In the past three years credit cards have put up their charges for late payment by as much as 40%*. Customers who breach their credit limit, pay late or bounce a cheque paying their account, now face an average charge of £22 each time they do so.

The average value of a bounced cheque has risen by 37% during the year to October 2005 and now stands at £22.68. The average value of a late payment has risen by 38% during the year to October 2005 and now stands at £20.93 whilst the average breach was £22.79 up 40%.

All this will add fuel to the investigation being carried out by the Office of Fair Trading who is looking at charges being levied by credit cards.

There is no doubt that credit card operators are justified in imposing charges but we doubt that the true cost of dealing with offending clients are anywhere as high as the penalties they are charging. After all the follow-up letters and procedures are fully automated with little if any, human intervention. In this context it is doubtful whether charges greater than £15 are warranted for the minimal cost actually incurred by the operators.

We know that card operators can handle these cases for £15 as some are already doing so – in fact some only charge £10 for a late payment or payment default. Having said that, the majority hit you for £25.

Within their investigation, the Office of Fair Trading is also examining the interest rates charged by credit cards. There is already signs that they will take action to chop the excessive rates charged by some store cards whilst the main line providers such as Barclaycard, have been moving their rates up in a move to offset the higher levels of bad debt experienced in 2005.

This all points to the fact that you need to review your credit card arrangements on an annual basis. Use the Internet to find out if you can better your current arrangements. The savings could be significant.

* Source: Credit Cards in the UK 2005 issued by Defaqto, the financial researcher.

Additional Credit card topics
Additional reading - Can I have an additional cardholder ?

1. Pay less on your mortgage

Many borrowers will soon come to the end of the special offer period on the mortgage they took out a few years ago. When that period ends your lender will probably move you onto their Standard variable Rate and this will be expensive. The answer is to Re Mortgage. Get details here – go to our Mortgage page. Click here for a Mortgage.

Most mortgages allow borrowers to repay up to 10% of their mortgage debt without penalty. If you have any spare cash use some of it to reduce your mortgage.

2. Pay less for your Credit Card

If you run an outstanding balance on your credit card it will be expensive. Do not pay more interest than you need to. Take out a new credit card with a 0% Balance Transfer deal. But be quick – fewer cards now offer these deals. Find out which is the best credit card for you – go to our Credit Card page. Click here for a new Credit Card.

3. Keep a watch on your fuel bills

It’s cold and fuel prices are rocketing. Visit an online fuel comparison site which is accredited by Energy Watch.

4. Ensure your investments and savings are tax efficient

Consider an ISA for the first £3,000 you save each year. Interest rates are competitive and the interest is received tax-free.

5. Make sure you Will is up to date and watch out for Inheritance Tax.

Make sure your estate is divided up as you would want. If you haven’t made a Will, make it one of your first jobs in the new year. Remember that if the value of your estate exceeds £275,000 you may have a potential Inheritance Tax liability. Take steps to reduce any potential Inheritance Tax bill. Consult an Independent Financial Adviser.

· Do some research about the type of car you are considering. Check out the second hand values on www.whatcar.com and look in your local press to find the prices of similar cars.

· Find out how much that car will cost to insure. That’s so easy to do on the Internet – simply get a quote or two. It’ll only take a few minutes. (High performance , Classic cars )

· Also check out the car’s other running costs in www.whatcar.com. Make sure you can afford to run the car!

· When you see the car insist that you see the documentation, including the MOT certificate if the car is more than 3 years old, and check that it all tally’s with the car. Also check that the person selling the car actually owns it.

· Ask to see the cars’ Service Record. This will also show the cars’ chassis number and details of the first owner.

· Make sure that the address on the Registration Document is the address where you are viewing the car - if not ask why. Be suspicious.

· Take a friend with you who knows’ about cars – not only to look at the car but also to act as a witness for what is said and agreed.

· Ask the seller if the car has outstanding finance and check the information out with RAC Vehicle Status Check.

· Examine the car in good daylight and at the seller’s own home. Look for signs of accident damage and repairs. The RAC vehicle status Check will notify you if the car had previously been “written off”.

· Get the car independently inspected.

· Make sure that the car hasn’t been clocked. The average mileage is between 10,000 and 12,000 per year. Look for signs that the wear on the car is greater than the mileage would suggest. The wear on the control pedals will help. Ask if the car has had new tyres and if so when. Then look at wear on the tyres.

· Look under the bonnet and find the VIN Number (it could also be on the chassis). Make sure that the number tallies with the number on the Registration Document. This will help to ensure that the car hasn’t had its identity changed.

· Check to see that the Road Tax disc is still valid and the registration on the disc matches the Registration document.

· Always test drive the car for a least 10 miles. Don’t forget to ensure you are insured. Do not automatically assume that your own insurance policy will cover you for someone else’s car. Check your insurance documents before you leave home. If the seller says his insurance will cover you, ask to see his policy – better safe than sorry.

· Don’t hand over any money until you have seen the results of the RAC Vehicle Status Check. And then don’t pay any money until the car is handed over to you with its Documents. Remember to get a written receipt for your payment that includes the sellers name and address.

· Finally, make sure you have car insurance in place from the minute you drive the car away. Remember, the Police can now impound, and ultimately destroy, your car if you are driving it without insurance or road tax. If the car has not got Road Tax, drop in at a Post Office on the way home and buy one.

Additional car insurance topics

Despite a drop in the number of household burglaries, the value of items stolen is increasing. In percentage of burglaries where the value of stolen articles exceeds £1,000 has risen from 25% in 2004 to 33% in 2005.

It’s because thieves are increasingly targeting wealthier areas and many householders own a range of small highly valuable electronic items that can be easily resold. Items such as laptop computers, games consoles, digital cameras, mobiles and iPods are high up on the thieves shopping list. So taking these items alongside the more traditional haul of jewellery, cash, TV’s and DVD recorders quickly moves the value stolen well above the £1,000 mark.

In addition, police and the insurers are worried about the link between household burglaries and identity theft. There has been a 300% surge in the number of burglaries in which credit cards are stolen. It all adds up to over £1 billion of property stolen each year.

So a good tip for 2006 – make sure the value of cover on your Contents Insurance is fully up to date. Write down each and every item of value and estimate what it would cost you to replace everything, new, at today’s prices. Walk from room to room, even garage and the shed (and remember the loft/roof area) and take notes.

And don’t forget your food, clothes and soft furnishings. A thief may not be too bothered with them but if you house caught fire, or you have a flood, everything is at risk and these items alone could easily add up to £3,000.

Wherever possible remember to keep receipts for the more expensive items as this will aid identification and very much speed the insurance claim process. And where it’s difficult to establish the correct value of an item, for example with antiques, get an expert valuation. It’s a bit of a hassle and there’ll be a valuation fee to pay, but you need to be as accurate as possible especially with valuable items that you’ll need to list separately on your policy.

Additional Home Insurance Topics
Additional reading - Why is home insurance so important
Additional reading - Good tips on reducing your premium

More than 50% of the UK population do not have any form of life insurance cover, says Swiss Re, one of the world’s largest insurance companies. In their latest annual report they estimate that an additional £2.4 trillion of insurance cover would be needed to bridge that gap.

But in practice the gap is not that big. Firstly, there’s the people who are ruled out from having life insurance due to their age - 1 in 6 people are aged over 65 and effectively uninsurable, and just over 1 in 5 are aged under 18, the minimum qualifying age for life insurance cover. Then there’s a raft of single people aged between 18 and 65, who have no dependents and for whom life insurance is quite unnecessary. Having said that, there’s no doubt that there are still many families out there who desperately need life insurance but who don’t have cover.

So what’s holding them back?

There are still lots of people who simply don’t understand what life insurance does and because it’s never top of their minds, nothing ever gets done. Then there’s apathy. Life insurance isn’t exactly a pleasurable buy, there’s no window-shopping or thrill in the purchase. So the probability is that unless a financial adviser sits down in front of these people and talks about life insurance, they’ll remain uninterested and uninsured.

Then there are the people who know they need life insurance but say they can’t afford it. But for many, “can’t afford” actually means “I choose not to afford”. They might be happy to spend £3,000 a year on a 30 a day smoking habit but won’t cut back to pay for a monthly premium that protects their family’s future.

There is no disputing the fact that some people have applied for life insurance and genuinely found the final premium offered, totally unaffordable. For the majority, life insurance at standard rates is fine but over the last seven years there has been a huge rise in the number of people who are paying loaded premiums. It’s due to the life insurance companies making it increasingly difficult for people to meet their definition of being “healthy”. Today, twice as many people as there were seven years ago, are being charged higher premiums because the insurance companies rate them as an above average health risk.

Even four years ago it was quite obvious who would have trouble getting insurance at standard rates – former cancer suffers, someone with a history of heart or circulatory problems and diabetics for example. The situation has now changed. The insurers’ application forms are now far more detailed and ailments that were previously acceptable under standard terms are now only accepted with loaded premiums. Take your weight – insurers are clamping down where they consider a person’s weight to be a threat to their longer-term health. In it’s not only the obviously obese that attract the insurer’s attention. The insurers are using a calculation called the Body Mass Index. This is calculated by dividing a persons weight by the square of their height. Insurers now want a BMI of 29 or less, whereas previously up to 40 was OK. This means that a woman weighing 83 kilos and 1.66 meter tall would now face higher premiums.

The application process too can put people off. Whilst around 30% of applicants will get a decision almost immediately, for everyone else the process can become one delay after another. As if a 14-page application form were not enough, some people are faced with additional forms to complete and medical examinations. Sometimes the whole process can stretch to 8 weeks, even more, before the applicant knows exactly how much the premium will be. If that works out more that the person can afford, the applicant is often too fed up of the whole process to start again with another insurance company. This leaves yet another family uninsured.

Despite these criticisms, the insurers claim that life insurance premiums are generally lower today that a few years ago, thanks to more sophisticated underwriting procedures and computerised risk assessment. Furthermore around 10% of life insurance is bought on the Internet where competition has forced discounting resulting in much lower premiums.

Nevertheless, in our view it will take many years to get the percentage of people covered by life insurance above the 50% mark.

2005 has been a bad year for the credit card companies. Whilst consumer demand has been buoyant with card balances topping £55 billion, they’ve been faced with rising costs which have hammered down their profits.

Their two biggest problems have been people switching between credit cards to take advantage of the 0% interest deals which to date have been so common, and rising levels of bad debt.

The credit card companies have responded in a number of ways. Some have cut the length of their 0% concession period, others have raised interest rates and introduced fees for balance transfers.

Halifax is the latest card to cut the 0% concession period on its One card from 12 months to 3 months. They followed the Nationwide which ended its 0% offer altogether.

On the interest rate front, in the last three months we have seen the average interest rate rise from 14.9% to 15.04% led by rate increases from Barclaycard, Mint and Simsbury’s.

When it comes to balance transfer fees, Capital One and MBNA have both introduced a 2% fee for balance transfers.

We expect the trend for the cost of credit card finance to continue to rise - so if you need a new card, you’ll have to move quickly. In our view the five best current deals are:

· Virgin – 0% on balance transfers for 9 months
· HSBC – 0% on balance transfers for 9 months
· Morgan Stanley’s Platinum Card – 0% on balance transfers and purchases for 6 months
· Co-operative Bank – also 0% on balance transfers and purchases for 6 months
· Sainsbury’s Advantage Card – 0% on balance transfers and purchases for 5 months

Additional reading - My credit card is lost or stolen. What should I do?
Additional reading - Will I have to pay interest each month?

In his recent budget, Gordon Brown announced a new “Homebuy” scheme which will become operational in October 2006.

Under the scheme, homebuyers can take out a mortgage for 75% of a home’s value and the government and the lender each would top up with 12.5%. Because of the extra cost to the lender, the interest rates are expected to be around 1% higher than base rate. Presumably, borrowers will still have to prove that they can afford the repayments.

When borrowers eventually sell the property, they will receive 75% of the net proceeds as the lender and the government will effectively own the balance. However, borrowers will be able to pay off the top-up loans at any time without penalty.

The government has not announced exactly who will be eligible to join the scheme although earlier they said that only those judged as “priority” would be eligible. Nevertheless, the government says that around 20,000 will benefit by 2010.

So far the Halifax, the Yorkshire Building Society and the Nationwide have agreed to participate in the scheme but other mortgage lenders are expected to follow suit.

To put this scheme in context, there were 361,000 first time buyers in 2005 so at the rate of 4,000 Homebuy mortgages per year, the scheme will hardly cause a ripple in the housing market.

More Topics - Right to Buy Mortgages
More Topics - What happens if i am refused a mortgage
More Topics - Where can i buy a mortgage

The term Adverse Credit means exactly the same as “sub-prime” and “poor credit”. It is used to describe people who have a history of unsatisfactory credit transactions.

This raises a number of questions; what information is collected about you, where do they get the information from and how poor must a credit history be to label you as an “adverse” credit risk?

It’s the credit reference agencies such as Equifax and Experian which gather information about you, then process and sell it. Indeed, anyone with an “authorised purpose” (as defined by UK Law) can pay to see your credit file. This includes insurance companies, banks, lenders, any government agency, landlords, employers, and anyone you have requested to provide a product or service to you.

And you’ll be astonished what the credit agencies know about you!

A typical file will have your name and address, Social Security Number and date of birth. It will also include your current address, whether you’re on the voters’ roll and your and previous addresses. Also details of your current and previous employers, and information relating to your monthly payments on your credit cards, mortgage, hire purchase agreements and any loans you have. Then the file will record information from public sources. Details of any Court Judgements in respect of your financial affairs will all be on file. Finally the file is topped off with records of any other credit applications you’ve made.

All this information is assembled from two main sources: from financial institutions, building societies, banks, and other lenders offering credit and lending facilities, and Public Records offices. Quite honestly, the agencies are tracking your credit history from the first day you appear on their computer screens. Big Brother is watching!

The credit agencies then sell this information to anyone to whom you’ve applied for credit. They’ll also credit score your track record so that a prospective lender can make a statistical judgment on whether or not to allow you credit. Within this process your credit score becomes key.

Under the credit scoring system your credit history is statistically measured and awarded scoring points based on your details on file. The higher the points awarded, the better your credit rating. The points score measures the probability that credit offered to you will be repaid. The system is based on the principle that it’s possible to predict your future credit performance by examining your past credit record and statistically comparing that with the performance of other applicants who have similar characteristics. The points score then allows your potential lender to forecast the level of risk and reduce the element of subjectivity in their lending decisions.

So now back to the central question - When is your credit history called “adverse”?

In practice it’s not the credit agencies but the lenders who decide. Each lender has a lending policy through which they determine the level of credit risk they’ll accept. The decision is theirs - after all it’s their money! If your total points score reaches a certain level, then you ‘pass’ their credit screening. If you don’t score enough points, the lender may either refuse your application or offer to lend you a smaller amount than you had asked for or charge you a higher interest rate. But this means that what is acceptable to one lender may not be acceptable to another.

However, it’s useful to know some of the most important black marks that will damage your credit score. The last two shown below are the worst:

· County or High Court Judgements for debt
· Arrears on your mortgage or other loans
· Payments that are over 30 days late on your mortgage or other loans
· Multiple applications for credit
· You’re not on the Voters Roll at the address you claim to live at.
· Repossession
· Recent Bankruptcy (undischarged bankrupts will certainly be refused credit)

Lenders keep their precise lending policy a closely guarded secret but particularly on mortgages, particular lenders may indicate that some black marks could be acceptable.

At the end of the day, we hope that by reading this blogg, you will recognise whether it’s possible that you’ll be judged as being adverse credit”. The problem is that you cannot always be sure until a main line lender has already refused you. If you do get refused, you’ll then have to turn to a sub prime lender who may accept your credit history, especially if you’re a homeowner, but will certainly charge you a high interest rate for the privilege.

By now you’ll have realised that it’s important to build up a good credit history, which will be reflected in your credit score. A decent score will prevent you from incurring higher interest rates and extra costs. So remember, if you do apply for credit, make sure you can afford it and then maintain a perfect payment record. That way you’ll increase your credit score.

Insurers are estimated to pay out £2 billion a year in legal costs to resolve legal battles for personal injury claims. Most of these cases chug through the courts in lengthy and costly legal actions and as a result, around £200 of the average car insurance premium goes towards the risk of having to pay out on a personal injury claim. So any move to cut these costs should result in a meaningful reduction in car insurance premiums.

In this context the recent move by the Association of British Insurers to get personal injury cases out of the courts and into an independent arbitration system, is certainly to be welcomed. A similar system was set up in Ireland last year and as a result legal costs were slashed by 75% and cases are resolved much quicker than in Britain.

Whereas today each personal injury claim is decided individually in court, the proposed arbitrator would map out benchmark payments for each type of injury. For example in Ireland, a back injury that recovers within twelve months, is allocated the euro equivalent of £11,000 whilst a neck whiplash injury, which recovers over the same time frame, is worth £9,400.

Not surprisingly, the British legal profession are none too keen on the proposals! The Association of Personal Injury Lawyers believe that the ABI’s proposals would leave the injured in the hands of the insurers adding that it’s own research showed that the initial offers by insurers were, on average, 50% of the final agreed compensation and that 66% of defendants initially deny liability.

However, the Lawyers objections are not backed up by experience in Ireland. Here compensation values remain at similar levels to pre-arbitration, but compensation is paid three times quicker at a quarter of the legal cost.

We say roll on arbitration and, for a change, lets see the cost of car insurance fall.

The market for private medical insurance has been slowly shrinking over the last five years with the numbers of people covered falling from 1.9 million in 2005 to 1.7 million last year. But at last the insurers have woken up.

The over 55’s represent a prime sector of the market but they are also the group who have been most badly hit over recent years by the big price rises dished out by the insurers. Now both Standard Life, The Pru and Axa PPP have decided to do something about it. All three companies have brought out plain vanilla policies which concentrate on basic medical treatment and strip out some extras such as alternative therapies and psychiatric care. The policies also have increased the limitations on out-patient cover.

The effect on premiums is startling. Premiums for these new policies are up to 60% lower than the main line medical insurance policies and customers can build up no-claims discounts of up to 65%. Standard will even carry forward a no claims record from other insurers to the new policy.

However I do have a question. If these policies revitalise the attraction of medical insurance for the over 55’s, why can’t they apply the same thinking for the under 55’s?

Britains largest group of estate agents, Countrywide, confirmed this week that sales in the housing market in 2005 slumped to their lowest level for 30 years.

Harry Hill, Countrywide’s Managing Director is quoted as saying “It has been a desperately poor year. And anybody who says anything other does not have the information or is telling lies”. He went on to blame the four hikes in interest rates last year for increasing pressure on family finances.

According to the Council of Mortgage Lender, around 1.2 million houses are sold in England and Wales during a typical year, but the Council predicts that 2005 will go down as one of the worst on record with the number of sales falling 19% to 970,000.

Fears about affordability have been highlighted by figures published by the Office of the Deputy Prime Minister. Fewer than 6% of young people paid more than £100,000 for their first home in 1997 but by 2005 the figure has risen to 60%.

With the average house in the UK now costing £180,103 and with the average household income standing at £23,200 pa, this indicates that Mr & Mrs average would have to take a 100% mortgage of 7.8 times their income. This indicates that affordability will continue to put a brake on house price inflation.

If you receive a cheque in the Xmas post from your credit card lender, watch out, these gifts may not be all they seem.

The run up to Christmas is bonanza time for credit card companies. They know that people often run low on cash and they take the opportunity to promote spending and additional borrowing.

With these cheques, you are invited to make out the cheques for your Xmas purchases or to use them to pay money into your current banking account. However, this extra money can be horrendously expensive!

According to research from Money Supermarket these cheques typically have a 2% handling fee and thereafter attract an ongoing APR well above 20%. And when you use the cheque, you don’t benefit from the usual 56 day interest-free period.

What’s more with these cheques, you get a lower level of consumer protection. If the good turn out to be sub-standard, you are not protected by the Consumer Credit Act 1974, which means you are not entitled to a refund.

You have been warned!

Primary Care Trusts and hospitals are facing a budget deficit of £620 million. In order to cut costs, we are already seeing patients having to wait the maximum 6 months before having their surgery. Indeed, in the last quarter of 1997/8 there were 11,550 last minute cancellations for non-clinical reasons. This rose to 13,074 in the second quarter of 2005. (Source Liberal Democratic Party)

For many, Medical Insurance is the solution to ensure that they get the surgery they need as and exactly when they need it.

For more about Primary Care Trusts click here

The mortgage lending industry is highly competitive. Lenders compete aggressively with one another by devising ever more novel mortgage products which, when it comes down to it, are really a repackage of an existing product.

So, what does the industry do? They compete for your business on price – in other words their interest rate. And as long as lenders use price as the main weapon in their marketing campaigns, price led promotion will encourage re-mortgaging to chase cheaper offers.

Having created price led competition, the mortgage lenders look in horror at the obvious repercussions. They have adopted a somewhat insulting name for customers who switch lenders to chase lower interest rates – they call them “Rate Tarts”. We have a much more apt description – Smart Shoppers! After all, why should people be subject to implied criticism for simply ensuring they are consistently paying the lowest price? After all a pound from one mortgage provider as effective as a pound from another!

In an attempt to discourage switching, some lenders have raised their up-front charges whilst the more enlightened have improved their client retention programmes. In such a cut-throat market, accolades must be awarded for the best customer retention programmes but increasing front end charges will simply have the effect of diverting prospective customers to their competitors. The tactic would only work if all the mortgage companies got together to agree a common policy on up-front charges. But if that happened, their action would undoubtedly be referred to The Office of Fair Trading. So seems that some lenders still have to learn that carrots beat sticks!

A case in point is Birmingham Midshires. At the moment Birmingham Midshires offer a two year fixed mortgage deal at 3.89%. 3.89% sounds a bargain wait till you read the small print – they’ve jacked up the arrangement fee to a giant £1,499! If, on a £100,000 mortgage, you amortise this arrangement fee over two years at £749.50 per year, it’s equal to an extra 0.75% on the headline interest rate.

So, if you think it might be worthwhile to re-mortgage, do some homework. Start by working out the costs of switching your mortgage. Remember to include absolutely everything. Include the legal fees to change the mortgage (usually around £350 on a £100,000 mortgage), the arrangement fee (typically £500), the valuation fee (typically £250 for a £100,000 mortgage), possibly a booking fee (£50?), and check whether you’re subject to any early repayment penalties from your existing lender. If so add them in too.

Now get on the old dog and bone to your existing lender.

Tell them know that you are considering moving for a cheaper mortgage. Unless you put them under pressure, your lender is likely to work on the basis that, provided they offer you reasonably attractive deal, you’ll be happy to sit tight and avoid the cost, time and trouble of re-mortgaging. So shake them up. Make them compete. If your current mortgage lender simply offers you their normal variable rate they don’t deserve your business!

Armed with all this information you can then accurately assess whether you’ll save money by re-mortgaging. If savings are to be made by switching, go ahead.

Call them Rate Tarts if you will, but guess who’ll be all the richer for it! Re-mortgagors are just playing the market by it’s own rules!

In the UK over 99.9% of mortgages are borrowed in Sterling and interest is charged the prevailing UK interest rate. But there are alternatives ……..…..

Despite changes in 2005, the domestic interest rates in the UK are still low by UK standards. However, they are significantly higher than rates in Switzerland, Japan, America, and indeed the Eurozone. Consequently, you can currently take out a mortgage in Swiss Francs, Yen, Euros, $ Dollars, or Euros, convert the money you’ve borrowed into sterling, secure the debt against the house you own in the UK, and end up paying a much lower rate of interest.

Judged against history, you may think that interest rates in the UK are currently low. But look at the following 3 month money market interest rates. You’ll see that the UK interest rate is significantly higher than the rates in other parts of the developed world:

Japanese Yen 0.12%
Swiss Franc 1.03%
Eurozone 2.46%
US $ 4.48%
£ Sterling 4.64%

(3 month Money Market Rates as at 9/12/05, source: Financial Times)

Monet market interest rates are the rates that banks lend currencies to other banks. So you won’t be able to take your mortgage out at these keen rates. You’ll have to pay a premium and the set up costs for your mortgage will be relatively high. Nevertheless, if interest rates remained at current levels, you could save a lot of money on your interest payments.

So why are 99.9% of UK mortgage holders still turning their backs on lower international interest rates? It’s a fact that most UK borrowers are unaware of the availability of foreign currency mortgages - but that’s not the main reason. The primary reason are the extra risks involved.

All interest rates can change and the gap between sterling interest rates and the foreign currency rate you’ve borrowed in, could narrow. If this happened, the interest rate savings would reduce and, if the trend continued, would make the foreign interest rate more costly than a standard UK mortgage.

But the most significant risk by far lies’ in changes in currency exchange rates. If you borrow in say, Swiss Francs, you eventually have to pay the loan back in Swiss Francs. That would be fine if the Swiss Francs /Sterling exchange rate was fixed – but it isn’t.

If Sterling strengthened against the Swiss Francs, then when it came to repaying the mortgage, you’d need to convert less Sterling into Swiss Francs than the Sterling value of the money you received when you first took out the mortgage. That would be great, repay less than you borrowed and pay a lower interest rate!

But things are never that simple. What happens if Sterling’s value were to fall against the Swiss Franc? You’d still have to repay the same number of Swiss Francs but you’d have to convert more Sterling into Francs to achieve that. In other words you end up paying back more capital than you borrowed.

So in many ways, a foreign currency mortgage becomes a currency bet. If Sterling rises against the currency you’ve chosen, you’re quids in. If Sterling falls, you lose money. In other words you’ve transformed your mortgage and probably your biggest liability, into a currency speculation. And your home’s secured against the debt! It’s not for the faint at heart!

You should also be aware that most lenders ask for at least a 20% deposit for foreign currency mortgages. It’s a reflection of the increased risk.

By the way, you now have another option to consider. You can take a mortgage in Sterling thereby avoiding the exchange rate risk, and have your interest rate linked to a foreign currency interest rate. This limits your risk to a bet that the foreign currency interest rate plus the interest rate premium, will remain lower than the equivalent UK interest rate.

Typically, these foreign interest rate mortgages have a 5 year tie in clause. So, if you want to repay your mortgage within 5 years, you’ll have a hefty penalty to pay - although the mortgage can usually be transferred to another property. For some borrowers this risk is acceptable, especially if the mortgage is linked to the Yen or Swiss Franc where interest rates have been surprisingly low and stable over past years. For example, the Swiss interest rate has not moved above 1% in the last 4 years.

All the same, part of a standard investment warning is particularly appropriate here ….. past performance should not be construed as a guarantee of future performance ……

If you are tempted by the potential savings, then the best of luck!

Please read Part 1 before you read Part 2! Click here for Part 1

First a word of caution. This article does not describe any specific health insurance policy. The terms and conditions issued by insurers do vary so please ensure you check out the precise details of the any policies you are actively considering or already own. Then, after reading this article, you’ll know what small print to look out for!

Sorry Sir, we can’t pay that – it’s preventative
Your health insurance is designed to pay for the treatment and cure of medical problems as and when they happen. The insurance is not intended to pay for treatment that is drawn on to prevent an illness.

But a problem of definition can arise. Occasionally it is arguable whether a treatment is a preventative or a cure. Take the drug Herceptin for example.

Research shows that if used in the early stages of breast cancer, Herceptin can halve the incidence of the cancer returning for women who have the particularly virulent form of the illness known as HER2. In this situation, is Herceptin being used as a cure or a preventative? Insurers are split on the issue. Legal and General and Axa PPP won’t pay the high cost of Herceptin treatment whereas BUPA, WPA, Standard Life Healthcare and Norwich Union will for HER2 patients.

Sorry Sir, we can’t pay that – it’s a chronic condition
If an illness or condition is not a long-term problem and can be cured, your health insurer will define it as “acute” and should meet the cost. If your problem is incurable or it’s a condition that, despite the right treatment, will suffer from for a long time, then your insurer will define it as “chronic”. As soon as an illness is defined as chronic your treatment is no longer insured.

But deciding whether a condition is acute or chronic is fraught with potential conflict. The decision and its timing is rarely a cut and dried issue and can lead to conflict between policyholders, insurers and indeed, between Doctors themselves.

Diabetes and asthma are clearly chronic conditions as suffers are almost certain to have them for the rest of their lives. So those categories of illness are not covered.

But what happens when Doctors initially consider a patients’ illness to be curable, but then the illness deteriorates and the medical team is forced to change changes its’ mind – the condition is now incurable. This can occasionally happen, especially in the treatment of certain types of cancer.

In these situations, the illness is initially defined as acute, and the costs are therefore covered, but as soon as it becomes chronic – the medical costs are not insured. This is possible as insurers have the right to reclassify an illness from acute to chronic during treatment.

Sorry Sir, we can’t pay that - it’s too long term
The health insurance will not meet the costs of long-term treatment. But the definition of “long-term” can differ between insurance companies. So you need to check your policy to see how it defines “long-term”. This is important because the situation can arise where a course of treatment extends for say twelve months, but the insurer will only pay for nine months.

Sorry Sir, we can’t pay that – the drug is not approved
Two of the main reasons for buying Health Insurance are to jump the NHS queues and to get the latest medicines and treatments. But there’s a rider.

The Government wants to ensure that the financial benefits to the nation from using a new drug outweigh the costs of using it in the NHS. So it established the Institute for Health and Clinical Excellence to approve the use of new drugs by the NHS in England and Wales (an equivalent also exists in Scotland). The problem is that the Institute’s brief is to perform a complex cost/benefit analysis – a difficult brief and it has placed the Institute under scrutiny for the extended delays in drug approval. This impacts on private health insurance as many insurers have taken the view that until the Institute approves a drug, they will not pay for its use.

These delays can create conflict between patient and their insurer where a drug has been proven to be beneficial for a condition but where the Institute for Health and Clinical Excellence has not given approval for its use. The compromise arrived at by the Financial Ombudsman is that if your insurer won’t pay for a drug, then if the experimental treatment is more expensive, the insurer should meet the cost of an approved conventional treatment with the policyholder paying the balance.

Sorry Sir, we can’t pay that – it’s a pre-existing condition
The basic principle is that if you have already suffered from a condition before you start a policy, then that condition “pre-exists” the policy. Thereafter, any claims for treatment of that condition are invalid.

For this reason, insurers insist you complete an exhaustive application form before they agree to provide you with insurance cover. After all they need an accurate picture of your medical condition before they quote a premium. For many applications, with your prior approval, the insurer will write to your GP for more precise details of your medical history. They like to have a complete picture.

So lets say some years ago you fell over and badly twisted your knee. Your knee appeared to recover but is now painful again and it turns out that you have a torn cartilage needing surgery. Your insurance company could argue that the cartilage damage was a pre-existing and you have to pay for the operation.

Some insurers try to resolve these areas of potential conflict with policyholders through a moratorium clause within your policy. Typically, these clauses provide that so long as you have been symptom free for two years regarding any condition you’ve suffered from within the last 5 years, subsequent treatment is insured. You should carefully read your policy because not all policies have these moratorium provisions and the qualifying periods of time do vary between insurers.

Sorry Sir, we can’t pay that – its not covered
Health Insurance is an annual contract – just like your home and contents insurance. So when renewal time comes, your insurer is free to review your premium and also change the conditions on which they’ll continue to provide cover.

Consequently, if your insurance policy comes up for renewal mid way through a course of treatment, it’s possible to find that your renewed cover no longer insures that particular treatment. Then you’d have to foot the bill for the rest of the treatment.

Furthermore, with continuing advances in medical research, more and more conditions are becoming curable. This progress has shifted back the dividing line between chronic and acute conditions.

This impacts the insurers’ purse in two ways. With more illnesses being reclassified as acute, the number of claims are increasing. Furthermore, there’s also a trend for new treatments to be more expensive – Herceptin is a good example.

The net result is that the insurers are finding that the overall cost of claims is rising. These increased costs are inevitably passed back to you through increased premiums. And in an attempt to limit claims, insurers have a tendency to adjust their exclusions and definitions. This means that you must always study your renewal notice closely before you agree to renew.

So when you’re buying Health Insurance, be forewarned that everything is not always black and white. If you’re insured and need treatment, always contact your insurer as soon as possible to get them to confirm in writing that they will meet the cost of the treatment you need.

Part 1

In the UK around £3 billion a year is spent on Health Insurance. Seven million people are insured with one in seven policies being purchased by individuals, the remainder being put in place by employers for the benefit of their employees.

Health Insurance is designed to provide protection for curable, short-term medical problems. It enables policyholders to jump the NHS queues to see consultants, be diagnosed, receive surgery or be treated.

But it’s not a replacement for the NHS. Private hospitals don’t have emergency and casualty departments and you don’t necessarily get better medical care – you simply get it quicker and at a hospital and at a time that suits you.

The fact is that Health Insurance is complex and few policyholders take the trouble to carefully read the details of their cover. As a result, many policyholders misinterpret what their policy will cover. If you are expecting Health Insurance to pay every medical claim, you’re mistaken.

Policies refuse to pay for dental treatment unless it is taken out as an optional extra to the main Health Insurance policy. Standalone dental insurance policies are also widely available and are becoming increasingly popular.

They also refuse to pay for treatment associated with straightforward pregnancies and childbirth. However if complications develop, then with most policies, the picture changes – the insurance will meet the costs of treating the complications.

How about cosmetic surgery? Again the answer’s no. Cosmetic surgery is clearly an elective procedure and does not constitute a valid medical problem.

When it comes to the issue of treating alcoholism and drug abuse, the insurers take the view that the problem is self-inflicted. Sorry sir, you’re certainly not insured.

Few prospective purchasers of Health Insurance will be too surprised or upset about these exclusions. But those are the tip of the iceberg!

Before you buy you need to appreciate the less obvious treatments and situations that fall outside the scope of the cover.

Part 2 of this article goes on to explain in detail …….. Click here for Part 2

Last month my wife and I booked a weeks holiday on the lovely Scottish Isle of Lewis. A two day drive up to Skye and then park the car up and take a ferry over to Lewis and the village of Steornabhagh. Wonderful scenery, bird watching and plenty of peace and quiet. Time to unwind.

You can imagine my surprise when my friendly local travel agent presumed I wanted travel insurance for an extra £27.50. Not on your Nellie the Lock Ness monster, I thought. Who needs a travel insurance policy for a holiday in Scotland? Even in the far north, the National Health Service is free and in an emergency, my son or daughter could drive up and get us home.

Later in the day whilst relaxing in my lounge I started thinking …………..

Holiday misfortunes can happen anywhere, not just abroad. So I jotted down the some of risks I could think of:

· The car might break down or, even worse, we might have an accident. No problem. My car insurance and breakdown cover would get us home and sort that out.
· Some thief might steal away with our luggage
· Last weekend I bought an all singing and dancing digital camera. Bought it on the Internet especially for the trip. What would happen if I lost it whilst on holiday?
· If either of us were taken seriously ill we wouldn’t want to be marooned on Lewis or Skye. Don’t know even whether they have a hospital on Lewis. Anyway, we’d want to be transferred back to our local hospital in Yorkshire.
· My in-laws are getting on, a bit frail now. God forbid, but I’d have to cancel the holiday if something happened to them just before we were due to leave.
· My wife or I could be taken ill before we depart. Then we’d have to cancel. As the ferry and the hotel were non-cancellable, we’d lose everything we’ve paid.
· There could be a big delay at the ferry sailing over to the Isle of Lewis. Besides the inconvenience, we have to sort out overnight accommodation on Skye.
· One of us might be called for jury service.

Then I had a thought. If I were in the UK, my existing Home & Contents insurance policy should cover me for loss of my precious camera or luggage. I nipped upstairs and dug out the policy. That was fortunate. We were only insured for “personal possessions” if they were listed and as I’d just bought my digital camera I hadn’t got round to listing it as a valuable item on my policy.

Another point struck me. I’d built up a good no claims discount on my Home & Contents policy. Not a claim in ten years! If I made a holiday related claim I’d lose my discount and that would throw a big saving down the pan. Not a good idea! Even after the discount the annual premium is £310 a year. I jotted down a another note – when my Home & Contents insurance comes up for renewal, see if I could get it cheaper on the Internet.

By now the travel agents’ policy at £27.50 for was beginning to look worthwhile after all.

Now my wife says I’m a bit of an old scrooge. So protect the image! I know, go back online and check out if the travel agents’ policy at £27.50 is competitive.

Not all the web sites I looked at offered me a stand alone travel insurance for a UK holiday but within five minutes I’d found what I wanted - plus a saving of over £10. Great!

Time to study the small print to ensure I had the cover I needed. Yes, apart from the car, all the risks I had noted were insured. The insurance company would even pay out £30 if the ferry to Lewis was delayed for up to 12 hours. Any longer and I’d the option to cancel my trip to Lewis and get my money back.

Now what wouldn’t the insurance company pay for? I wasn’t covered if my holiday was for less than two nights or my hotel was less than 25 miles away from home. No problems there. I also had to meet the first £30 of any claim I made. All seemed fair to me.

So the decision was made. Time to enter in my credit card details and with a CLICK I was insured.

Peace of mind again!

Retirement has arrived. It’s a time to experience a slower pace of life, relax and enjoy spot of gardening. But not all of today’s over 65’s have got that message!

Retirement is taking a new twist. Less of the slower pace of life and substitute jetting around the world! International travel for the over 65’s is here and booming!

It’s a result of an increased sense of adventure and willingness to experiment, combined with more wealth. Lower cost air tickets also help! Even cruises, once the sole province of the rich and famous, have become affordable. A Caribbean cruise, an escape to Antigua and a fortnight in the Canaries are now all on the travelling schedule for the over 65’s.

Then a bluebottle lands in the ointment. Just try finding cheap travel insurance when you’re over 65. It is a real difficulty. Insurers recognise that folks have healthier lives and are living longer, and in many sectors the companies are designing bespoke products for the older market. But with travel insurance, older people are still faced with sky-high premiums.

Premiums escalate as you get older and if you want an annual policy to cover an extended holiday or a series of holidays, the problem no longer becomes simply finding the cheapest price - more of finding any policy at all.

The problem revolves around the insurers’ experience of the costs of medical claims. The over 65’s are far more likely to make a medical claim and the average claim size is higher too. Then again, older holiday makers reportedly take greater care of their luggage - but these savings are offset because their belongings are liable to be more valuable, so there are few economies here.

The result is that even if you are over 65 and fit, the lowest priced annual policy could easily cost £1,000 per traveller – that could be more than the holiday itself. Faced with these cost, the only solution is to find separate travel insurance cover for each trip. But even then the premium for a 3-week holiday in Spain starts around £65 even with a good medical history, and will rise enormously for destinations further a-field.

The solution? Shop around and get a range of quotations. Your travel agent may offer a quotation but don’t snap his hand off until you’ve got competitive quotes. You’ll almost certainly find much cheaper by surfing the Internet and buying online.

But don’t make the decision simply on the basis of cost.

When you’re buying travel insurance always examine the small print. Watch out because some policies will cover you for a trip up to 21 days, others to 31 days or 45 days. Some policies will only insure you if you’re staying in booked accommodation rather than staying with friends. No good for visiting family in Australia! Then you need to ensure that the policy provides liberal cover for medical and hospital expenses and that they’ll fly you home to the UK if your medical condition demands. Don’t forget to compare the excess you have to pay per claim and whether the policy pays medical costs direct to the hospital or whether you are required to pay first and then reclaim.

Then having booked the holiday and paid the insurance, comes the really good bit – jet off and ENJOY yourself!

If your bones are strong and your joints are flexible, you move freely. And that means you can live your life to its’ full. But one in seven people have their movement hindered by musculoskeletal problems - back pain, osteoporosis, arthritis, fracture, or sports trauma. Faced with such painful conditions you may be delighted to pay £4,000 for orthopaedic surgery to get those joints flexible again. But would you be so happy to spend the same money on your pet Dalmation?
Veterinary science has developed quickly over the last ten years and as pets get older they are increasingly likely to suffer illnesses that can be costly and lengthy to treat. For example, take diabetes. This is relatively common in dogs and whilst it can be successfully treated, the treatment will be ongoing and expensive – one vet estimated that treatment cost around £2,500 per year. Eczema is yet another of many other conditions that require extended treatment.
But as with us, your pet could require emergency treatment at any time. According to Mintel, one in three pets make an unplanned visit to the vet every year. There are always scrapes that our pets get into. Your cat may have nine lives but they may well land you with nine vets’ bills! Then there are hereditary health problems. Labradors and Golden Retrievers are prone to progressive retinal atrophy, Boxers and Spaniels are susceptible to dodgy hearts, Alsations can get hip dysplasia and Setters, canine leucocyte adhesion deficiency. With an MRI scan putting you back £1,500 and a series of x-rays costing £400, the case for insurance cover becomes compelling.
In this setting, pet insurance has become the fastest growing form of insurance in the UK. E&L, Animal Friends, PDSA, Petwise, Petplan, Pet Protect, and Marks and Spencer are all names in the market. Indeed, competition for your business is intense with over 220 different policies offered by over 60 different insurers. With so much selection, the task of selecting a pet plan becomes complicated.

So keep things simple. Pet insurance falls into three basic categories. The first and usually the cheapest form, limits the claim per condition to 12 months - suitable for one-off emergencies but no good for diabetes! The second limits the total annual payout whilst the third limits the amount paid per condition.

Faced with this level of choice what features should you look for? Here are the 10 key questions to ask:
· What is the excess you have to, pay per claim? Sometimes it will be a fixed sum, sometimes a percentage of the treatment cost but more often, a combination of both.

· Are claims subject to a maximum annual cost or are they on a “per condition” basis?

· If the insurance is limited “per condition”, there will inevitably be a time limit. What is it?

· Is there a limit on vets’ fees? Yes? What is it?

· Is pet is prone to any hereditary conditions and if so, will the plan payout for their treatment? For cats you’ll get information about hereditary problems at www.petplanet.co.uk/petplanet/breeds/cats-breeds. For dogs you’ll find the answers at www.the-kennel-club.org.uk

· Is your dog insured for third party liabilities? You should be aware that if your dog caused injury or damage you could be liable.

· If you pet needs emergency surgery shortly before you are due to leave for a holiday, will your insurance cover the cost of holiday cancellation?

· If you go into hospital, does the plan cover the cost of cattery or kennel boarding fees? Some plans will payout after the policyholder has been in hospital for a minimum period.

· Does the pet insurance cover a finders’ reward if you pet is lost or stolen or the cost of advertising?

· Does the plan make a payout when your pet dies? If so, how much?
Where can you find the answers to these questions? Perhaps not surprisingly, vets are not particularly well clued up. They often have leaflets for one or two plans in their waiting rooms but they are seldom up to date with what’s available in the market. Perhaps that’s not surprising with all the developments in veterinary care for them to keep abreast of!
Well, you’ve already found the finest source of information – it’s the Internet! Simply search for pet, cat, or dog insurance and you’ll find all the information you’ll need. It might take you an hour or so to finish your research but it will be worth it in the end.