DEAR TRICIA
Q Many years ago we were advised to contract out of SERPS. What does this mean and how will it affect us when we retire? A It means at some point you paid reduced National Insurance contributions and didn’t pay into the State Earnings Related Pension Scheme (additional state pension).
Instead it’s likely you paid into a personal pension, maybe a workplace pension. Depending on how long you were contracted out, you may receive a lower state pension. The idea behind it was you were saving into another pension and that would make up the amount of state pension you lose.
Q I have an interest-only mortgage and the term ends next year. I can’t afford to repay the loan, and I don’t want to move either. What options do I have?
A First, I would contact your lender and see if you can switch to a repayment mortgage, and if it would be affordable. As a last resort you could also consider an equity release plan if there is enough equity in your home to repay the debt.
Q I’m single and I’ve just bought my first home. Do I need life insurance or is there something more useful I could get to protect my finances? I’m getting very mixed messages from friends.
A You have no obligation to purchase any protection. As a single person, life insurance isn’t the best one for your circumstances. You need cover that will help you should you hit hard times. If you are an employee you need to check what cover you may get through your job. I would seriously consider income
protection first, if you don’t get any employer’s sick pay or you are self-employed. This is because you are more likely to be off work through injury or illness, and if you can’t pay your mortgage your home might be repossessed.
QI have built up a bit of debt on a credit card and I’m not getting anywhere paying it off. I’m worried this will affect my credit score and will also mean I don’t qualify for 0% deals. How can I check before applying?
ASimply making sure that you repay your credit card on a regular basis
should help improve your credit score. I would always suggest paying more than the minimum repayment amount each month, as that usually just covers the interest and a negligible amount of the debt.
Even just £10 more will help to reduce the actual amount you owe.
Some credit cards firms, including Barclaycard and MBNA, offer a ‘soft search’ where you can find out which products you are most likely to be eligible for. Moneysupermarket has a Smart Search tool and Totallymoney has an eligibility checker.