Finance Information Guide

Mortgages are sums of money lent by financial institutions for the purpose of buying property. In a typical arrangement, the would-be homeowners will approach the financial institution about their prospective purchase and will themselves put up a percentage of the total purchase price of the home, for example 20%. The financial institution, after verifying that the home has been valued appropriately, will put up the remainder of the purchase price. The entire sum of money will then be paid to the seller of the home and the mortgage customers will be required to make regular payments to the mortgage provider until their debt is paid off. Thus the customer needs to seek best mortgage rates before getting into the agreement. If the customers default on the debt, ownership of the property reverts to the financial institution which provided the mortgage, a practice known as repossession. Mortgage refinance is the alternative for such a situation. The term of a mortgage can vary but typically would run to around twenty years or so.

A wide variety of mortgages exists. Some are geared towards first-time buyers of homes; some require only repayment of interest on the initial loan while a separate account is used to invest in shares with the goal of ultimately repaying the capital from the proceeds of the investment strategy; some feature fixed rates of interest while others can change.

The term debt management is usually employed to describe the process of coping with debts so high that they have become overwhelming. There are a number of agencies and charities, even government organizations, which dispense advice to those who find themselves in serious debt. Often such people have a number of debts from different institutions, including credit car companies and banks. One basic debt management strategy is to consolidate the multiple debts into one single debt by taking out a bank loan. Often the bank loan will be obtainable at a much lower interest rate than credit card debts, for example, making the overall debt burden much more manageable.

If, in the end, the debtor is simply unable to cope with interest payments on the debts, he or she can approach the lending institutions and ask if there is anything they can do to help for debt relief. Often, they are willing to consider temporary or permanent reductions in payments or payment holidays to try and ease the debtor over a difficult patch. Ultimately, if none of these coping measures is adequate to tackle the problem, the debtor may either have to default on the debt, declaring bankruptcy, or deal with third party agencies which specialise in debt consolidation to reach an agreement of massively reduced payments with the creditors.

Personal Finance is a phrase used to refer to those aspects of the financial world which are likely to be of interest and concern to ordinary people. It is commonly used in newspapers, magazines and business directory to describe sections of the publication in which financial experts give advice on matters such as business credit cards, credit cards, bank accounts, bank loans, pensions, mortgages, taxation issues or investment strategies. The term is used to make a distinction between those aspects of the financial world which are primarily of concern to businesses.

Most ordinary people find many aspects of the world of professional finance complex and off-putting. Despite this, very few people are able to avoid it entirely. Thus, media organisations employ experts to try and bridge this gap in understanding and make the difficult issues comprehensible to the average person.

Under the rubric of personal finance, newspapers often publish queries received from readers about financial topics which puzzle them. Experts will respond, giving advice and guidance. Naturally enough, the goal in most cases is to either save money or to make more of it and the advice given ranges across topics such as how to pay less tax, or how to earn a higher return on savings or investments.

The term “Franchise” typically means granting some individual/firm the right to sell/buy/serve or distribute goods of the franchisor. It is also a type of permission from franchisor which allows to buy/sell/serve or distribute goods under the brand name of franchisor, the use of logo of the company and other promotions are also included. The rights may be limited to specific territory as per the terms of agreement between franchise and franchisee.

A capital needs to be invested to owe a franchise, which is usually needed for renovation, franchise fee and other necessasary tools/equipments. The fee paid to franchise is usually for using the brand name, traning and evaluation support.
A written contract/agreement is signed by both the parties, i.e franchise and franchisor which includes terms and conditions of the business. The agreement usually complies of rights, responsibilities, term of agreement and country specific laws.

Almost every leading company provides franchise opportunities to spread their business/brand in every part of the region, UK Franchise Opportunities is the best example of it. Franchise opportunities are good  profitable business for those who have some cash or time to invest.

Financial services are services related to handling and managing money, usually provided on a commercial basis. Examples include banking, insurance, currency exchange, mortgage provision and facilities for borrowing money such as credit cards, car loans, and online payday loans.

In the modern world, banking has become a financial service which it can be very difficult to do without. In the past, many people, particularly those at the lower end of the economic spectrum, were able to live entirely on a cash basis. They would have received payment from their employers in cash and would then have spent or saved that money directly, without contact with any financial institution. More recently, many employers have required that their employees have bank accounts in order to receive payment. As a result, some governments have taken steps to encourage banks to provide banking services to poorer people, something they have often been reluctant to do because of its non-profitability.

Many banks market a wide range of financial services to their clients, using the information which they naturally glean from their awareness of the customer’s financial situation to make suitable offers to them and to assess the customer as a risk prospect. Although in some countries banking services are provided for free and therefore at a loss from the bank’s perspective, the banks usually expect to earn money through the marketing of other services to the customer.

The term economy is usually used to describe the sum total of transactions – the buying or selling of goods or services - within a defined geographic area, usually a country, over a period of time. Economists have devised a number of concepts for measuring the size of an economy. Among these are the Gross Domestic Product and the Gross National Product.

It is generally considered desirable that the size of an economy should expand over time since this means that the people within the country become wealthier. Some ecologically-minded people dissent from this view, however, arguing that the high levels of personal consumption prevalent in the Western world are unsustainable because they represent too much of a drain on the earth’s resources.

In modern times, in the developed world, economies have experienced an almost constant expansion, though growth rates among them have differed. Exceptions to this, when economies in fact contracted, have generally been brief and are known as recessions or, in extreme cases, depressions.

Outside of the developed Western world, the picture has been more varied and exhibits more extremes. Cases exist, on the one hand, of economies shrinking over time and, on the other, of experiencing rapid expansion, enjoying much higher rates of economic growth than are common in the West.

Credit cards are cards which are used to pay for items on credit. The debt is incurred, not to the company from which the purchase is made, but to the credit card provider. The credit card holder is then responsible for repaying the debt to the credit card company. Usually this is done via a monthly payment. The borrowing arrangement is very flexible and the debt can continue to exist for a long time. Each month the credit card company will notify the borrower of the minimum amount which must be paid that month. This is typically of the order of 2 to 5% of the total sum outstanding.

Credit cards companies usually charge a significantly higher interest rate on debts than is typical for other debt instruments such as bank loans or mortgages. Despite this, the flexibility of credit card borrowing arrangements makes them extremely popular. Each credit card owner will be notified of a maximum borrowing amount for the card.

Each credit card has a unique number, carries data embedded in a magnetic strip and bears the signature of the borrower. Machines in retail outlets are used to read the information from the card, and sometimes the user must also enter a PIN number to verify that he or she is the card’s rightful owner.

Banking is the most fundamental of all financial services. In its most basic form, it involves storing money on behalf of those who own it, and making it available for collection in a number of places and ways. Banking first emerged in something like its modern guise in the middle ages when the demands of an expanding trade economy created the need for financial services among the merchant class.
In the modern industrial world, the vast majority of adults own bank accounts identified by a unique number or sequence of numbers. Using an account number, it is possible for third parties to make payments into the account and for the account owner to transfer money to others.

In some countries, bank accounts are traditionally free, while in others it is normal for a monthly or quarterly fee to be paid.

Banks typically pay interest on any positive balances held in an account and often allow their bank account customers to withdraw more money than they actually have in the account through a debt facility known as an overdraft.

Because banks know that their bank account holders will not normally request all of their funds at once, they are able to maintain a stock of reserve cash which is lower than their total outstanding liabilities, leveraging the remainder for investment purposes.

Top industry figures came together recently at the Financial Adviser’s round table to discuss the challenges facing the protection sector and in particular the issues of Income Protection.

As the insurance industry remains split over the future of income protection in the ‘service versus price’ divide, a protection roundtable chaired by Financial Adviser last week, argued that regulators were to blame for the lack of simplicity for both providers and consumers.

In a mixed bag reaction over the need to reduce this protection margin, advisers, providers and industry figures discussed why this is still a growing issue. Many causes were discussed but none more so than those issues surrounding price, costs, charges and clarity of cover afforded.

The industry experts agreed that they need to not only look at innovative ways to address these issues but create an environment that encourages rather than discourages people from considering the benefits offered by Income Protection Insurance Policies.

Cover provided by insurers will vary from company to company. It is important to ensure that anyone planning to take out such cover should carefully consider their requirements, shop around and ensure cover offered meets their needs.

Most income protection companies offer cover to a maximum of 50-65% of your gross annual salary. Payouts under Income Protection Policies do not attract tax under curent legislation.

To assess how much cover you require, it is advisable to calculate your monthly outgoings, i.e. mortgage payments, rent, bills, food, travel costs etc. and use this as a starting figure.

Affordability now moves into the picture and whilst most people insure around 50% of their income, you may decide to cover your mortgage payments/rent and council tax.

If you require any advice on this you should contact an experienced advisor.

Insurance is the financial compensation provided by the insurer to the insured in the event of unforeseen financial losses in lieu of periodic payments made by the insured. Insurance extends financial assistance to a company, individual or any other entity. There are some forms of insurance that are mandatory while some are optional. When an insurance provider and an insured agree to the terms and conditions of the insurance policy, the policy comes into effect. In majority of the cases part of the loss is borne by the insured, which is referred to as the deductible and the remaining amount is paid by the insurer or the insurance provider.

Common types of insurance include-

* Health insurance
* Disability insurance
* Life insurance
* Business insurance
* Auto insurance

It may be mentioned here that the sole purpose of insurance is not to guide consumers in budgeting their expenses but to protect them during a financial catastrophe.

Buying insurance

Insurance can be bought either on your own or with the help of an insurance agent. There are different insurance companies in the market offering insurance policies.

Prior to buying an insurance policy, the following aspects need to be addressed-

Type of insurance needed-

* You must assess your requirement and decide upon a policy accordingly.

* The damage the policy is covering also needs to be taken into consideration. Policies vary from one another depending on the coverage they are extending. In few cases, there is coverage for specific dollar amounts.

* You need to decide whether you are buying the insurance policy on your own or from an agent.

Brief information on the different types of insurance policies is given below-

Auto insurance

Auto insurance in most of the states is mandatory. Auto insurance is bought mainly for two reasons.

* To insure liabilities you have to other people
* To insure against damage inflicted to your car by others.

Life insurance

Life insurance may be either pure insurance which pays on the policy’s holder’s death. The other can be cash value insurance. Majority of the policy holders are well off with pure insurance as well as savings for retirement.

Health insurance

Health insurance is very much necessary and you should decide upon an insurance plan keeping in mind the deductibles and the premiums. Basically, there are 3 types and other traits may be formed by mixing and matching policy traits.

* Fee for service- allows a policyholder to get covered for almost any medical condition. It is a bit expensive.
* Preferred Provider Options- allows a policyholder to self refer him to any provider available in the PPO list.
* Health maintenance organizations or HMOs- this type of health insurance is the least expensive and but has the maximum limitation.

Disability insurance

Also referred to as disability income insurance, this insurance policy takes care of the financial expenses when an individual is out of job due to disability.

Business insurance

This type of insurance extends financial coverage for businesses rather than for individuals. This kind of insurance protects business houses against risks.

Prior to selecting a particular type of insurance policy, you need to shop around for the policy which suits your needs the best. You can compare rates and costs of different insurance providers online or by consulting an insurance expert.