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UK Homeowners Should Carefully Review Their Finances

by Jim ONeil on March 28, 2011

in Personal Finance Tips

With the March budget comes some desired relief for families with low incomes. However, many homeowners in the middle-income bracket face higher living costs, no wage increases, and the potential for mortgage rate hikes in May.

Atlantic Financial Management (AFM) is one company advising that UK families conduct a full financial assessment to make sure they can weather additional increases in expenses.

According to AFM Director Kevin Still, approximately 1.1 million people within lower incomes will now not have to pay tax. Low-income families can now take advantage of additional child tax credits and those in the public sector will see pay increases.

The decisions to lower the 40 percent tax threshold and increase the fuel duty were also rejected.

Despite this good news, the cost of living is increasing at two times the pace of wage increases, reported Mr. Still. AFM clients who are homeowners with mortgages have an unsecured debt level that averages £35,000. For them, a mortgage rate increase in the near future could be detrimental.

Many families that fall in the middle-income bracket, who are already struggling, will receive little relief under the new budget.

The middle-income population in the UK is possibly most at risk for debt issues, stated Mr. Still. This is because the group is more likely to have a higher level of secured credit. When these individuals are considering which expense to pay first, rent, mortgages, council tax, utility bills, and secured loans must top the list.

Using cheap loans to consolidate debt is one solution, as is an individual voluntary arrangement or debt management plan. Companies like AFM negotiate unsecured debt repayment plans for clients and are often able to get charges and interest frozen for these accounts.

Consumers facing financial difficulties should consider these options in order to get themselves back on stable ground.

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