Should I Borrow Money to Pay for Food at Christmas?

When Christmas comes along it can be easy to start to panic about how we will afford it. Some people manage to save a bit of money each month of spread the cost so that it is more affordable. However, not everyone does manage to do this and so as December approaches they can begin to panic about how they are going to afford everything. Most people will buy gifts for friends and family, they might buy decorations, new clothes and extra food. All these costs will add up and it can mean that you may not be able to afford everything and may consider getting a loan to cover the cost of the food that you will need on top of everything else. There can be a lot of stress at this time of year and worrying about a loan can add to it so it is important to make sure that it is the best possible solution for you.

Consider what loans are available

It is worth taking a look at what loans are available to you. It can be all too easy to rush into a loan without thinking about whether it is the best one. Start by thinking about how much money you think that you will need to borrow and then look at the types of loans that offer that amount.

If you are not sure about what loans are available and how much you can borrow from them, then you could ask a financial advisor. If you want independent advice then you will have to pay for it unless you use the money advice service. However, you could go into you bank and speak to their financial advisor. They will try to sell you their products, but you should be able to find out all about different types of loans and which are suitable for what. If you are looking to borrow money to pay for extra food, then it is likely that you will need a credit card, overdraft or short term loan. Depending on your credit record you will have different options though. The better your credit record; the more options you will have.

Compare the loans, both on the price as well as what they are offering so that if you do decide to have one, you get the best possible one for you. It can take time to do this but it is worth it as it can save you a significant amount of money.

Consider how you can manage repayments

It is well worth thinking about how much you will have to repay and when. All loans have to be repaid and you will have to pay back what you have borrowed plus interest and fees. You should be able to find out form the lender exactly how much you will be expected to repay and when. This means that you will be able to work out whether this will be affordable for you. This is easier than you might think.

You will need to look back at bank statements for the last few months and see whether you would normally have enough money available to cover those repayments. If you do not, then look at the sorts of things that you have been buying and think about whether you can go without some of them, just until the loan is repaid.

It is also worth considering how you will manage if the interest rate goes up and therefore your repayments increase. This could happen if the Bank of England base rate goes up but it could also happen at any time if you are on a variable rate as lenders can choose whether they change interest rates and when.

Think about alternatives

It is worth thinking about whether there are any alternatives to borrowing the money. Firstly think about whether you really need lots of extra and expensive food for Christmas. Many of us end up putting on weight at Christmas due to indulging in extra cakes, pies, biscuits, chocolate and sweets which we often regret afterwards. If you are having a party or family gathering, consider asking whether they will contribute towards the food so that the cost can be shared among everyone. Consider shopping ta budget supermarket to keep the costs down as well.

If you have savings then try to use these rather than borrowing money. If you do not then you may be able to get some extra money by earning a bit more. There are often extra job opportunities around at Christmas and you might also be able to sell things that you do not need more easily at this time of the year. You may also be able to find some ways to earn extra money online. Try keeping down the costs of the other things that you are buying so that you have more money available for food.

How to Know if you are Ready for a Mortgage

Taking on a mortgage is a really big step. All loans should be considered thoroughly but a mortgage is usually a much longer term loan and for much more money. This means that you need to think a lot harder about it compared with other forms of borrowing. There are many things to consider in order to consider whether you are ready and a few are discussed here.

Is your deposit enough?

For most mortgages you will need to save up some money for a deposit. The amount will vary as it will need to be a percentage of the asking price of the property. This tends to average around ten percent but can vary quite a bit. The more deposit you put down, the lower the amount of money you will need to borrow for the loan. This will mean that the loan will be cheaper and you might be able to pay it off more quickly and will pay less interest on it. If you can get a higher deposit then this will keep your loan even lower. However, if you save more of a deposit, it can be tempting to go fir a more expensive property so you need to be careful and make sure that you do not go for something that is dearer than you can afford.

Can you afford the repayments?

It is therefore really important to make sure that you are able to afford the repayments that you will need to make. The lender will check your bank statements to make sure that you will have enough money, but it is important for you to check as well. It is important to make sure that you know for sure that you will always have the money that you need to cover the repayments. Think about what might happen in the future as well as your current situation and whether you think that you will always be able to manage. Hopefully your pay will increase and the payments will become more affordable. However, it is worth considering what might happen if interest rates go up and your pay does not and how you might manage, especially if your family increases in size or your salary goes down.

Do you have a secure job?

Job security is not something that many people have these days. However, there are still some jobs that are more secure than others. Therefore it is worth thinking about whether you feel that your job will be able to provide for you, for a significant amount of time. Think about how well the company that you work for us doing and how well they might do in the future. Consider whether your role will always be needed and if not, whether you will be able to move to another job within the organisation or whether you have transferable skills that you could use to move to a different company. You will need to make sure that you always have a good enough income so that you can afford those mortgage repayments.

Are you likely to move house?

It is worth thinking about whether you really want to have a home in the same location for a significant period of time. Of course, you can sell your home before you have completely finished paying for it, but it can be tricky within a few years of having the house. This is because the value of the home may go down rather than up. If this happens the amount you borrowed will be more than the value of the home and it could make changing the mortgage to a new property difficult.

Is the property likely to increase in value?

It is therefore worth thinking about whether the property is likely to increase in value. This can be hard to judge in the short term as the whole of the housing market could go down in value for some reason. However, it can be a bit easier to judge whether the specific property you are buying or the area it is in might go down in value. Make sure that you have a good survey done on the property so that you are aware of any potential problems with it. Think about whether you feel the house will continue to be appealing based on the current market trends as well. This can be tricky but it is worth thinking about if you can. Consider too whether the area seems to be up and coming or whether it is in decline. This could tell you something about the potential house price increase too. If the area is improving then it will get more desirable and this will mean that the house prices will increase but if the area is in decline then the house prices will fall.