With the Brexit process set to begin in earnest, next year could be tough on many people’s finances. Guardian Money is here to help:
Car insurance
Car insurance premiums are set to break through the £600 barrier for the first time next year, as insurers pass on big cost increases and the fresh hike in insurance premium tax announced last month. Premium costs alone are up 16% over the past 12 months, meaning most us are likely to get a nasty surprise when the 2017 renewal lands on the doormat.
You can, however, fight back: shopping around at renewal time is key, but do so in advance. Buyers get significantly lower quotes (£100 less) if they buy 30 days in advance, rather than the day before. We reckon Gocompare is the most user friendly of the comparison websites, but there are plenty more.
Don’t overbuy cover – if you only drive 5,000 miles a year, don’t insure (and pay) for 10,000. And if you can park off-road, do so, and tell your insurer – it will make a big difference. Consider adding a spouse or parent as a named driver (or if you are elderly, a middle-aged son or daughter) as it could reduce the premium by hundreds of pounds.
Don’t soup up your car with sports exhausts, alloy wheels etc – it just means higher premiums. And while we are promised £40-per-policy savings from
a crackdown on whiplash, this will be offset by the rise in insurance premium tax to 12% next June.
Mortgages
This has been a pretty good year for many people who have taken out a mortgage, with record low fixed-rate home loans on offer – provided you meet the criteria – and a base rate cut. But is the party coming to an end?
Earlier this month, HSBC, which has been very competitive in its mortgage pricing, withdrew its 0.99% two-year fix, as well as increasing rates on other products. Some brokers and other financial experts are warning that mortgage rates will almost certainly rise in the coming months.
On Thursday the Bank of England left interest rates at their record low of 0.25%. However, Nick Dixon, investment director at investment and -insurance giant Aegon, says: “With inflation moving towards the Bank’s 2% target quicker than expected, the only way is up for interest rates in 2017. Mortgage-holders should consult their advisers now about fixing their rates before they rise.”
According to Moneyfacts.co.uk, best-buy two-year fixes include Norwich & Peterborough building society’s 1.39% deal (maximum loan-to-value of 65%) and Yorkshire building society’s 1.44% rate (maximum LTV of 85%). For five-year fixes rates start at 1.99% from Leeds building society. Someone who can manage a 10%-plus deposit can fix for five years at 2.99% courtesy of West Bromwich building society.
Energy bills
If you are one of the two-thirds of UK households on your energy supplier’s “standard” gas and electricity tariff, you are almost certainly overpaying by £200 – more if you live in a big house. Get yourself on a fixed-price tariff right now. It takes five minutes to switch.
The current stand-out deal is offered by Co-op Energy. It has an £850-a-year fixed-price tariff that runs until February 2018 – a typical £200 saving over the average “big six” standard tariff. But be aware that the Co-op has had a poor customer service record recently.
Moneysupermarket has an exclusive deal with Flow Energy, which may still be available, but is about to be pulled. It costs an average of £877 and is fixed until the end of March 2018. Failing those, search for the best deals at Energyhelpline.com.
Switch to a long-term fix if you can, as prices are set to rise from next March – if the experts are to be believed.
Home insurance
The cost of home insurance has been falling in recent years, but only if you have been switching supplier regularly. Every year at Money we are contacted by readers who have finally woken up to this fact. Having renewed with the same firm each year, they found they were being asked for £1,500 a year. When they compared prices, rivals offered the same cover for £250. Make 2017 the year you say goodbye to being ripped off by your home insurer.
Direct debits
If you haven’t checked your monthly direct debits and other continuous payments then get to it, as some people may find they are still paying for services they cancelled. How about that gym or AA membership you dropped – have the payments actually ceased? Did you cancel your old direct debit when you switched energy provider? Amazon Prime’s £79 annual payment repeatedly catches out some consumers. Remember, the direct debit guarantee requires banks to refund wrongly taken payments without quibbling.
Savings
Anyone relying on savings income had a pretty torrid 2016, and the outlook for next year isn’t much better. With inflation currently running at 1.2%, savers getting less than that are seeing their savings dwindle. Even the top-paying easy-access accounts are only offering 1%. If you are prepared to lock your money away for a year, OakNorth Bank is paying 1.41%, or 1.56% on its two-year bond. The Charter Savings Bank is paying 1.38% on its one-year deal.
Many bank accounts now pay better rates. Santander’s 123 account is paying 1.5% on balances up to £20,000. The Bank of Scotland classic account is paying 3% on balances of £3,000-£5,000. Nationwide’s FlexDirect account pays 5% on £2,500, but only for a year.
Five-year fixed-rate bonds now pay a little over 2% at best, but that arguably does not look like a good plan, as interest rates look likely to start to rising in 2017 – albeit slowly. Consider using savings to lower your mortgage instead.
Tax returns
Last year, 890,000 people filed their tax return late and faced a £100 fine, and the addition of punitive interest on any money owed. If you still haven’t filed it three months after the 31 January deadline then it gets much worse: daily penalties of £10 per day, up to a maximum of £900, are added. Don’t be a Christmas turkey – get it in on time.
[Source:- Gurdian]
