FAQs

Take a look at all our FAQs for immediate answers to common questions.

Loans

Should I take out a loan?

A loan can be a great way to pay for a holiday, home improvements, a car...But it’s essential to know exactly how much your repayments will be, and think carefully about what can happen if you can't make the repayments.

What are the different types of loan, and which one's best for me?

At Moneybrain we offer five types of loan: secured, unsecured and guarantor, plus bridging and peer-to-peer loans.

  • Secured loans require some form of collateral as security, such as your home.
  • With unsecured loans, the lender trusts you to repay without collateral, so you don't have to put your property at risk.
  • Guarantor loans require a third party to act as security for the amount you borrow. This is often a parent, legal guardian or employer.
  • Bridging loans are specially designed to speed up property sales, ‘bridging’ the time gap before the money from your mortgage is available.
  • With peer-to-peer loans, an individual, company or organisation, rather than a bank or building society, is lending to you via one of the established P2P platforms. P2P loans often have more competitive interest rates or more flexible terms.

Which type of loan is best for you? That depends on your income and credit status and how much you want to borrow. Ask Moneybrain for expert advice you can trust.

How much should I borrow?

The short answer is as little as possible to achieve your goal. Borrowing more than you need may seem tempting, leaving you extra money to play with, but it could make your payments much higher.

How can I work out how much I'll repay?

Knowing the APR (Annual Percentage Rate) is not enough. Never agree to a loan until you know the total amount payable, what your monthly repayment will be and over how many months. Your provider is obliged to tell you the total amount payable and this must include any fees or charges, the interest rate, the APR, how much you'll repay in total and how much you'll pay each month. Moneybrain will ensure you have this information, which will also be written into the pre-contract credit information form. The lender must send to you this before you sign the loan agreement.

Will taking out a loan affect my credit rating?

Asking Moneybrain to find and compare loans won’t have any effect on your credit rating. However, making a number of applications over a short period can have a negative effect – driving up the cost of borrowing or making you more likely to be refused. That’s just one of many reasons why letting Moneybrain do the work is a better idea than making applications and being turned down. You’ll only have to apply once, for your most suitable solution.

Is it cheaper to ask my bank for a loan?

Your bank or building society may be happy to offer you a loan, but you can’t be sure it’s the best deal available – until you’ve asked Moneybrain to search and compare. Your bank may also offer an overdraft. This can be a low-cost way to borrow, but only for a short period.

Is it cheaper to borrow using my credit card?

Some credit cards charge 0% interest for a limited period. If you have such a card and you can repay within the time limit, that could be your best option. In any case it makes sense to let Moneybrain check your other options.

Does everyone pay the same interest on a loan?

No, it all depends on your credit rating. The better it is, the lower the rate you are likely to pay.

What happens if I can't make my repayments?

Always tell your lender if you can’t make your repayments. They may agree to a payment holiday for example. But they’ll be much less understanding if you default without keeping them informed.

Savings

Gross, net and compound interest, what’s the difference?

Gross interest is pre-tax. The net interest rate is after the tax has been deducted. Compound is interest paid on the interest you have already earned. It’s the real engine for savings growth, because it means that each time you earn interest your saving pot gets bigger. Interest is then paid on the larger amount, creating a snowball effect.

AER and APR: what do they mean ands how do they differ?

The Annual Equivalent Rate (AER) on savings refers to the gross interest rate including compound interest. Annual Percentage Rate (APR) is used mainly to compare interest rates on credit cards and loans. It determines how much you’ll pay back over each year of the loan’s duration, including fees and additional costs.

How much tax will I pay on my savings?

If you’re a basic rate tax payer, the first £1000 you earn in interest on savings each year is tax free. After that you’ll pay 20% income tax on any interest you earn. Higher rate tax payers have to declare interest on their tax return, with only the first £500 tax free. However you can save up to £20,000 in ISAs without paying any tax on the interest.

What is an ISA?

The initials stand for Individual Savings Account, but today’s ISAs can be either an account or a wrapper – which means a home for different investments that shelters them from tax. This tax year (2017-18) you can hold up to £20,000 in ISAs, and there are currently four different types to choose from:

  • Investment (stocks and shares) ISA
  • Cash ISA
  • Innovative finance ISA (IFISA), using FCA-regulated peer-to-peer lending platforms
  • Lifetime ISA

You can put your whole year’s ISA allowance into a single ISA, or split it between different ones, although there’s a £4000 limit for Lifetime ISAs. If you don’t use your full ISA allowance in a year, you lose it. There’s no way to carry it over to the next year. But you can open different ISAs every year, and have as many as you wish.

Mortgages

What are the different types of mortgage?

Repayment: each month you pay back a portion of the amount borrowed, plus interest, until the whole amount is paid off. Payments can vary, depending on the interest rate.

Interest-only: All you pay each month is a portion of the interest on the amount borrowed. The amount borrowed is repayable in full at the end of the mortgage term.

Variable rate: This is a specific type of interest only mortgage in which the amount of interest you pay is determined by the SVR – Standard Variable Rate. The SVR is decided by the lender, broadly in line with inflation and the Bank of England base rate.

Tracker: An interest only mortgage with the interest rate pegged to the Bank of England base rate (usually 0.5 – 2% above it).

Fixed rate: A mortgage with the repayments fixed for the first few years (generally two to five). It then reverts to the lender’s SVR.

Offset mortgage: An interest only mortgage that takes into account any savings you have, yet still allows you to access those savings. The amount you have saved is subtracted from the total amount borrowed, and you only pay interest on the remainder. For example, if your mortgage is for £300,000 and you have £50,000 in a savings account, you’ll pay interest on £250,000.

How much can I borrow as a mortgage?

That depends on various factors, including your financial situation and the value of the property you are buying (because this will act as security for the mortgage). Gone are the days when lenders simply multiplied your income to decide on the maximum amount you could borrow. Nowadays they’ll want a much more detailed financial picture including your net income, regular outgoings, credit score and debts such as credit cards or loans – providing a realistic estimate of how much you can afford to repay.

How much deposit will I need?

The size of the deposit lenders require varies, depending mainly on your credit rating and financial circumstances. Generally speaking, the bigger the deposit you can pay the better. Not only will it lower your monthly payments, it will also give you a bigger choice of deals, so you’re likely to find a better one.

What does LTV mean?

This is the loan-to-value ratio: the difference between the price paid for the property and the amount borrowed. The bigger your deposit, the lower the LTV

Can I take out a joint mortgage with my partner or a friend?

Yes you can, but it’s important to draw up a legal agreement giving both parties the power of sale, in case there’s a dispute later. This can be either a joint tenant agreement (a 50/50 split) or, if you have different income levels, you can be ‘tenants in common’ with each owning a different proportion.

I don’t have a great credit rating, can I still get a mortgage?

Chances are Moneybrain can find you a mortgage. There are mortgage products especially for people with credit rating problems – but be prepared to find less choice and higher rates than the very best deals offer. This simply reflects the higher risk for the lender.

What happens if I miss a monthly payment?

Tell your lender as early as possible if you think you may have to miss monthly payments. They are likely to be understanding, offering solutions such as a payment holiday, or a rearrangement to lower payments over a longer period. They may be much less understanding if you default without warning them first.

What fees will I pay on my mortgage?

You are likely to be charged legal fees, valuation costs and admin charges known as arrangement fees before you take out your mortgage. Amounts vary from lender to lender, so it’s wise to read the small print and ask what the fees will be before deciding on a mortgage deal.

Is there a charge for paying off the mortgage early?

Probably. Lenders prefer you not to pay off the mortgage early because it costs them money in lost interest. The fee they require is called the ‘early repayment charge’. Calculating whether early repayment is advisable is a simple sum – how much you’ll save in interest minus how much you’ll be charged. However some repayment mortgages allow for limited monthly overpayments (often up to 10%). As always it pays to read the small print and ask the lender if there’s anything you’re not sure about.

Investments

Don’t I have to be rich to start investing?

No, but if you do have small sum to hand, or have a few pounds spare at the end of the average month, investing with the right (i.e. Moneybrain’s) advice can be an exciting way to maximise your return on that cash. You really can start with surprisingly little.

I don’t know anything about investing, is that a problem?

Not in the least. All you need to start investing is a little cash and your passport or driving licence, because we’ll need to confirm your identity first. No knowledge of investment markets or products is required from you. Our innovative investment service is a very modern mix of advanced technology and real expertise from real human financial advisers. They are registered with the Financial Conduct Authority, which means your portfolio couldn’t be in safer hands. One last thing, if we believe you’re not suitable or shouldn’t be doing our kind of investing, perhaps because of your financial position, we’ll let you know politely but firmly.

How will I know what’s happening to my money?

The Moneybrain service provides regular updates and help is available 24/7. We start the investing process by asking you to set your own risk preferences and objectives, and they will guide every sale or purchase we make on your behalf. You’re always in control.

How much does investing with Moneybrain cost?

Fees can vary but are always affordable, amounting to 0.50% per year. What’s that in real money? A medium risk portfolio with £20,000 invested would cost you £1.92 per week, or 27 pence a day. There are no hidden fees and all fund costs are included.

Is it a complicated process?

We reckon it will take us five minutes to create an investment portfolio for you. We’ll make sure you understand everything we tell you, and you can rest assured that all our advice is fully authorised and regulated. You’ll end up with a sophisticated investment portfolio with very little hassle and no delay.

How risky is investing?

Investing in stock market-linked investments always has an element of risk. While you will be able to decide on the personal risk level you are happy to accept, we will remind you clearly that all investments can go down as well as up. Providing the most accurate information possible is the best way you can minimise risk – and maximise return.

Home and contents insurance

What does buildings and contents insurance cover?

The buildings aspect of a combined home insurance policy covers the physical structure of your home. That includes the bricks, mortar and roof tiles or equivalent, but also fitted kitchen and bathroom units, doors and windows. You can claim in the event of damage caused by fire, weather conditions, earthquakes, fallen trees etc. The contents component protects the belongings you keep in your home in case of theft or damage. Buildings and contents insurance can be bought separately, but most homeowners find that a combined policy costs less.

I'm a tenant, do I need home insurance?

You don't need to take out buildings insurance, that's the landlord's responsibility. But it's wise to protect your own property with contents insurance.

Is emergency cover included?

That depends on the policy. Some include it as standard, whereas others offer additional emergency cover for an increased premium. You can also take it out separately. Check your policy to make sure you only get extra emergency cover if required.

There's an excess on my policy. What does this mean?

It's the amount that won't be paid when a claim is agreed. The higher the excess, the lower the premium.

There's a risk of flooding in my area, how will this affect my policy?

If your area has been flooded recently or is flood-prone, premiums will be higher. But thanks to the government's Flood Re scheme, you should always be able to find a policy.

Do I have to have buildings and contents insurance?

It is not a legal requirement. However, your mortgage lender will probably insist that you have it to cover the rebuilding cost in the event of catastrophic damage.

How should I work out what my contents are worth?

Simply go through your home room by room, list the contents and put the estimated value next to each item, then add them all up. Incidentally, it's wise to keep as many bills, invoices or other proof of purchase documents as you can. This can make claiming quicker and simpler.

Are my contents still covered if I take them out of the house?

With most policies you’ll need to add personal possessions cover to your policy for a small additional premium.

Does contents cover include accidental damage?

Most policies don’t, although they may offer accidental damage cover as a fairly inexpensive add-on – handy in case you drop your PC or spill something nasty on the carpet.

Do I have to take out the cover offered by my mortgage lender?

No, although they may offer you a policy. Moneybrain will find you the best deal.

Do apartments need buildings insurance?

Almost certainly not, although it’s wise to check your lease. Usually the owner of a block of flats is responsible for buildings insurance, and shares the cost between residents.

Join the Moneybrain community!

Get the latest updates and be the first to know when Moneybrain goes live!