YT Lending

Lending tips and advice.

Is a Career development Loan a Good Idea?

A career development loan is available to anyone that wants to borrow money to do a course that will improve their career prospects. They can be used for all sorts of different courses and therefore are a flexible option for many people who want to do some more study. It is worth understanding more about them and how they differ from a student loan and other types of borrowing.

What is a career development loan?
A career development loan is only made available to those people who want to study a course and need help with paying the fees. They are specifically for people studying to improve their career and so the course you are taking ill need to be specified in your loan application. You will get money that will cover the course fees and living expenses. During the duration of the course you will not be expected to make any repayments, although you will have interest added to the loan. As soon as the course ends you will need to start repaying the loan.

How it differs from a student loan
There are similarities with a student loan in that you will be able to borrow the money to pay for a course and do not have to repay it until after the course ends. However, with a student loan you only have to repay the loan if you are earning enough money. This does not happen with a career development loan where you are expected to start repaying it regardless of whether you have a job. A student loan is also written off after thirty years regardless of whether you have repaid the full balance. A career development loan has a specific repayment schedule and you are expected to make all of the repayments. A student loan is repaid through your tax code and does not impact your credit record but a career development loan has to repaid by you, usually through direct debit in the way that you would expect to repay a standard loan and does affect your credit record. The interest rate on a student loan tends to be lower than that on a career development loan. A student loan is means tested though, so you can only borrow the full amount if your household is thought to not be earning too much money, however, a career development loan is not means tested.

From this you can see that it would probably be best to go for a student loan if you are eligible for one as it will be cheaper and has better terms meaning that there is a chance that you will not have to fully repay it. However, you can only borrow for four years with a student loan so if you have had one before for a degree then you will not be able to get one again unless it is for a master’s degree. You will also find that student loans are only available for specific courses so if you are not doing a degree course then you may not be able to get one. If you are older and have had a grant in the past the same will apply, if you have had 4 years of grant money then you will not be able to get a student loan.

How it differs from other loans
A career development loan is therefore fairly similar to other loans and it can be just as expensive as well. The main way in which it differs is that you do not have to start repaying it until you complete your course. This could be crucial as you may be studying full-time and not able to be working and getting an income at the same time. In this case you would need to be able to find an alternative way to cover those repayments.

If you feel that the career development is too expensive and do not have an alternative as you cannot work while you are studying there is a possible way out. Once you have finished studying you may be able to get a conventional loan and use it to pay off the career development loan so that you have a cheaper loan to repay. You would obviously need to do lots of calculations to see if this would be worthwhile and hope that your credit rating was high enough to allow you to get a loan at a good rate. It may not be a solution that you should rely on but it could be an option that you might want to take. You will also need to make sure that you take into account any early redemption fees on the career development loan, to make sure that it really is cheaper to pay it off early as these costs may make it too expensive an option.

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When Should I Start Saving for a Deposit?

If you are thinking that you would like to buy a home then you may wonder when you should start to save up for the deposit. This is because you will need to put a down payment on a home in most cases before you are allowed a mortgage. This is used to not only show that you are capable of managing your money but so that if the price of the home goes down the mortgage will not be higher than the value of the home.

As a child
It is worth parents encouraging their children to start saving up as soon as possible. Not necessarily with buying a home in mind but teaching them how to save up their money for the future. It can be very satisfying saving up and waiting to buy something so that you know that you have paid for it yourself. Learning to wait for something is a great thing to do and also knowing that feeling of being able to eventually get something that you have always wanted. If they get big chunks of money, perhaps if they are lucky enough to get an inheritance, for example, then it is wise to show them how to put that money away safely to earn interest or gain in value until they need it when they are older. Discouraging them from spending money as soon as they get it and making sure that they have a savings account are really good ways to start to help them.

As a young adult
As they get older then parents have less of an influence and it is more up to the person to make their own mind up about money. It can be difficult to save money but is something which really should be started right away. Once you start earning you tend not to have that much money and it can be a great novelty having regular money to be able to spend on things. However, this is the time when you need to start being really careful. Regularly putting money into a savings account can be a great way to save for different things. Having a lump sum of money can be handy for emergencies, such as car repairs, replacing a broken fridge and paying unexpected bills. However, it is best to try hard not to spend the money if you can as the more that you can accumulate the better.

As someone about to buy a home
Hopefully if you are about to buy a home you will be getting all excited about buying something and thinking hard about what you can afford. At this stage you will be much more motivated to save up and concentrate all your efforts on the home. This might mean that you will be happy to go without other things so that you can put more money towards the home. You will need to be thinking about what else you need to spend money on as well as the deposit though. You will need to pay removal fees, solicitors’ costs and for any repairs or decoration that needs doing in the house that you buy. Even if you buy a place which looks perfectly well decorated there will always be things that you need to buy such as curtains, lightshades, lamps and you may also want things like rugs, pictures and furniture to fit in with the new home. There seems to always be more things that need buying than you might think and so it is a good idea to keep some money in reserve for that as well as putting as much as you can aside towards the deposit. So as you can see you are never too young to start thinking about saving. Getting together a large deposit can be a really useful thing when you are buying a home. Not only can it mean that you might be able to buy a bigger home or one in a nicer area compared with what you might be able to get with a smaller deposit but you will also be able to get a smaller mortgage. This means that you will either be in debt for less time or you will be able to have smaller and more manageable repayments each month. You may even find that you will have more choice of lenders or be able to get better interest rates as you have a nice large amount of money to put down which means that lenders will have more trust in you and see you as less of a risk to lend to. So, there are many advantages to having a large deposit and by starting saving as early as you can, you will have a better chance of getting together a large deposit before you buy your first home.

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