How To Save Money In The Cost Of Living Crisis
There are many areas where you can look to reduce outgoings and save money in these challenging times. Whether it be to review your finances to make savings, or to ensure that you are running your home efficiently so that you use less energy.
Be Efficient In The Kitchen
The kitchen is one of the best places to start when looking to be more efficient and save money.
Firstly, it would be good to look at your fridge and freezer. There are many obvious ways including keeping the doors shut for as long as possible. Consider what you’re going to put in the fridge and where you’re going to put it before opening the door. If it’s an older fridge, make sure it's firmly closed when shutting it. Older fridges have a tendency not to close fully!
Food should always be cold before you put it into the fridge or freezer otherwise it’s using more energy to get it to the cold temperature it needs to be.
At the same time, it shouldn’t be completely full with food and to allow the air to circulate to maximum efficiency you should aim to keep it 75% full. If for any reason your fridge is particularly low on items at any time you can always fill it with bottles of water.
Two other rules are to defrost frozen food from your freezer in your fridge, by doing this it resembles an ice pack meaning less energy is required. The other is to ensure you defrost both on a regular basis.
Be Efficient When Washing And Drying
While it might be obvious it’s worth thinking about how often you wash items, whether it be your clothes or plates!
It’s a good idea to try and get an off-peak electricity tariff that enables you to wash items at certain times of the day for less cost, reducing your energy bills.
You need to ensure your washing machine or dishwasher load is full. Why put a half-full dishwasher on 3 times a day, when you could wash the same number of plates and glasses in 2 washes? A 33% immediate reduction in energy costs!
While the ideal way to dry clothes is on an outside clothesline, it’s not always possible for those living in flats or apartments. Also, it’s not ideal on a wet frozen January afternoon.
A clothes horse is much preferable to a radiator and try at all costs to avoid using a tumble dryer. If you have to use a tumble dryer, make sure you’ve wrung out as much surplus water as possible.
Make sure you change or clean any filter regularly as a blocked filter will be less efficient and can also be a fire hazard.
Check Your Finances
It’s always a good idea to check your bank statements just to make sure you’re not paying for something you don’t need to, a check every 12 months can help.
Maybe your pet dog passed away six months ago but with all the stress you’ve forgotten to cancel your pet insurance.
To be on the safe side cancel any direct debits that have come to the end of their term with any loan provider.
One way to reduce your outgoings during difficult times is to approach the lenders that you have credit cards and loans and ask them if you can come to some arrangement for a period where they reduce your repayments.
The only negative to this is that it might affect your credit score detrimentally which means it might restrict future borrowing or that you will have to pay a higher interest rate on any future borrowing.
If it’s come to the time to renew your car, buildings, or contents insurance, it would be wise to consider using a comparison website to see if you can get a cheaper deal with another provider. These are very competitive markets with hundreds of providers wanting your business. Make sure any broker fees are clearly shown.
It's never too late to start a savings account, having a separate bank account to help meet your savings goals can help reduce financial strain in the future.
Consolidating Your Debts
With the Bank of England increasing interest rates recently it's likely your existing secured and unsecured debt payments may have increased.
If your credit card and unsecured loans providers are not prepared to come to an arrangement to reduce your outgoings temporarily, or the reduction in repayments is insufficient to ease your financial pressures, you could look at the option of a consolidation loan.
If your debts are say £25,000 or less, you could consider an unsecured debt consolidation loan or personal loan. These loans are not secured against your property but are only normally offered over 5 years or 7 years. This relatively short repayment term means that the monthly payments may still be high.
The interest rate offered will be determined by the lenders' criteria and your credit history.
Consider A Second Mortgage
Another option, particularly if you have higher outstanding debt, say £30,000 plus, might be a second mortgage which is also known as a homeowner loan, secured loan, second charge, or second charge mortgage.
These loans are secured against your property meaning that non-payment of the loan may result in you losing your home. As a result, if you apply for a homeowner loan you need to feel comfortable that you will be able to make the repayments not only now, but for the duration of the loan.
Second mortgage lenders are generally happy to lend up to a term of 30 years depending on your age and pension arrangements. A point to remember if you are refinancing your debts over a longer period is that if you keep the loan for the full term of the loan, you are most likely to repay significantly more interest than if you had carried on with your short-term loan and credit card payments.
Most lenders allow borrowers to make additional capital repayments. If you were to make extra payments this would result in you paying less interest and clearing the loan more quickly than if you were to make all payments as agreed in the terms of the loan agreement.
How Long To Get A Second Mortgage
When applying for a second mortgage there are several processes to complete.
Firstly, any lender will want to be confident that you can afford the loan. More importantly, you need to be satisfied that you can afford the loan as your home could be repossessed if you don't keep up repayments.
You would need to provide proof of your income in the form of wage slips if employed, or accounts if self employed.
Your mortgage broker may need to write to your mortgage company to get their permission for a second mortgage to be registered against your property. A search of the Land Registry will let your broker know if he has to get the consent of your first mortgagee.
All lenders need to know the value of the property that you are offering as security. Depending on the size of the loan they may be happy with a desktop valuation or alternatively, they may want a full internal valuation which tends to delay the completion time.
While the best case scenario might be a completion time of 7 days, it is more realistic to work on a completion time of 4 - 6 weeks.
If you'd like to explore your options for a secured debt consolidation loan, you can apply now.