Debt

A group of people who are frequently overlooked when it comes to financial tips and guidance are those who fall into the “middle earner” bracket. Middle earners are neither the highest paid, lowest paid, or the poor and, according to the Organisation for Economic Co-operation and Development (“OECD”) around 60% of workers across Europe fall into this category.

Why is it that some people find money easy to deal with, regardless of how much they have, whereas for others it is a cause of stress and anxiety? Your relationship with money will be determined by the feelings and thoughts you have from your life experiences. It’s not simply about whether there was enough money in your household as you grew up though. If that were the case, people from poor backgrounds would always be bad with money, and the wealthy would always be good, which simply isn’t true.

At the beginning of the year many people take the opportunity to make changes. Some decide to adopt a healthier lifestyle; losing weight, stopping smoking, or reducing the amount of meat they eat. Others see the start of a new year as the motivation they need to look for a new job, start a new hobby or even move house.

As is often the case when it comes to finance, the world of loans seems to have its own language and can get complicated, very quickly.

Here we aim to explain some of the language and answer some of the common questions about loans, to help you if the need to borrow money ever arises.

What is a loan?

Loans come in all shapes and sizes; from a friend lending you £5, to a mortgage to buy a home. However, the principle of all loans is the same. A loan is an agreement between you and a lender where they give you money, and you agree to pay it back.

Second part of Reducing the cost of debt post.
 

Tip 5: Re-mortgaging to pay off debt

Secured debt, such as a mortgage, tends to offer the cheapest form of borrowing. You could consider borrowing more on your mortgage to pay off expensive unsecured debt such as credit cards, unsecured loans, and overdrafts.

Whilst most people will have some sort of debt to manage their finances, the aim with debt should always be to repay it as quickly as possible whilst paying the least amount of interest along the way.

Here are eight tips to help reduce the cost of your debt.