helping us to move forward in life?

The answer to that question is, the money you’ve acquired is someone else’s. You have to pay it back with interest. Before you’ve even spent the money, you’re already required to payback more than you borrowed. Continued borrowing leads you straight up that hill.

Next question: what are you going to do to get out of this vicious cycle?

#1 – Get Sober

To understand why your finances are out of whack, you need to understand three things: how much you need to live, how much you’re earning and what exactly are you spending it on. This process is about financial sobriety.

How much you earn is simple and quick: check you pay slips, or your employment contract. How much you need to live on is a little more involved and requires you to make a list of every aspect of your financial life. From Hosiery to housing to haircuts; what does it cost you? It’s likely that the figures for what you earn and what you need to earn don’t match. This is where understanding what you spend your money on is vital.

Log your purchases for three consecutive months. Whether you decide to do it using a smartphone app, or simple pencil and paper, go with whatever makes you comfortable. Write down every single purchase you make, the time and date on which it was made and the cost of the item. If you’re buying multiple items, take the receipt with you and log them when you get home. After just a few weeks you’ll begin to recognize any destructive spending patterns you’re in. At this point, you can begin to change.

#2 – Stop Spending and Start Making

If these steps have made you reassess your spending, it’s likely that you’re also considering how you spend your time. People who misspend their money often misspend their time too. Think about how much time you put in to making money; probably just 9-5, which for some people is enough. It could be enough for you too, if you weren’t spending more than you can afford to pay back. What you have to do now is spend your time making the money you need to bring down your debt.

You could do this in a variety of ways: work longer hours; get a better paid job; set up a secondary business that utilises something you’re really good at – this is a great one because doing something you really love and getting paid for it boosts self esteem. You could participate in a clinical trial – volunteers participating in a long trial (usually two weeks), can earn up to £2000, or $2500 per trial. Another good option is to sell any unwanted or unused items you have at home. This could mean listing that really expensive but unused sports motorcycle on a platform like Grays, or advertising clothes on eBay that your children have now grown out of. Either way, every penny counts!

#3 – Throw Money at the Problem

Ignoring debt only makes it bigger. The only way to make debt go away is to pay it back. Once you have gained some financial sobriety and started making enough to live on, the extra money you make should be ploughed in to debt. With some effort, that mountain will start feeling like a mole hill in just a few months.

Best strategies to Take Money Out of Your Retirement Plans After You Retire

After years of meticulous financial planning, you have come to the point where all your efforts paid off. By investing prudently, seeking help of debt settlement companies and cutting down on unnecessary expenses, you can now pride on the decent amount sitting in your bank.

Best strategies  to Take Money Out of Your Retirement Plans After You Retire
While it is certainly the time to enjoy all of your hard work, you have to be even more careful about the way you withdraw money from your account as it can make a life and death difference. The withdrawal strategy you will adopt will shape your financial future so there is no way you can afford any risks. The following is endeavored at giving you useful advice on how you should go about the process of withdrawing money from your retirement account.

The way you valve your retirement account in the post-retirement years is dependent on several factors.
  • The kind of retirement account you possess
  • Your decision of whether or not you wish to leave an inheritance behind
  • Your plan of managing your expenses in the coming years
  • The risk aversion aspect of your portfolio
You can easily determine the best path to go down by taking these factors into consideration. Next, the question arises about the best time when one should start withdrawing money from retirement accounts. As a rule of thumb, the longer you wait to withdraw money from your IRAs or 401(k) accounts, the better. The more time you give these accounts to grow with the tax, the greater reward you will secure. However, there are other factors that come into play as well.
  • Have you retired already?
  • You can delay withdrawing money from your 401(k) account till you are 70 and ½ years of age because this is when the minimum distributions that are required start.
  • Is your financial portfolio strong enough to support you till you withdraw from your accounts? If not, you can start withdrawing money right away.
Another factor that you cannot afford to forget is other sources of income.
  • Can you keep your status as ‘retired’ while working part time to balance some of your living costs?
  • Is the amount you get in the name of social security sufficient to offset your living costs or not?
  • Pension is a great source of income that plays a big role in reducing annual withdrawals from your retirement account.
The longer you avoid taking out money from your retirement account, the bigger chance you have to live your retirement the way you planned. Whenever you plan to take money out of your accounts, you always come to a fork in the road. You have to make a decision between withdrawing money from traditional accounts or Roth accounts. There is no specific answer as to which account you should first withdraw money from but guidelines that can help are listed below.
  • If you think your income will be highly taxable, you should always withdraw money from IRA or Roth as this way you can avoid paying the higher tax rates.
  • If you think otherwise, go for the traditional accounts first. You can save your withdrawal for the years when you anticipate a higher taxable income.
When you first decide to withdraw money from your account, there are two factors you should take into consideration; namely transaction fees and the way asset allocation will be influenced. You will obviously want to minimize transaction fees and work your way towards an effective asset allocation. Some tips to help you reduce transaction fees are as follows.
  • If an investment brings about redemption fees, avoid selling it.
  • Avoid selling your assets in small batches as one has to pay trading fee repeatedly this way. You will be much happier selling a bigger chunk once and let all the money sit in your account.
  • Go for a single transaction instead of multiple ones by avoiding selling numerous assets at a time.
  • Make sure you put a halt to automatic reinvestment of dividends and take out the dividend instead.
As you get older, it is strongly recommended that you avoid making any volatile investment and go for the more stable assets like bonds. 

APR mortgage calculator

Shopping for a mortgage is quite a tedious job. It’s because different lenders term for their fees by different names as a reason comparison becomes quite difficult. Most borrowers compare the interest rates so as to choose the best loan. APR (Annual Percentage Rate) is a better rate of comparison as this will take into accounts the lenders fees along with the interest rate. Sometime to lure customers lenders offer loan with lower r4ate of interest but charges higher upfront fees. These can turn out to e costlier than that of the loans with higher rate of interest. APR will let you know the true cost of borrowing and it will be better if you can compare the APR of the lenders while taking out a mortgage. 

APR mortgage calculator
How an APR difference from interest rates?

The rate of interest is the percentage of the loan amount that a lender will charge you for borrowing the dollars. APR is calculated by adding the interest amount with the lenders upfront fees, other origination fees. This is expressed in a yearly percentage of the loan amount. Since all the costs are considered APR will be higher than the normal rate of interest.

4 Limitations of using APR:

1) Third party fees are excluded while calculating the APR. Home appraisal fees, home insurance and title fees are usually not taken into consideration when Annual Percentage Rate is calculated, but they usually add up to a significant amount.

2) Comparison of APR is more useful for Fixed Rate Mortgages. Since the interest rate for Adjustable Rate Mortgages are not fixed, the Annual Percentage Rate that the lenders quote is not the actual figure and is based on forecasts.

3) Annual Percentage Rate is calculated for the full term of the loan, but borrowers rarely keep a mortgage for 15 or 30 years. When a borrower refinance or sell a home after 5 or 7 years, a mortgage with higher upfront fees will end up being more expensive than a mortgage with low upfront fees and high interest rate.

4) You’ll find that calculation of Annual Percentage Rate varies from lender to lender. Sometimes lenders exclude some fees from the calculation of APR, so being a good buyer you must ask the lender about all the fees that are excluded from your loan.

Thus you have acquired a thorough knowledge of how to take the advantage of an APR calculator while taking out a mortgage.

Improving Your Credit History with Short Term Loans

Getting onto the property ladder for the first time is not an easy step, and consequently people are always looking for a quick leg up. Taking a short cut when it comes to an investment of this size is not advisable, but that doesn't mean that first time buyers should not look around for other avenues into the housing market. There are a number of ways to help you improve your credit history, and increase your chances of getting a mortgage for the first time.

Improving Your Credit History with Short Term Loans

It's not something many people think about before they come to buy a home for the first time, but the majority of first time buyers in recent years have had almost no credit history whatsoever. For this reason it is becoming increasingly difficult for first time buyers to get a mortgage, as banks simply do not want to lend to people who have no proven track record of paying money back.

Short term loans are not a solution to this problem, but they can provide a little boost. That is not to say that taking out a payday loan from a broker like Cashlady is, by any stretch, an acceptable way to pay for a house, or even part of it. Perhaps one day a pay day loan may be required to help pay off a mortgage one month, but it is not the purpose of this article to detail that. Rather, by taking out even a small number of short term loans and paying them back on time, banks are able to see that the person they're asked to lend to is capable of paying back the money they are given.

6 tips to get the most out of your bank account

It is a well-known fact that banks add to your asset and give it security. But nowadays, the banks do more. They have stepped out of their conventional barrier to serve you in multiple ways. These financial hubs are now acting like guardians to guide you how to accumulate savings. However, you too can put into some meaningful effort to make the most of your bank account. Here are some wonderful 6 magic tips to be successful in your purpose.

6 tips to get the most out of your bank account
Deal with the right bank: It is the foremost criterion to follow if you want to optimize your bank account. All banks do not offer the same facilities, so you need to shop around in search of the right bank that offers comfortable interest on borrowing, provides the option of direct deposit and free checking. Also make sure that the bank offers online transaction facilities and have several branches and ATM centers.

Plan in advance: If you are heading to a remote area, make it a point to know if your bank has an ATM corner in or around the place. If not, then it is better to carry a tidy sum of cash safely. Otherwise in times of emergency, if you draw cash from another bank’s ATM, you will be doubly whipped by fees from your bank and that bank too.

Know about the minimum balance requirements: Most of the banks charge monthly fees if their clients fail to maintain the minimum balance requirements. If you are not sure about meeting these obligations without fail, consider dealing with another bank that does not impose stringent rules regarding minimum account balances. You can also ask the bank authority if fees can be waived in the event of direct depositing of paycheck into your account.

Use debit & credit card wisely: If you are using these cards, never forget to get the transaction recorded in your bank passbook. In case you are using online banking facility, always check the balances. It will help you restrict your spending habit. Furthermore, you will never come in for shocking surprise.

Stay away from credit card debt: Always clear the credit card debt in full and on time so that you don’t get trapped into the worst debt scenario. Never forget about the due dates within which it is must to pay off. In a word, learn to use your credit cards with much prudence.

Make money more from your savings account: Several banks say, “current account offers available”. But I personally feel, it is always better to go for savings account. One point needs to be mentioned in this context. Traditional savings account does not yield a decent interest rate but only-online money market makes much better offer.

There are several other points to consider thoroughly. Large constellation of many factors may be head-reeling for you, so better to consult a finance expert to guide you in this regard.

An Introduction To Forex Trading

The foreign exchange market is the largest financial marketplace in the entire world. The stock market pales in comparison to the incredible amount of daily turnover in the fx space. Currently, there is about $3 trillion in turnover per day in the foreign exchange market, while the total daily turnover at the New York Stock Exchange is a measly $50 billion, on average. In fact, if you added up the daily turnover at every major stock exchange in the world, it would still fall far short of the average fx turnover.

An Introduction To Forex Trading
Most investors have never heard of the fx market due to its relatively new arrival to the retail investing world. Until the internet boom in the late 90’s, the fx market was inaccessible to most investors due to incredibly large minimum account requirements and minimum contract sizes. Only very wealthy individuals, investment banks, family offices, and hedge funds were able to be active in the market. The internet boom, however, has created a new world. Today, online retail fx brokers allow traders to open accounts with as little as a few hundred dollars.

How Do You Trade Forex?

FX trading involves buying and selling currencies. If you have ever travelled internationally, you have traded fx. For example, when a person travels to Mexico, they will inevitably exchange U.S. dollars for Mexican pesos in order to purchase goods and services in Mexico. When this tourist converts dollars into pesos for vacation, he is essentially selling U.S. dollars and buying Mexican pesos. In fx terms, this person has just sold the USD/MXN currency pair, which means our tourist friend has sold U.S. dollars in exchange for Mexican pesos.

In the fx market, the most commonly traded currencies does not include the Mexican peso. The bulk of activity every day takes place in the following major currencies: U.S. dollar, Japanese yen, Swiss Franc, Euro, and British Pound. These currencies always trade in pairs. It is impossible to buy a currency without simultaneously selling another. Therefore, these currencies trade in pairs such as the EUR/USD, GBP/USD, EUR/GBP, etc.

How You Make Money Trading Forex

If a trader buys the EUR/USD currency pair, then he has sold dollars and bought euros, which means he has went long the EUR/USD currency pair. Therefore, if the euro now appreciates versus the dollar while this trader has his long position in place, then this trader will profit when he liquidates the position by selling euros and buying dollars once again.

Here’s how it works mathematically :

Bob buys 1 standard contract (100,000) EUR/USD when the pair is trading at 1.2500.

Bob’s position is now worth (100,000 x 1.2500) $125,000. Now, if EUR/USD exchange rate rises to 1.2700, then Bob’s position is now worth (100,000 x 1.2700) $127,000. Bob has profited $2,000 off this
move. During rather volatile market conditions, EUR/USD can easily move 200 basis points in a day or two.

Today, most retail brokers will allow private retail traders to control 1 standard contract with as little as a $2,000 account. To get started trading foreign exchange, simply visit one of the many online retail forex brokers, download a simulated paper account, and begin practicing on fake money to get a strong foundational understanding of how the market works, and how to trade the world’s largest financial marketplace.

How to Decide If Bicycle Insurance Is Right For Your Budget

With the rising prices of gas and the progress of green and sustainable living has come the rise in popularity of the bike as a legitimate (and sometimes preferred) form of urban transportation. However, as many bike riders know by now, riding a bike--especially in large cities and urban centers--can be a dangerous adventure. As more and more people take to the streets on two- wheels of pedal-powered awesomeness, reports of bike-related injuries and accidents have risen.

How to Decide If Bicycle Insurance Is Right For Your Budget
Obvious logic leads to the conclusion that a couple tons of reinforced steel traveling at 20 to 30 miles per hour will win most battles against a couple hundred pounds on two wheels traveling at half the speed. In many urban areas around the country, from New York City to Seattle, the battle of the road has taken on a more serious tone, as city governments try to find a delicate balance between car road necessity and bike lane security. As this issue becomes more prevalent in the national conversation, the issue of bicycle insurance is also coming to the forefront of the minds of bicyclists everywhere.

Most people have no clue such a thing exists, but bicycle insurance has been around for quite a while. By some accounts, it has been around nearly as long as auto insurance, which was first used in the late 19th century. Even though bicycle insurance has been around just as long as car insurance, it has mostly been forgotten and deemed useless. However, as bicycles regain popularity due to how budget-friendly they are, the idea of bicycle insurance may not seem so quaint, and may indeed be proven to be quite useful for daily riders.

Readers who are bike owners should think of a time when a bike (or a friend’s bike) was stolen. Wouldn’t it be nice to not have that be a complete loss financially? Bike insurance not only covers theft, but also accident liability (avoiding arbitration lawyers is a nice side benefit, no?), property damage, medical expenses resulting from crashes and other accidents and in some cases even death. Currently, bike insurance is difficult to find in some states, but odds are if you live in or near a major urban area with a substantial amount of bike riders there will be at least one bike insurance provider.

Most theft policies for bike insurance will only cover the actual cash value of the bike, which means how much the bike is worth after considering its age. So, despite the love a rider has for their bike, sentimental value is sadly not included in bike insurance policies. But, on the plus side, many bike insurance providers do offer replacement insurance, which means if a bike is stolen the insurance may pay full value for the cost of a new bike. So, say the stolen bike was 10 years old and had an actual cash value of a few hundred dollars, but a new bike of the same model is worth a thousand. The insurance would pay a $1,000 for a replacement, well, only if it was included in your policy.

Unfortunately, bicycle insurance is much more difficult to find when compared to auto insurance if only due to a lack of demand and scarcity. There are some options for bike riders who cannot find an insurer, such as personal property insurance; personal liability insurance; general medical insurance and personal injury protection insurance. All of these types of insurances are fairly simple to receive and are also affordable for most people.

Finding the Best Car Insurance deal - The Ultimate Guide

When it comes to finding a great deal on car insurance, you will probably have heard mixed messages. Some people will tell you to head straight for the comparison websites to find the best deal whilst others will tell you that the best deal is found going direct to those insurance companies that aren't on the comparison websites.

If this is the case, you will probably be left wondering what to do and who is correct. Here is the ultimate step-by-step process to finding the best car insurance deal around.

#1 - Check the quote from your current provider

Finding the Best Car Insurance deal - The Ultimate GuideIf you already have car insurance with an insurance company and it comes to that dreaded time of year when you need to renew your policy, the first step that you should take is to obtain a quote from your existing provider. It is obviously easier to stay with your existing provider if at all possible so getting a quote from them to start with is paramount.

When you have the figure from your existing provider, it will also give you a figure to work from. When searching for quotes from other companies, you will be able to compare whether their premiums were higher or lower than your existing provider. If they are higher, you can rule them out right away.

#2 - Check the comparison websites

The next step is to go on the comparison websites. There are often some great deals available on these and a lot of people really will find the best premium on these sites. However, you need to know what you are doing when it comes to the comparison sites so here are a few tips.

Firstly, you need to make sure that you use a few different comparison websites. Some comparison sites will have more insurance companies than others and each will likely feature slightly different companies. Secondly, you should make sure that you are as accurate as possible when filling out the forms on these sites. Make sure that you fill in the details of your particular car as accurately as you can and make sure your occupation is accurate too. All of these small details really do affect your policy by a huge amount when added together.

#3 - Keep track of the quotes

This is an important one. When looking at comparison websites, calling companies or even obtaining quotes from your current insurance provider, you need to make sure that you keep track of all the quotes offered. Doing this on comparison websites is usually quite easy as you can save your results on most of them but if you're doing things over the phone, you might want to note them down on a piece of paper.

#4 - Contact those companies that don't feature on comparison sites

As mentioned before, you can often get a better quote from those companies that do not feature on comparison websites. Contacting these companies is a must so get out the phone book or do a quite online search and start contacting a few of these.

Again, you need to make sure that you keep track of the quotes so you can pick the lowest quote later on.

#5 - Contact your current insurance provider again

This might seem a little odd but let us explain. Now that you have a huge number of quotes from other insurance providers, you are in a great position. Your existing provider will want to keep your business with them, as it is very little effort on their part to simply keep you on their system. When you call your existing provider back, you need to tell them that you received a quote from another provider for a lower cost.

Pick the lowest quote you have found from your list and quote this to your existing provider and ask them if they can match/beat it. Tell them that if they can't at least match it, you will be changing insurance providers.

More often than not, you will manage to lower your premium with your existing provider and this will be less hassle for you. If they don't match it, simply go for the company that offered the lowest quote for your premium.

The pros and cons of credit card usage

Credit cards are a convenient way to make purchases, but if not kept in check, they can quickly become your financial undoing. Whether you are considering applying for your first card or your fifth, it is important to consider all sides of credit card usage. Here are the facts.

Credit card pros

You can start building credit. You will need a good credit score if you want to buy a car or a home, or even make smaller purchases that you can’t front the cash for immediately. A credit card can help you get there by enabling you to build credit. The responsible use of a credit card -- that is, making all the payments on time and carrying a low (if any) balance -- signals to rating agencies that you are a trustworthy buyer.

The pros and cons of credit card usage
 Rewards can actually earn you money. If you study the terms of your credit card contract, you could actually make it work for you. Many companies will offer promotions like cash back on purchases and mileage toward travel if you use your credit card at certain types of merchants such as grocery stores and gas stations.

Credit cards are more secure than debit cards. If you are ever a victim of card fraud, it will be much easier to recover your funds with a credit card. With debit cards, or prepaid credit cards, the money has to actually be replaced instead of simply reversing the charges, which can make recovering from a fraudulent incident more time-consuming.

Credit card cons

Credit card debt doesn’t help you. With student loans, you are investing in an education that could possibly increase your earning potential. And with a mortgage, you are putting your money towards a home that could possibly increase in value over time. The only thing that increases with credit card debt is the amount of interest you owe on your balance. For this reason, many credit experts will tell you that credit card debt is one of the worst kinds of debt to hold.

The fine print can be tricky. Credit card companies don’t often publicize account fees and penalty payment terms in the same large, bright text that they use to advertise a zero-percent interest starting rate, and there’s a good reason for that. If you don’t become well-versed in credit card lingo before opening an account, your chances of incurring extra fees will be through the roof. And even if you do read the fine print, sometimes the language used within it is so evasive that you still don’t understand how to be the perfect credit card holder, so it’s better to speak with a representative via telephone.

The temptation to overspend is makes credit card dangerous. For most consumers, it may seem like conventional wisdom to spend only what you can afford to. However, credit cards make it more difficult to realize when you’ve reached your limit. Especially if you use them for everyday purchases such as food and gas, you may not remember every charge that you’ve put on your account. In fact, most people don’t know what their balance is from day to day.

However, whether credit cards are beneficial for you depends largely on how you use yours. If you keep the pros and cons in mind when you swipe, you’ll be closer to financial success.