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The Letter N
Saber Finance know the finance world is full of terms, phrases, buzz words and jargon.

On this page we explain,
National Insurance > Negative Equity > No Claims Discount > Non Status

National Insurance
National insurance is a tax collected from your income by the Treasury.
The national insurance contributions are used to pay for most social security benefits. Thus the deductions from your pay help those people less fortunate or less able than yourself.

National Insurance Contribution Types
There are 4 types of national insurance contributions.

Class 1.
Class 2.
Class 3.
Class 4.

Class 1 National Insurance Contributions
Employers and employees pay class 1 contributions.
The amount contributed is based on a percentage of a persons earnings. An income that is above the lower earnings limit pays a set percentage, which rises in value up to the upper earnings limit. Put simply, the more you earn the more you pay.

Class 2 National Insurance Contributions
The self employed pay class 2 contributions.
As long as the income is above a lower earnings limit, contributions are at a weekly flat rate.
Class 2 contributions give entitlement to most social security benefits, but excludes unemployment, invalidity or widows pension.

Class 3 National Insurance Contributions
Class 3 contributions are voluntary.
These contributions are paid by those not earning a sufficient enough amount to pay Class 1 or Class 2 contributions. Class 3 contributions are used to top up benefit entitlement to enhance the state pension.

Class 4 National Insurance Contributions
The self employed pay class 4 contributions.
Class 4 contributions are paid on profits which are subject to income tax. The contributions are at a set percentage of the profit earned. Class 4 contributors receive no extra social security benefits, however the self-employed receive tax relief on these contributions.

Negative Equity
Negative equity is when a homes value is worth less than is owed on the mortgage.
Equity in reference to property is the difference between the market value of the property and the amount borrowed to purchase it usually a mortgage. Negative equity usually only happens when property prices fall after purchasing. Borrowers who brought property when at the height of a property boom could be more at risk of negative equity especially if they extended themselves when arranging the mortgage loan.
In today's property market negative equity is highly unusual, however, there is always a chance that property prices could fall dramatically and homeowners may find themselves with a home which on paper is worth less than the mortgage they have to purchase the building.
When a property is in negative equity it may be difficult to sell it in a attempt to recover the loss, due to the properties market value being lower, the borrower may be unable to get the same price that they paid for the property.
A positive thought on negative equity is that although property values may fall it should only be temporary, and statistics show a steady rise in property over the last few decades. If possible ride it out, it is only a matter of time until property prices will rise up again.
Try our property finance section for property finance information.

No Claims Discount
No claims discount is a term most frequently found in motor insurance, and is a reward for not making a claim on the policy. The reward typically grants a discount on the cost of your motor insurance, with the reward rising with the number of years you have without making a claim.
It is a real possibility that paying a minor accidents costs could be cheaper in the long term than losing your no claims. An unblemished no claims record is a prize worth preserving.
If you are concerned that one claim could wreck your no claims discount, you can protect it. Insurers offer policies where for an additional premium, you are permitted to make a number of claims without your no claims discount being affected.
Looking for insurance? Try the vehicle search directory or car insurance best sellers.

Non Status
Non status is a term used to describe an individual who is unable to prove their income or have yet to establish a credit history. When you can not provide any proof of your income or have little or no credit record, lenders can consider you to have a non-status credit rating when performing a credit check..

Non Status Credit Scores
Typical people scored non status on credit checks include,

Self Employed, who have to self-certify their finances.
Contract Workers, without a regular income.
Seasonal Workers, with income at particular periods.
Unsalaried Workers, who are bonus or commission paid.
Any Individuals, yet to build a credit history file.

Need Finance - But are Non Status
Having a non status rating can be a serious obstacle when you apply for finance, many lenders are just not prepared to lend to people without perfect credit scores. You may be able to help your finance applications by showing you have a good history of making payments elsewhere.
When applying for finance you could use your current mortgage statements, if you are a home owner, to show how reliable your repayments have been. If you are a tenant, ask your landlord to provide a reference to certify that rental payments were always punctual and in full. You can find lenders who will lend to people with non status ratings, the credit granted however may cost more due to the higher risk lenders are taking.
Want more information? The quick info page on credit information could help.

If you are in any doubt about any financial product or term we recommend that you seek advice from a financial advisor.

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