If you are looking to borrow a small sum of money but without incurring eye watering repayment fees, there may be an option out there for you. Many high street or loan pay day firms charge up to 2000% interest. Then there are loan sharks or door to door lenders that are of course illegal and may resort to nefarious means if you are unable to meet their exorbitant repayments.
However, in 2010, the Governments launched the ‘My Home Finance’ scheme as a social enterprise. Social enterprises are trading organizations that have a clear social or environmental purpose. They can be large and international but are usually small, community based enterprises. Any profits are ploughed back into the social enterprise in order to further and develop the social mission.
In conjunction with the National Housing Federation, a number of housing associations, the Wates Foundation and the Royal Bank of Scotland, the My Home Finance scheme launched with 10 initial branches across the West Midlands. The area was selected and piloted based on the National Housing Federation research and evidence that the West Midlands is an area that is in particular need of affordable credit.
The scheme is aimed at potential borrowers with a poor credit history, on benefits or on a low income. The typical APR is 29.9% which compares favourably to the rates offered by high street banks and building societies. Loans are usually repayable over 12 months, but the repayment period can be reduced or extended if required. Up to £1,000 is available. Not a huge amount, but a potential lifeline for those who would otherwise be unable to obtain any credit. They can be used for consolidating existing payday loans – with their extortionate interest rates – those times when your washing machine has unexpectedly broken down, or needing to buy new school uniforms due to unexpected growth spurts, it’s up to you.
With up to 2.5 million people borrowing from doorstep lenders and an estimated 200,000 resorting to loan sharks, the My Home Finance scheme is aimed at people who have been previously turned away by high street lenders. The 10 branches are open during normal working hours and located in shopping centres and high streets. Individual circumstances will be taken into account, rather than a blanket ‘computer says no’ policy.
The scheme aims to offer 150,000 loans to people on lower incomes over the next ten years, rolled out across the UK if the West Midlands pilot is a success. As well as the cheaper loans available, the My Home Finance scheme provides opportunities to save and offers money advice. They also provide bank accounts to customers who do not have one in conjunction with the Royal Bank of Scotland. Check to find out if the My Home Finance scheme is available in your local area.