Calls for greater information for borrowers

FRIDAY, APRIL 28, 2006

People in the UK need to be provided with more information on what amount they can afford to borrow before applying for loans.

Halifax has raised concerns that often borrowers are unclear on potential loan limits or how much they can afford to repay before meeting with a financial advisor.

In many cases people tend to have unrealistic sums in mind, especially when it comes to house buying.

"People need to know how much they can borrow," a spokesman for the Halifax said.

He added: "Our online calculator will set expectations about what you can borrow. You should then sit down and work it all out with an advisor."

Clearer information would also enable borrowers to seek out the best deals and assess how possible increases in interest rates would impact on their financial welfare and reduce their monthly disposable income.

Personal budget plans 'can help you out of debt'

A detailed personal budget could help many people plan their way out of debt, according to a national charity.

People concerned with rising debt levels could take a step towards regaining control of their spending habits by drawing up a budget plan that provides detailed information on all their financial activities.

A spokesman for National Debtline, a charity that provides free telephone advice to those with money worries, said: "The first stage is to do a personal budget listing your income and all essential outgoings to keep the roof over your head."

The plan should include any essential monthly payments such as mortgage, rent, fuel, council tax, water, phone, housekeeping, and travel, as well as any incomings from wages or benefits.

This information will then allow specialised advisors to assess where cutbacks can be paid or if alternative forms of lending are needed to help reduce overall debt levels.