Annual percentage rate.
APR is the official rate to help you understand the cost of borrowing any amount. Your lender should always disclose the APR before you sign any agreement.
APR can be a good way to compare credit cards to see which would work out cheaper for you.
APR includes both the standard fees and interest you’ll have to pay on your borrowing over the course of the year. It’s usually added to the amount you owe on a monthly basis.
If the APR on your credit card is 17% this means you will owe 17% of the total amount owed to them in interest, on top of the total amount.
Often the interest rate isn’t the only cost of a credit card. To account for this, APR considers both a card’s interest rate and any other standard fees. This means that the APR percentage offers a more complete picture of how much borrowing will cost.
The APR you are offered will often be dependent on your credit score, the less of a risk you appear to be to lender’s then your APR could be lower too.
Credit card rates can vary, typically between 5% to 30% APR.
The lower the APR, usually the lower the cost of borrowing will be and this will make your payments cheaper if you are late or miss any amounts.
Fixed – If you have borrowed a fixed amount then such a loan or mortgage, having a fixed APR will make your payments more predictable as the APR won’t change.
Variable – The lender or bank can change the APR at any time and is often tied to the interest rates. This can make it harder to financially plan.
Representative APR – This is the advertised rate and means that a majority of applicants will get a APR of the same or lower than the representative.
Halifax and Lloyds, two of the UK’s largest mortgage lenders, have recently announced a significant change to their mortgage lending criteria, allowing prospective homeowners to borrow up to 5.5 times their annual income. This marks an increase from the previous limit of 4.49 times income and will have a substantial impact on first-time buyers looking to enter the housing market.
The mortgage to salary ratio is a critical factor that determines how much a lender is willing to lend a borrower based on their income. This ratio essentially sets the upper limit on the amount of money that can be borrowed. Most lenders in the UK have limited this ratio to around 4 to 4.5 times the applicant’s annual income. For example, under the previous rule, someone earning £30,000 a year could expect to borrow up to £135,000. However, with the new 5.5 times income rule introduced by Halifax and Lloyds, the same individual could now secure a mortgage of up to £165,000, significantly increasing their purchasing power in the housing market.
The Mortgage to Salary ratio also helps borrowers work out how much they can afford, this can vary depending on location and other factors.
This policy change is particularly beneficial for first-time buyers, who often struggle to secure a mortgage large enough to purchase a home, especially in high-demand areas where property prices are steep. With the new ratio, first-time buyers will have a better chance of entering the property market. This is a crucial development, considering the rapid increase in house prices over the past two decades.
Lloyds data shows that since the year 2000, house prices in the UK have skyrocketed by approximately 240%.
This increase has far outpaced the growth in average earnings, which have only risen by around 112% during the same period. This disparity has made it increasingly difficult for many, particularly first-time buyers, to afford a home.
However, it’s important to note that this increased lending ratio is typically only available for loans with a loan-to-value (LTV) ratio of 90% or less. The LTV ratio is the percentage of the property’s value that is being financed through a mortgage. For example, if you are purchasing a home worth £200,000 and have a deposit of £20,000, your mortgage would cover £180,000, resulting in an LTV of 90%. This means that to benefit from the new 5.5 times income policy, prospective buyers must have a deposit of at least 10% of the property’s value. This requirement ensures that the borrower has a significant stake in the property and reduces the lender’s risk.
Lloyds has reported that this policy update will allow them to lend eligible customers up to 22% more than they previously could under the old policy. This increase is likely to be welcomed by buyers who are finding it increasingly difficult to keep up with the rising house prices. By enabling borrowers to access larger loans, Lloyds and Halifax are making it more feasible for buyers to purchase a home in today’s challenging market.
While this increase in the mortgage to salary ratio provides clear benefits to borrowers, it also has broader implications for the housing market and financial stability. On one hand, it could help stimulate the housing market by enabling more people to buy homes, potentially driving up demand. On the other hand, there is a risk that higher borrowing limits could contribute to further increases in house prices.
Higher borrowing could also lead to greater financial vulnerability for individuals if interest rates rise or if their financial circumstances change, making it harder to meet mortgage repayments. As such, while the policy is undoubtedly beneficial in the short term for those seeking to purchase a home, it also requires careful consideration of the long-term risks involved.
When planning a trip to the European Union (EU), it's essential to understand the visa requirements and travel restrictions, which can vary significantly depending on your nationality. For citizens of the UK and the US, specific rules govern how long they can stay in the EU without needing a visa. Here's a detailed guide for both British and American travellers.
Since the United Kingdom left the EU in January 2020, UK citizens are no longer entitled to the freedom of movement that allowed them to live, work, and travel across EU member states without restriction. However, UK nationals can still travel to the EU without a visa for short stays, thanks to the visa-free travel arrangements that apply to many non-EU countries.
Schengen Area Rules: Most EU countries are part of the Schengen Area, a zone comprising 27 European countries that have abolished passports and other types of border control at their mutual borders. UK citizens can visit the Schengen Area for up to 90 days within a 180-day period without needing a visa. This 90-day limit applies to the entire Schengen Area, not each individual country. It’s important to note that the 90 days are cumulative, so multiple short trips can quickly add up to the 90-day limit.
Counting the 90 Days: The 90 days are calculated on a rolling basis. This means that each day you spend in the Schengen Area counts towards your total, and you must look back over the previous 180 days to determine how many of those days were spent in the zone. For example, if you spend 30 days in France, leave for a few weeks, and then return to Spain for another 30 days, you have used up 60 of your 90 days.
Consequences of Overstaying: Overstaying the 90-day limit can result in fines, deportation, or being banned from the Schengen Area for a certain period. Therefore, it's crucial to track your days carefully to avoid inadvertently breaking the rules.
Non-Schengen EU Countries: Some EU countries, like Ireland, are not part of the Schengen Area, and different rules apply. For example, UK citizens can visit Ireland without a visa for up to 90 days independently of their time spent in the Schengen Area. Always check the specific entry requirements for each country you plan to visit.
Working or Studying in the EU: If you plan to stay longer than 90 days, work, study, or live in the EU, you will need to apply for the appropriate visa or residence permit. The application process and requirements vary depending on the country.
Similar to UK citizens, US nationals can also travel to the Schengen Area without a visa for short stays, though the rules are slightly different.
Schengen Area Rules: US citizens are permitted to stay in the Schengen Area for up to 90 days within a 180-day period without needing a visa. This limit, like for UK travellers, applies to the entire Schengen Area. The 90-day rule is the same for all travellers, and it’s crucial to remember that the 90 days are cumulative across all Schengen countries.
ETIAS Requirement: Starting in 2024, US citizens will need to apply for an ETIAS (European Travel Information and Authorisation System) authorisation before traveling to the Schengen Area. This is not a visa but a travel authorisation, similar to the US ESTA. The ETIAS will be valid for three years and will allow for multiple entries into the Schengen Area as long as the 90-day rule is observed.
Counting the 90 Days: Like for UK travellers, the 90-day period for US citizens is calculated on a rolling basis. Therefore, keeping track of your travel dates is essential to avoid overstaying.
Consequences of Overstaying: If you overstay your 90 days in the Schengen Area, you could face penalties, including fines, deportation, or future entry bans.
Non-Schengen EU Countries: US citizens should also be aware that some EU countries are outside the Schengen Area, such as Bulgaria, Romania, Croatia, and Cyprus. Each of these countries has its own entry requirements and visa rules.
Working or Studying in the EU: For stays longer than 90 days, or if you intend to work or study, a visa or residence permit is required. The process and requirements will vary by country, so it’s important to research and apply well in advance of your trip.
For both UK and US citizens, traveling to the EU remains relatively straightforward for short stays of up to 90 days within any 180-day period. However, it is vital to understand and adhere to the rules of the Schengen Area to avoid any legal issues or penalties.
As of 2025 there will be additional requirements for anyone planning a trip to the EU including biometric checks to replace passport stamps. There will also be a visa waiver which will be necessary for any trip to the EU.
The announcement that got everybody talking, Oasis will be touring the UK in 2025 for 25 dates set for the summer. The tickets went on sale last week with a fight for the front of the queue.
The 2024 Paris Paralympics will be running from the 28th August to the 8th September with 549 events and 4,400 athletes. The Paralympic games still have tickets you can purchase to experience the incredible athletes in action in Paris.
One of the highlights of the Paris Paralympics is the accessibility of its ticket pricing. Over 2 million tickets have already been sold, with more than half of these tickets priced under €25. This pricing strategy makes it possible for a wide range of fans to attend, ensuring that the Paralympics are as inclusive and accessible as possible.
For those interested in attending the finals, ticket prices range from €20 to €100, offering an affordable way to experience the climax of the competitions. Whether you’re looking to attend multiple events or just the highlights, there are ticket options to suit various budgets.
The Games have attracted a diverse audience from around the world. The majority of ticket holders are residents of Paris, taking advantage of their proximity to the events. Interestingly, 48% of those attending the Paralympics have already purchased tickets for the Olympics earlier in the summer.
The international appeal of the Paralympics is evident, with 28% of ticket holders coming from the UK alone. In total, fans from 144 different countries will be in attendance, making the event a truly global celebration of sport.
If you haven’t secured your tickets yet, there’s still time to be part of this incredible event. Tickets for select events are still available, and with affordable prices, it’s not too late to make your dream of attending the Paralympics a reality.
For those traveling from the UK, the cheapest way to get to Paris is by flying. Budget airline EasyJet is currently offering return tickets for as little as £50, making it an economical option for those looking to experience the Games without breaking the bank. By booking your flight and purchasing your event tickets soon, you can join the thousands of fans from around the world.
When financial challenges arise, extending your mortgage term might seem like a viable solution to ease the burden of monthly payments. However, it's essential to consider the long-term implications of such a decision. While extending your mortgage term can lower your monthly outgoings, it significantly increases the amount of interest you pay over time, affecting your financial future, particularly during retirement. The amount of young homeowners gambling their retirement fund for their mortgage payments is increasing due to high costs, this will leave many struggling later on. This article explores the consequences of extending your mortgage and discusses alternative strategies to manage mortgage payments effectively.
Data from Mojo Mortgage reports that extending your mortgage term by 10 years can lead to substantial additional costs. For the average first-time buyer, this decision could mean paying an extra £87,180 in interest over the extended period.
One of the most critical concerns is the potential strain on your retirement savings. By extending your mortgage, you may find yourself using pension funds to pay off your remaining mortgage balance, undermining the financial security you need in your retirement years. Without a well-funded pension, you risk facing financial difficulties in old age. Even if you manage to maintain your pension contributions, the extended mortgage payments could stretch into your retirement, placing a significant strain on your finances.
Before deciding to extend your mortgage, it's essential to weigh the pros and cons carefully. If you're struggling with your monthly mortgage payments, extending the term could provide immediate relief by lowering your monthly payments. However, it's crucial to recognise that this short-term benefit comes at the cost of paying more in the long run due to the higher total interest.
One advantage of extending your mortgage with your original lender is that if they do not carry out an affordability assessment, your credit score will not be affected. This could be beneficial if you're trying to improve your credit rating or if you anticipate needing additional credit in the future.
Another consideration is your ability to build a savings fund. If your current mortgage payments are consuming a significant portion of your income, extending your mortgage to reduce your monthly payments could free up some cash to save for future needs. However, the increased overall cost of the mortgage should not be overlooked.
Even a one-year extension can cost the average borrower an additional £8,472 in interest.
Alternatives to Extending Your Mortgage
You can find credit cards which offer rewards when you spend so that you can get something back. This can include travel rewards, cashback or retail rewards. This means you can choose which one would be best for you and which you could get the most out of. Having a cashback card will work if you spend regularly and simply want a percentage of your money back. If retail rewards sounds better for you then take a look below for your options.
Cashback Credit Cards
Cashback credit cards have become an increasingly popular tool for consumers looking to maximise the value of their everyday purchases. These credit cards offer a simple yet effective reward system: a percentage of your spending is returned to you in the form of cash, which can be applied as a statement credit, deposited into a bank account, or even redeemed for gift cards or other rewards. you might earn 1% cashback on all purchases, but 3% back on specific categories like groceries, dining, or gas. Some cards offer rotating categories where the bonus cashback percentage changes every quarter, while others may offer a flat rate on all purchases.
You can also find credit cards which offer alternative reward systems such as travel discounts or retail rewards.
Best Credit Cards for Travel Rewards
Choosing the right credit card with travel rewards can be a valuable tool for frequent travellers, offering benefits like air miles, discounts on flights, and hotel stays. However, it’s essential to evaluate the rewards program and associated costs to ensure the card aligns with your spending habits and travel needs. You can find credit cards with travel rewards, cashback or retail rewards so choose the right one for you.
Below, we explore some of the top credit cards offering air mile rewards, highlighting their features and benefits.
Rewards credit cards can be an enticing option for consumers, offering various perks that range from travel discounts to cashback and retail rewards.
But are they really worth it? To answer that question, let’s explore the different types of rewards available and weigh the pros and cons.
If you know you will make full use of the rewards offered then they could be of great value to you and your habits despite the higher interest. As always, make sure you always pay on time and in full to receive the full benefits of your credit card.
Building a good credit score is essential for accessing favourable financial opportunities, such as loans and mortgages, in the future. While getting a credit card is a common method to establish and improve your credit score, it’s not the only way. In fact, many people are unknowingly contributing to their credit scores through everyday financial habits. Building a credit score is not a speedy process but don’t give up as you can find many ways to add to your credit history.
You can regularly check your credit score, there are three main credit reference agencies (CRAs) – Experian, Equifax and TransUnion. Each one could calculate a slightly different score using their unique methods so it recommended to check al three from time to time. If you spot any mistakes make sure to report these immediately to protect your credit file.
Overpaying your mortgage can be a savvy financial move, but it's important to weigh the pros and cons before committing your extra funds. By understanding the pros and cons of overpaying your mortgage, you can make an informed decision that aligns with your financial goals and situation.
Overpaying your mortgage means paying more than your required monthly payment, either by increasing your regular payment or making lump-sum payments. These extra payments go directly toward reducing the total balance of your loan, rather than the interest. This can significantly reduce the amount of interest you’ll pay over the life of the loan and can also shorten the term of your mortgage.
Most lenders allow you to overpay your mortgage, but the terms and limits vary. Some may restrict the amount you can overpay each year without incurring a penalty, while others may have more flexible terms. It’s crucial to check the specifics of your mortgage agreement before making additional payments.
One of the most compelling reasons to overpay your mortgage is the possibility of paying off your loan ahead of schedule. By applying extra payments directly to the principal, you reduce the outstanding balance faster, which shortens the overall term of the mortgage. For example, if you have a 30-year mortgage, consistent overpayments could help you pay it off in 25 years or even less. The sooner you pay off your mortgage, the sooner you’ll free up your monthly income for other purposes, such as retirement savings, travel, or other investments.
Mortgages are typically structured so that you pay more interest in the early years of the loan. By overpaying, you reduce the total faster, which means less interest will accumulate over time. This can result in substantial savings. For instance, a £200,000 mortgage with a 4% interest rate over 30 years could accrue over £140,000 in interest. However, by consistently overpaying, you could potentially save tens of thousands of pounds in interest.
Overpaying your mortgage also increases the equity in your home more rapidly. Home equity is the portion of your property that you own outright, and it can be a valuable financial resource. Higher equity can provide a safety net for future borrowing, fund home improvements, or even generate income if you decide to sell.
Depending on your mortgage deal, you might face early repayment charges if you overpay beyond a certain limit. These charges typically range from 1-5% of the overpaid amount and can offset some of the financial benefits of overpayment. It’s crucial to understand your lender’s policy on overpayments to avoid unexpected costs.
While it’s tempting to focus on eliminating your mortgage, it’s important to consider the interest rates on other debts you might have. Credit cards, personal loans, and other high-interest debts can cost you more in the long run if left unattended. Prioritising these debts before overpaying your mortgage could be a more financially sound strategy, especially if the interest rates are significantly higher than your mortgage rate.
Overpaying your mortgage might leave you without enough savings for emergencies. If you allocate all your disposable income to your mortgage, you might struggle to cover unexpected expenses like, car repairs, or job loss. It’s essential to maintain a robust emergency fund—typically three to six months’ worth of living expenses—before considering overpaying your mortgage.
