Month: September 2010

Greece’s recovery

According to the International Monetary Find (IMF) Greece has made a strong start in getting its finances in order but the government risks being over complacent about its ability to grow the economy in the medium term.  Money was lent to Greece by the IMF and Eurozone members in exchange for far-reaching spending cuts and led to violent protests on the streets.

With further payments given to Greece last Friday reflecting the positive start the country had made in cutting its spending the IMF had to warn the Greek government not to be complacent about the country’s informal economy to keep the country growing in the future.

The IMF warned ‘risks exist on the revenue outlook as the economy will be contracting, and spending is not under full control in sub national entities of government.’

But despite the stringent cuts the IMF said the recession in Greece is unfolding in line with expectations although inflation is higher than expected from indirect tax hikes.

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The end of interest only mortgages

Following Coventry Building Societies announcement that they will no longer allow interest-only mortgages for first-time buyers – does this spell the beginning of the end of interest only mortgages?

The Council of Mortgage Lenders seems to believe that the FSA could well kill off interest only mortgages with its proposals for regulating the loans in the Mortgage Market Review.

The FSA wants to ensure that borrowers have plans in place to repay the capital element of the mortgages and that lenders are then responsible for monitoring this.  Due to the potential costs to the lender to achieve this it could, therefore, lead to the withdrawal of interest only mortgages.

The CML says “It is far from clear that the costs and the impact of restricted choice for consumers would be matched by any wider benefits. There is clear evidence that the FSA’s approach had already resulted in more restricted availability of interest only mortgages.  Some lenders have announced they will no longer offer them to first-time buyers, or to those wanting to borrow more than £500,000.

This could well leave borrowers who do not want repayment mortgages unable to remortgage.

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Does your business need protection?

The day-to-day pressures of running a business could mean you rarely get the opportunity to think about the ‘what-if?’ scenarios that face you every day. 

To help you best prepare for the future you should ask yourself a series of health check questions that will potentially highlight any potential dangers to your business. 

  1. Would your business be able to continue paying any loan payments if the business owner or key person died or suffered a critical illness?   
  2. What would be the effect on overall cash flow if you or one of your fellow business owners died or became seriously ill? 
  3. Do you have sufficient funds to buy the available shares of the business and retain control if a shareholder / partner died?   
  4. Could your business borrow more money if cash flow were affected following the death of a key individual or shareholder?  
  5. Are you aware of any additional security you may have already provided to your bank for any existing debt? 
  6. Do you have a succession plan in place if one of the shareholders/ partners were to die or become seriously ill? 

Most importantly when did you last review your business protection plans with an independent financial adviser who specalises in business advice? 

Business planning is more than just growing sales and profits – think about the risks too.

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