Help with my finances (Mortgage, Life Insurance Related)

dunkle · 6 July 2008 at 9:32AM

Not really sure where to post (lame first timer sorry) as this question sort of covers two sections but probably best here

In November 2006 myself and partner purchased our first house. As silly as it sounds it could have been classed as an impulse buy (her friend had been selling the house for ages with no interest, we liked it, we made an offer and it was ours) and as a result of this we did almost zero shopping around at the time.

We used Nationwide for EVERYTHING, Mortgage, Life Insurance, House Insurance and Critical Illness Cover.

We have since moved our house insurance to LV but everything else is still with Nationwide.

The Mortgage was taken out at 2 years fixed rate (payment not interest only) and will be due to finish in November.

Now the worry of what is going to happen is really starting to get to me and could do with some advice on what I should be preparing to do for when the time comes when our 2 year deal comes to an end (on the upside we have managed most months to overpay the mortgage by around £100 or so)

What should we do about the life insurance and critical injury etc ?
Should we stick with Nationwide for everything ?
Would it be feasable that we could save on our life insurance payments to the extent of any mortgage increases will be offset ?

I have ZERO idea about anything financial (probably why we just stuck with Nationwide for everything)

Ian_Griffiths_Halifax · 6 July 2008 at 9:49AM

Banks and Building Societies rub their hands when they see people like you coming. FTBs are often just greatful for being given the money and just go with whatever is put in front of them.

Start looking for another deal to switch onto around 3 months before this one ends, but don't write off staying with the Nationwide for the mortgage as their deal may be better than switching, due to not having to pay legal and valuation fees.

Depending on the size of your mortgage, the rise in payments on going onto a higher interest rate, may not be a problem due to your sensible actions in overpaying already. The problem may be though, that you aren't likely to be overpaying by mutch/at all if you keep to your current level of payments.

If you want to keep the benefit of the Critical Illness cover, shop around for a cheaper one. You may make a big saving and you won't be penalised by Nationwide for cancelling your policy with them.

I did a comparison for some FTBs recently, who were quoted £85 per months for Life or Earlier Critical Illness and got it down to £30 per month!

If you are struggling with payments when the new rate kicks in, consider reducing the Critical Illness element. You don't have to cover the whole mortgage and this is the most expensive part of the insurance. It's not an ideal solution, but an option.

dunkle · 6 July 2008 at 9:55AM

Thanks
I guess they did rub there hands, everything was such a blur, in space of around a month (maybe less) I had gone from living with parents for 30 years and never really bothered about having a house of my own to moving my belongings across town and starting new.

I have ZERO clue about money. I dont understand any of it, all I knew (mainly from advise on sites such as this) was that I wanted to go repayment - I had no idea where to look, who to ask and as my other half banked with Nationwide we went there. The women to her credit was very helpful, very nice (I know, she was doing her job and probably overcharging) but as I was so bamboozled we just went along with it signing up for everything (although Critical Illness only for half mortgage value)

Now I am EXTREMLEY worried about what the coming months will bring

UK007BullDog · 6 July 2008 at 8:46PM

Go and see a broker. a Whole of market broker or a financial adviser not attached to any banks for your life cover, critical illness cover and mortgage repayment protection.
The house and caontents you can find better deals yourself.

No need to pay any fees if done correctly. Educate yourself and stop being the helpless lamb.

dunkle · 6 July 2008 at 10:14PM

UK007BullDog wrote: »

Go and see a broker. a Whole of market broker or a financial adviser not attached to any banks for your life cover, critical illness cover and mortgage repayment protection.
The house and caontents you can find better deals yourself.

No need to pay any fees if done correctly. Educate yourself and stop being the helpless lamb.

Thats sort of what I am trying to do, but thanks for the encouragement

Anyone able to recommend any in the Shrewsbury area ?

Ian_Griffiths_Halifax · 7 July 2008 at 11:57AM

If affordability is a problem, the basics you need are:

Building Insurance (a requirement of the lender), but do you really need Accidental Damage? Do you have any kids or pets? It's pretty hard to 'Accidentally Damage' a house.

Life Assurance. Decreasing Term Assurance is normally arranged for a Repayment Mortgage, but if either of you have any Death in Service Benefit through work, then you may not need any Life Assurance. Critical Illness cover is a luxury.

Redundancy cover. Just in case! As interest rates rise, this effects businesses too, and that's when they start laying people off. So long as you have been made redundant and not been sacked or left of your own accord, this type of policy is generally quite easy to claim against.

Everything you buy, you should think - Do I NEED IT? Do I WANT IT? Can I AFFORD IT?

If the answer to any of these questions is NO, then don't buy it and that applies to virtually any purchase, not just these here.

Help with my finances (Mortgage, Life Insurance Related)

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