This page provides information on some of the most common financial products and services that are available from banks and credit unions, and the issues that affect people who experience mental distress. Specifically, it covers:
Getting advice
Terms and conditions on money services
Banks
Borrowing money
Mortgages
Please note the information does not provide advice or recommendations on choosing any of these financial products or services.
For a complete rundown on bank accounts and insurance, please see those specific sections.
There are many considerations when choosing a financial product or service and navigating these can be complex for anyone and made more difficult if your mental health fluctuates. You may be concerned that, for example, that you may not be able to keep up with loan or mortgage repayments.
Some financial services providers may not be prepared to offer you their products or services if they think you have mental health problems. Insurance is a particular issue. You may also want to speak someone you know and trust to help you. There are also many organisations that offer independent and confidential advice if you do not feel comfortable talking directly to the provider. Information on who may be able to help you is included in Getting help.
You may also consider contacting a financial services adviser, though they usually charge a fee for advice. If your mental health problem makes it difficult for you to go out to meet a financial adviser you can use the internet, the phone or write a letter instead. A financial adviser will often arrange to visit you in your home if this is more convenient for you. You might want to check how the adviser charges for their service before asking their advice.
When you're shopping around for a financial product, it's important to know who's offering what and what will suit your needs best. There are two ways of finding this out. You can:
When you gather information it's 'off the shelf' and is the same for everyone – so your own money situation is not looked at.
With advice there is usually a recommendation and assessment of products or services, and of action you can take for yourself, suited to your own personal circumstances.
Firms that give financial advice have to be regulated by the Financial Services Authority (FSA), or be the agent of a regulated firm. You can check whether a firm is regulated by visiting the FSA website which has a register of all regulated financial services firms, individuals and other bodies. Regulated firms and their agents placed on the register have to meet certain standards. Always make sure that the firm you use is on the register and is allowed to give financial advice before handing over your money. If they aren't regulated by the FSA and things go wrong, you won't have access to complaints and compensation procedures.
The following tips can help you get good advice:
Many people find the number of options and jargon involved with selecting a financial product or service to be confusing and off-putting. There are many individuals and organisations who give financial advice, most of who will give accurate and independent advice. There is also a small minority who may not meet the same standards and might take advantage of you.
Understanding the terms and conditions of any agreement before you sign is very important because these are legally binding.
You could ask a friend or family member, your carer, your local Mind association, local advocacy service or other support service to help you contact someone for advice. For details of your local Mind association see Mind in your area.
If you wish to complain about any financial service or product that you have bought information on how to do this is available in the section on Complaining about financial products and services.
Just the thought of going into a bank and having to deal with unfriendly or unhelpful bank staff can put anyone off going into a bank. If you have a mental health problem, especially if you experience low self esteem or are feeling generally low, then this task can feel particularly difficult. The benefits of having a bank account, however, are very high. Read about the different kinds of bank accounts.
It is important that you think carefully before borrowing money. If your circumstances change, for example if you have to take time off work because of your mental health problem or if you have to go into hospital, you might not be able to keep up repayments.
Top tips:
• Make sure you understand the costs and charges of any borrowing option that you choose.
• Don't borrow for longer than necessary. You’ll pay less each month, but you could pay more interest overall.
Try not to buy items on impulse. If this is a symptom of your mental health problem then talk purchases through with someone you trust before you go ahead and get the loan or the store card.
The most common forms of borrowing for the short to medium term are bank overdrafts and personal loans.
You can find more information on the Financial Services Authority (FSA) website.
Personal loans can be secured or unsecured:
How do they work?
You borrow a fixed amount and usually have to repay it in fixed instalments over a set period (the term). The interest you pay is also usually fixed. Rates for secured loans are usually lower but there could be extra fees, and of course you could be putting your home at risk.
More information on the Financial Services Authority (FSA) website:
Personal loans
Credit cards, store cards and in-store finance
Other borrowing
When you apply to borrow money in any of these ways, you’ll be asked to complete an application form. Your answers help the lender to predict how big a risk they're taking by lending you money. This is called a credit score.
You’ll be charged interest on what you borrow, usually monthly. The interest rate varies depending on the type of loan. You can use the APR (Annual Percentage Rate) to help you shop around for the best deal. APR tells you the cost of the loan taking into account the interest on the loan and other charges. All lenders have to tell you what their APR is.
Buying property is an extremely complex process and so is choosing a mortgage. It is one the biggest decisions a person can make in their life, because it can tie them down for many years. If you have a mental health problem and you are considering getting a mortgage, what do you need to think about?
If you don’t manage to keep up repayments on your mortgage, the company can eventually repossess your home. The continued threat of losing a home is cited as the biggest cause of stress and anxiety.
It is important that you are sure that you will be able to keep up repayments in order to protect your mental wellbeing. If you are experiencing the threat of repossession, it is vital that you get help immediately. If you can come to some arrangement with your mortgage company, it is possible that you will be able to keep your home. You can get help from Citizen’s Advice if you are in this position.
How does your mental health problem affect you? If you have long periods where you can’t work or you are in hospital, how will you keep up repayments?
If you have periods of excessive spending, do you have the ability to set aside the mortgage amount each month without dipping in to it? A direct debit to the mortgage company could be the answer.
Before you decide on a mortgage, it is important that you review your monthly outgoings alongside your income and work out whether you can afford the mortgage repayments. If you are currently living with parents then don’t forget to add the cost of utilities such as gas and electric, water and council tax to your budget.
Completing a simple budget calculator is a way you can start to work out how much money you have available each month and whether there is anywhere you can make savings. Take the time to check the money that you have coming in and going out so that you can get a clear idea of how much you spend and how much money you have left over. Don't forget occasional items and treats, such as holidays, days out and presents.
The FSA's Money Made Clear website also has a budget calculator which may help you work out how much money you have available each month. It takes about five minutes to complete. Your answers are completely confidential, and neither Mind nor the FSA will see your information or pass it on to anyone else.
There are a variety of mortgage products available from banks, building societies and mortgage specialists. More information can be found at Mortages made clear, part of the Money made clear series from the Financial Services Authority.
The FSA's 'Mortgages made clear' factsheet also has a mortgage calculator tool that can provide a guide to how much your monthly mortgage repayments are likely to be.
You may want to get advice from a FSA-regulated mortgage advisor on the right product so that you don’t end up paying more than you should, and to help you understand the terms of the mortgage you are being offered.
There is help available to understand mortgages from an independent financial adviser or a solicitor or see the Getting help section. Remember you will be charged for these services, however the mortgage advisor will often take his fee in commission.
Sub-prime lenders
These are licensed lenders who are willing to make loans to people who are unable to get credit from mainstream lenders because of a poor credit record. They often charge a much higher rate of interest than banks and building societies.
Doorstep lenders (sometimes known as ‘home credit’)
Loans from doorstep lenders, such as salespeople who come and knock on your door, are usually expensive. If you do consider taking out a loan from them, then as well as checking the APR, you should:
Loan sharks
Loan sharks are unlicensed lenders. They operate illegally and will lend you money when nobody else will, but: think twice before taking money off them!
The government's Directgov website gives an explanation of loan sharks, how to find out if a lender is licenced, what to do if you have borrowed from a loan shark (you are under no legal obligation to repay the debt) and hotline numbers for illegal money lending teams throughout the country and what to do if you are being harassed.