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Last Updated: Monday, 16 July 2007, 13:49 GMT 14:49 UK
Managing your borrowing
Even if you don't have any problems right now, it's a good idea to review your borrowing from time to time to make sure that it is still appropriate, and that your debts aren't getting out of control.



REVIEWING YOUR BORROWING

You might like to think about whether you are borrowing in the best way. Different types of borrowing suit different people and situations.

As well as thinking about how much you need to borrow, you will need to consider:

  • How much can you afford to pay back each month? You could use an online budget calculator to help you work this out.
  • How might the amount you pay back vary each month? Will it change if interest rates rise or fall - or is it fixed? Or can you choose yourself how much you pay back?
  • How long will it take you to repay what you owe? Your repayments may be less if you pay back the money over a longer period, but you could end up paying back more in total in the long run.
  • Is any of your borrowing secured on your home? Secured loans can be cheaper than some other types of credit - but remember you could lose your home if you don't keep up the repayments.
  • Are you still getting a good deal? You might be able to save money by switching to a cheaper credit card or to a different mortgage, for example. Information comparing the different products on offer is widely available on BBC 2 Ceefax page 250-259, the internet - eg the FSA's mortgage tables -, and in newspapers and magazines.

But remember to check what it will cost you to make any changes to your borrowing. Lenders may charge fees to set up new loans or if you repay your existing loans early.

PREVENTING BORROWING PROBLEMS

Borrowing problems can creep up on you. So it makes sense to do what you can now to prevent them.

Take the time to think about what would happen if your situation changed - if you lost your job, for example - or if interest rates rise.

Would you still be able to keep up the repayments on your borrowing? Using one of the calculators listed below might help you to work this out.

You might want to think about building up an emergency fund or taking out some insurance to help make sure you could keep up your repayments if you have an unexpected fall in your income.

Take a look at our checklist on 'money in an emergency' for more information.

And it's a good idea to think carefully before you take on any more borrowing. Make sure that you will be able to afford the repayments - both now and in the future.

TAKE THE DEBT TEST

You can review your borrowing in more detail and get more information on how to manage your borrowing by taking our Debt Test.

GETTING HELP

If you are having problems with your borrowing, look at our checklist on borrowing problems for some ideas on what to do.

You could also speak to a specialist debt adviser.


Useful checklists and information


Handy tools

The BBC is not responsible for the content of external internet sites


Contact numbers and internet links

Financial Services Authority - Consumer Information
Information from the UK's financial services watchdog
Consumer helpline: 0845 606 1234 (call rates may vary)

British Bankers' Association

Council of Mortgage Lenders

Apacs credit card website
Information on credit cards from the UK payments association

The BBC is not responsible for the content of external internet sites


This checklist was developed jointly by the BBC and the Financial Services Authority (FSA), the UK watchdog for the financial services industry. It does not provide financial or other professional advice. If you want advice specifically tailored to your personal circumstances you should consult an adviser.






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