Inflation to hit pensions prediction

Pensioners are facing the prospect of having to cope with a seven per cent rate of inflation during 2008, according to a new report.

Figures compiled by Newcastle Building Society Equity Release Service show that the rate of inflation experienced by the elderly is significantly higher than the four per cent level of the Retail Prices Index.

The main contributory factors to this are food and energy prices, which the Office for National Statistics estimates make up a third of pensioners' expenditure.

Food costs increased by 12 per cent last year and look set to keep rising, while three major gas and electricity suppliers have implemented sizeable price rises in recent weeks.

Newcastle Building Society's Bob Mottershead said the figures paint a "bleak picture" and predicted some pensioners would struggle financially in the coming months.

"For the many relying on the basic state pension of just £87.30 per week, these increases could negatively impact everyday quality of life," said Mr Mottershead.

The warning comes just weeks after a study by Alliance Trust found that working people in their sixties viewed inflation as the biggest threat to them being able to have a comfortable retirement, ahead of illness and a stock market crash.

A larger loan 'could reduce interest payments'

Borrowers need to be "on their toes" when considering taking out a loan, it has been claimed.

According to Defaqto, smaller loans are often charged a higher rate of interest than bigger sums.

The financial research company explained that borrowing as little as £1 more could result in an interest rate reduction of around eight per cent.

"Borrowers should take care when choosing the size of loan they want, as a little effort in researching the interest rates charged on different tier levels could save them a considerable amount of money," advised David Black, principal consultant of Banking at Defaqto.

He said that the length of the loan is an important factor as choosing a longer period can result in lower interest rates.

Finance website Moneyfacts.com recently urged consumers to consider consolidating their debts to one loan.

The website claimed this could often lead to lower monthly payments and a reduction in interest rates.

The Risks of a UK secured loan

In a secured loan, the house of the borrower needs to be pledged as collateral. This is to reduce the risk faced by the lender in case the borrower is unable to repay the loan. Due to a lower risk factor, UK secured loans carry a lower rate of interest. For borrowers with adverse credit this is an easy way to get a loan because otherwise they are denied credit due to low credit scores. Secured loans are also known as home equity loans or homeowner loans.

A secured loan offers no security to the borrower. The term 'secured' refers to security provided to the lending institution or bank. For the borrower there is enhanced risk as he/she stands to lose his/her home if there is default in the scheduled repayment. The lender can repossess the house and sell it for satisfaction of his debts.

This is one of the reasons why many people are apprehensive of obtaining a UK secured loan. A borrower, especially one saddled with an adverse credit history, should carefully assess his credit needs and ability to repay while pursuing a UK secured loan. It would be wise for a borrower to look into alternative options of availing credit before opting for a secured loan. If nothing else is feasible, then the best way would be to be to shop around for a UK secured loan with the lowest rate of interest and also arrange for a payment protection plan.

It is usually possible to obtain a UK secured loan with some type of a payment protection plan added to it. A payment protection plan is in fact an insurance cover that protects a borrower in case he is unable to honor his payment obligations for the secured loan due an unforeseen exigency. If the payment protection is taken at the time of obtaining the secured loan then the amount of the insurance premium is added to the monthly repayments against the UK secured loan. This will ensure that the borrower is protected against any missed repayments against the loan due to some unexpected happening beyond his control like sickness, accident, unemployment, disability, or leave of absence to take care of an immediate family member. In case of a borrower's untimely demise, the balance of his UK secured loan is paid by the insurers sparing his loved ones from the added burden of loan repayment.

If you are a UK secured loan borrower, it would be a wise move for you to take payment protection insurance in order to reduce the risk of losing your home pledged as collateral. Life is full of uncertainties and it is not possible to be sure if things will always remain in a state of wellness. When times are tough, the peace and security offered by your own home is of immense value. By paying a little amount each month against payment protection coverage you can protect one of your most valued assets and be sure of enjoying the continued security offered by your home.