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Credit Crunch survival guide

In 2007 a global financial crisis was triggered by worries over sub-prime mortgage lending in America. An onslaught on credit availability ensued with the term 'credit crunch' widely being coined.

Some of the largest financial services companies in the world were on the brink of collapse. Indeed Lehman Brothers, once considered one of the most powerful investment banks in the world, collapsed, while the British government had to bail out many of the high street banks, including RBS and HBOS.

The economic crisis had major implications for the cost of wholesale funding which soared, meaning mortgage lenders had no liquidity with which to lend money. People looking to get a mortgage generally had to put down much larger deposits in order to get favourable rates and some products, such as the 100% mortgage loans, disappeared from the market. Even 90% mortgages are still few and far between. 

There are still fears we could fall into an even deeper recession. So just how do we survive any future recessions?

  • Emergency fund: If you are worried about financial worries, it's advisable to increase the size of your emergency fund – in any case you should have at least three to six months worth of living expenses in a safe and easily reachable place such as an easy access savings account.
  • Don't overstretch: Property prices are often hit during economic uncertainty, meaning many people choose to sit tight and credit can quickly be cut by providers. Therefore you should think carefully about moving house or making large purchases that could leave you financially vulnerable.
  • Insurance: Payment Protection Insurance (PPI) got a bad name due to being mis-sold, but cover for your mortgage and income can provide a valid safety net against unemployment or other reasons for a drop in earnings - just be sure that you get a policy that is right for your circumstances.
  • Become debt free: The price of everyday living is increasingly expensive thanks to inflation currently running well above the Bank of England's target. If you pay off your debt, you won't have to worry about meeting monthly repayments on top of everything else.
  • Get help: If you are worried about debt or your finances seek help. Citizens Advice , National Debtline and Consumer Credit Counselling Service are all free services that provide help on how to manage your finances.
 
 
Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.35% To Jul 2014 4.95% 4.6% APR 75% £999
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% £499

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